LANGE ON LAW

Defending or Launching Lawsuits

Welcome to Lange on Law. Here you will find 150 legal columns written by Donald and published in the Highlands Communicator, a newspaper in the County of Haliburton with a circulation of over 5,000 copies per issue every two weeks. Click on a topic and read what Donald has written about the law.

AGENTS

APPEALS

LITIGATION LIMITATION PERIODS

LITIGATION LOSSES

LITIGATION MEDIATION

LITIGATION MOTION

LITIGATION REPRESENTING YOURSELF

LITIGATION SETTLEMENT OFFERS

REAL ESTATE TRANSACTIONS

SOLICITOR- CLIENT PRIVILEGE

AGENTS

Agent and Principal Law

The relationship of principal and agent occurs when one person (the principal) empowers another person (the agent) to act on behalf of the principal in such a way as to affect the principal's legal relationship with others (third parties). This is called the law of agency. An example is when an agent is authorized to make contracts on behalf of the principal with third parties.

A principal is legally vulnerable in such a relationship. The general rule is that the principal is vicariously liable for the wrongful acts of the agent committed within the scope of the agent's apparent authority. A company, which buys and sells cars and pays a person a commission on cars sold by that person, will be liable for that person's fraudulent misrepresentation in the sale of the car. The social policy behind vicarious liability is that the agent is often not in a financial position to compensate a person who is injured by the wrongful act. Who should bear the loss, the employer or the innocent victim? The answer is the principal because the principal can and should secure protection from the risk of the agent by insurance, the cost of which forms part of the general cost of carrying on business and is ultimately borne by the general public.

There are many factors in the complex law of agency. One factor is in the lawsuit itself. Let us assume that a victim sues both the agent and the principal. The victim must choose between them when it comes time to sign judgment. There cannot be a judgment against both. If the victim only sues the agent and obtains judgment against the agent, the victim cannot later sue the principal when it is discovered that the agent has no money or other assets and that collecting on the judgment is impossible against the agent. The reason for this is that, where a judgment has been obtained against the agent, the factual and legal basis for the lawsuit has been exhausted and the victim cannot sue again, on the same basis, against the principal. In legal terms, this is called the doctrine of alternative liability. One or the other may ultimately be liable but not both.

APPEALS

Appealing a Judgment

A civil lawsuit that ends in a judgment of the court can be appealed to a higher court. If it is a Small Claims Court judgment, the appeal is to one judge of the Superior Court. If it is a Superior Court judgment, the appeal is to three judges of the Court of Appeal. A party has a right to appeal to these courts in civil cases but no right to appeal further to the Supreme Court of Canada. The party must obtain permission to appeal to the Supreme Court and very few civil cases are given that privilege. The Court of Appeal is really the court of last resort for almost all civil cases.

Some unsuccessful litigants think that, if they appeal the judgment, the appellate (appeal) court will reassess the trial judge's decision on the evidence. An appeal does not give a party a reassessment of the evidence and an appellate court will not interfere with the trial judge's decision on the evidence. The reason for this is that the trial judge is in a better position to assess a witness's credibility because the witness is right there before the judge. All the appellate court sees is a typed transcription of the evidence.

To succeed on an appeal, a party must convince the appellate court that the trial judge erred in the application of the law to the facts of the case as decided by that judge. For example, a party might argue that the trial judge misunderstood the legal principle involved or applied the principle even though there were not sufficient facts proven at trial to warrant its application.

If the plaintiff and defendant settle their case out of court, there is no way of appealing the settlement.

BUSINESS

The Corporate Veil

Some businesses conduct themselves as sole proprietorships. The business may have a business name but it is owned and operated by an individual who is personally liable to the world at large for the conduct of the business. Some businesses are incorporated. When this occurs, the business enjoys a separate legal personality from its owner called the "corporate veil." The owner has shares in the company and, if it is a small business, the owner is often the sole shareholder, director and officer (president) of the company. There are two good reasons to incorporate a business. A company usually enjoys a lower tax bracket than an individual and, most importantly, the owner of the company, as shareholder, director, and officer, is not personally liable for the conduct of the business. This means that personal assets, such as a home, are not at risk.

However, courts may "pierce the corporate veil" by setting aside the separate legal personality of the company and attaching personal liability to the shareholder, director, or officer. Courts in Canada are extremely reluctant to pierce the corporate veil. The dominant rule is that company decision makers, acting in good faith, should not be personal liable for the acts of the company.

There are exceptional circumstances when the corporate veil will be lifted to create personal liability. One exception is when a company is found by the court to have been incorporated to do something that is illegal or improper for its shareholders to do personally, such as to commit fraud or to avoid legal obligations. Fraud may occur when there is a misrepresentation to a third party that the third party is dealing with an individual with assets when, legally, the third party is really dealing with a company with no assets. As well, a company may have a legal obligation to a third party, such as a debt, but transfers its assets to the shareholders in order to render itself incapable of fulfilling the legal obligation. Another exception is the "sham" company, that is, when the company is nothing more than the "alter ego" of the shareholder and being used as a shield for an improper purpose. The test is usually whether the company is completely dominated and controlled by a single person.

These exceptions are often applied in conjunction with a vaguely defined principle of unfairness before a court will pierce the corporate veil.

Winding-up a Company's Business

Many businesses conduct themselves under the umbrella of an incorporated company. The company is often owned by one shareholder and this makes the conduct of the business a fairly simple matter. However, if the company is owned by two or more shareholders, troubles may arise as in any relationship. For example, there may be a deadlock between two equal shareholders which makes it impossible for the company's business to be carried on. Or, the company may be owned by a majority shareholder and a minority shareholder and the minority shareholder is experiencing a lack of confidence in the management of the company's business by the majority shareholder.

Disgruntled shareholders may look to the courts to resolve their problems by applying to have the affairs of the company wound up and the assets liquidated. A winding up order creates a "fire sale" situation. Courts naturally view such an order as a drastic measure to be resorted to only in extreme cases where there is no reasonable alternative to resolve the problems facing the shareholders. To avoid this drastic measure, the courts have adopted a creative approach to resolving shareholder problems. A common approach is to give a shareholder an opportunity to buy out the disgruntled shareholder, or vice versa, after a proper valuation of the shares. An order to wind up the company will only be made if the share purchase does not take place. If the company owns land as well as a business, the court may order that the land be appraised by an independent appraiser and that the business be appraised separately by an independent qualified accountant. The bottom line is that the courts strive to implement a solution to dissolve the shareholder relationship in order to avoid the dissolution of the company itself.

CITIZENSHIP

Citizenship

There are new amendments to the federal Citizenship Act. The Act has been amended largely in response to recent changes to U.S. immigration policy which now requires all travellers to present valid passports on entry to the U.S. Knowing that this change was coming, many Canadian residents, who assumed that they were Canadian citizens, applied for Canadian passports but were denied because they were actually not Canadian citizens.

Among the new amendments, the Act restores Canadian citizenship to those who were forced to renounce their Canadian citizenship when they became citizens of other countries. Dual citizenship was not permitted prior to 1977. It also restores citizenship to those who became citizens when the first Citizenship Act was passed on January 1, 1947 but who subsequently lost it for one reason or another. These include people born in Canada prior to 1947 and war brides, as well as British subjects who lived in Canada for at least five years before 1947. The restoring of citizenship will be retroactive to the date the person lost citizenship.

One of the significant changes is a limitation on who is automatically entitled to citizenship. Previously, the Act permitted Canadians to pass their citizenship on to endless generations of children born outside of Canada. This is no longer the case. Citizenship may now only be passed down to the first generation of children born outside of Canada. One of the parents must have been born in Canada or became a Canadian citizen after immigrating to Canada. However, all children born to a Canadian parent working outside of Canada for the federal or provincial governments or serving with the Canadian Forces will be granted Canadian citizenship regardless of the generation in which they were born outside of Canada.

COLLECTIONS

Enforcing a Judgment for Money

A successful lawsuit leads to a judgment for money but not to payment of the judgment. If the defendant does not voluntarily pay the judgment, the plaintiff must commence enforcement proceedings against the defendant. There are two common ways to enforce a judgment.

One way is for the plaintiff to issue a court document called a writ of seizure and sale. The writ is filed with the sheriff of the county and empowers the sheriff to enforce the judgment. The plaintiff directs the sheriff to enforce the judgment by, for example, telling the sheriff to attend at the defendant's bank branch and seize money in the defendant's bank account to satisfy the judgment. When filed in the registry office, the writ also acts as a lien against land owned by the defendant in the county.

Another way to enforce a judgment is for the plaintiff to seize the defendant's wages. If the plaintiff knows where the defendant works as an employee, the plaintiff may commence garnishment proceedings to seize ("garnish") the wages. The plaintiff issues a court document called a notice of garnishment, which sets out what is due and owing, and sends it to the employer. The employer is obligated to hold back a portion of the defendant's wages from each paycheck and send it to the sheriff who, in turn, sends it to the plaintiff. If the employer fails to co-operate, the employer may be liable to the plaintiff for the amount that should have been held back.

For a defendant who owns land or earns wages that can be seized, it is prudent to pay the judgment and avoid further legal costs and the risk of a bad credit rating.

Collecting on a Money Judgment

A successful lawsuit for money owed leads to a judgment but it does not, inevitably, lead to payment of the judgment. If the defendant does not voluntarily pay the judgment, the plaintiff must commence enforcement proceedings against the defendant. This is like a separate lawsuit after judgment that the plaintiff must get involved in and it is sometimes a difficult and frustrating process for the plaintiff.

If the judgment is in the Small Claims Court, one of the ways the plaintiff may start the enforcement proceedings is by requesting that the Clerk of the Court issue a Notice of Examination. The plaintiff may simply mail this Notice to the defendant. The examination is commonly called a judgment-debtor examination. Because there is now a judgment against the defendant, the defendant is called the debtor and the plaintiff is called the creditor. Once the debtor receives the Notice of Examination, he is required, by law, to complete a Financial Information Form and send it to the creditor. This form has sections on monthly income and monthly expenses to be completed by the debtor, as well as the requirement that the debtor list ongoing debts, such as credit cards, and list and value assets owned by the debtor. At the judgment-debtor examination, the creditor has a wide range of enquiry. Areas identified in the court rules include the reason for non-payment, debts owed to the debtor, and whether the debtor has disposed of any property either before or after the judgment was made.

Sometimes, the debtor will not show up for the examination. The only remedy that the creditor has at this point is to obtain a court order requiring the debtor to attend an examination. This time the creditor must arrange to have the debtor personally delivered the court order and a new Notice of Examination. If the debtor does not show up at the second examination, the creditor may then ask the court for a contempt hearing because the debtor has refused to comply with the court order. The Clerk of the Small Claims Court will provide the creditor with a Notice of Contempt Hearing and the creditor must again have the debtor personally delivered the Notice. The contempt hearing is heard before a judge of the Ontario Superior Court of Justice, not in the Small Claims Court.

The Superior Court has a similar collection process for judgments in that court. If the debtor is now living in another province, that province will have legislation to enforce the Ontario judgment in that province. The Ontario judgment will have to be registered in the superior court of the other province before the creditor may start enforcement proceedings in that province.

CONSTITUTIONAL LAW

Constitutional Law

Canada is governed by a federal constitution. The main constitutional documents are the Constitution Act, 1867, (formerly known as the British North America Act, 1867) and the Canadian Charter of Rights and Freedoms. In our federal system, sovereignty is divided between two levels of government. The constitution distributes powers and responsibilities by two lists of categories or classes. One list is for the federal parliament, the section 91 powers. The other list is for each of the provincial legislatures, the section 92 powers.

By far the most important of the class of subjects assigned to the exclusive jurisdiction of the provincial legislatures in section 92 is that of "property and civil rights in the province" since all legislation affects civil rights in one way or another. Some authorities have viewed the subject of "property and civil rights" as encompassing the entire field of law-making apart from criminal law.

The Constitution Act has divided responsibility for criminal law between the federal and provincial levels of government. Under section 91(27), the federal parliament is given the exclusive power to enact criminal law and criminal procedure. However, the enforcement of the criminal law is allocated to the provinces pursuant to section 92(14), which provides that the provinces have exclusive power in relation to the "administration of justice in the province." Thus, the provinces have the right to lay charges, to prosecute offences, and to establish and maintain police forces. Criminal prosecutions are also conducted in courts established and maintained by the provinces.

In our federal system, the judiciary has the authority to resolve disputes over the distribution of powers in order to ensure that neither level of government exceeds the powers that are allocated to it under the constitution. Over the last century, there have been many important decisions about our constitution. Quite a few of them were made in England by the Judicial Committee of the Privy Council which was the court of last resort for appeals from Canada via the Supreme Court of Canada until 1949 when it ended.

The Rule of Law

The preamble of the Canadian Charter of Rights and Freedoms begins with the phrase; "Whereas Canada is founded upon principles that recognize the supremacy of God and the rule of law." The "rule of law" is a cornerstone of Canadian constitutional order and it is expressed in our lives in various ways. Most importantly, the Constitution Act itself states that any law that is inconsistent with the provisions of the Constitution is of no force or effect. Statutes enacted by the federal parliament or a provincial legislature which conflict with the Constitution are invalid and, technically speaking, do not become law. Since any law which is inconsistent with the Constitution is invalid, any actions or decisions taken by government officials in reliance on such law are also invalid since these actions or decisions will have been taken without legal authority. The application of constitutional law, therefore, primarily focuses on whether particular laws are valid or invalid under the Constitution.

In order for the rule of law to work, there must be the assurance of an independent judiciary. There must be a system of legal representation through an independent legal profession. And there must be effective and impartial enforcement of law and order through police services. These are necessary for, and protected by, the rule of law. The maintenance of the rule of law would be impossible if unconstitutional laws could not be challenged in the courts. As a result, the Supreme Court of Canada has held that the guarantee of access to the courts for the determination of a person's legal rights is embodied in the rule of law. So, the next time you read in the newspaper that someone is challenging a particular law as being unconstitutional because it violates a provision of the Canadian Charter of Rights and Freedoms, the rule of law is at work.

CONSTRUCTION

Construction Trades and Property Owners

A construction tradesman, whether electrician, plumber, or carpenter, may find himself not being paid for work performed for a property owner. The tradesman's work improves the value of the property and makes the property owner subject to a "construction lien." The tradesman may register the construction lien against the property to protect himself. This lien acts like a mortgage securing the property as collateral for the value of the work performed until the property owner pays what is due and owing.

Registering a lien on a property is a fairly simple matter of filing certain forms in the registry office where the property is situated. That is why it is often thought that, when a construction tradesman has not been paid, he should lien the property. But registering the lien is just the beginning. A registered lien is only valid for 45 days. For the tradesman to "perfect" the claim for lien, other legal steps must be taken. The tradesman must commence a lawsuit with a statement of claim and then obtain a "certificate of action" from the Registrar of Titles. The certificate declaring the lawsuit then must be registered on the property within the 45 day period.

Where a relatively small amount of money is involved, taking the construction lien route, with court appearances, may not be the most cost effective route to collect a construction debt. If the construction tradesman knows that he can collect from the property owner once the dispute is over, a simple lawsuit for collecting the debt may suffice.

Construction Woes

Many cottagers from the city have moved here to settle permanently. Some have built their dream home where once was a 1950's style summer cottage. This is the true story of the construction of a dream home gone bad. The owners hired a close friend who was a builder. Relying on the good relationship they had, they did not bother to enter into a building contract with their friend. Nor did they put together detailed architectural plans to guide the friend in the construction of their home. They simply agreed with their friend to build a 2000 square foot home based on a sketch for a price of about $200,000.

Excavation began in order to prepare the site and concrete footings were poured in the summer of 2002. Basement work was then completed and the framing of the home started. Before long, disagreements arose between the parties about alleged defects in the footings and foundation and in the design and construction of the framing. Construction work stopped by December 2002. In 2003, the friend sued the owners for $100,000 for work and materials supplied. The owners counterclaimed for $250,000 to correct deficiencies and complete the construction.

There was a seven day trial. The chief building official of the township where the home was built (not in Haliburton) testified that the house met all building code requirements while it was under construction. In a lengthy judgment, the trial judge awarded the contractor friend $80,000 for the work and materials supplied despite the owner's counterclaim for defective workmanship. The owners testified that the official was wrong but it appears from the evidence at trial that their lawyer did not provide the court with expert testimony about the defective workmanship. After the trial, the owners hired experts who provided engineering reports that indicated significant deficiencies with the structure. Based on the reports, a new building official for the township issued a Stop Work Order, an Unsafe Order, and an Order not to Occupy until the defects were remedied. Today, six years later, the owners have a judgment against them for $80,000 on top of their own legal expenses and need another $300,000 to finish the house. I am told that, next month, the local sheriff of the township is slated to auction off their dream home. They never even got to live in it.

CONSUMER PROTECTION

Consumer Protection

In earlier days in Toronto, there used to be door-to-door sales people who would come around trying to sell you a vacuum cleaner or the ten volumes of the Encyclopaedia Britannica. Today, there still are door-to-door sales people selling the usual goods but they now also sell such things, as internet services and other telecommunication products. In 2002, Ontario enacted a new Consumer Protection Act consolidating 6 older consumer protection laws and reforming the area to reflect today's technological world.

A typical example of consumer protection under the new Act is a sale in your own home. If you purchase goods or services from a door-to-door sales person, you have a right to cancel the sale at any time from the date of signing the purchase agreement until 10 days after receiving a written copy of the agreement. The 10 day period is usually referred to as the "cooling-off period." Such a period of time allows a consumer an opportunity to have second thoughts about the purchase. All the consumer needs to do is to notify the seller of the decision to cancel. The consumer need not give a reason. The seller has 15 days to return your money and also has the right to the return of the goods by either picking them up or paying for the costs of sending them back. You should be aware that this consumer protection does not apply if you buy the goods or services at the seller's place of business or other sales locations, such as a market place, an auction, a trade fair, or at your office.

There are other types of contracts which are also protected for consumers. Pre-paid goods or services, where some part of the contract occurs in the future, such as a fitness membership, are protected. Time share agreements and internet agreements are also protected.

Compared with city dwellers, the residents of the County of Haliburton are not pestered as much by door-to-door sales people but the same consumer protection applies here.

Consumer Agreements

The Consumer Protection Act received Royal Assent on December 13, 2002 but the legislation could not be proclaimed in force without the regulations which detail the many requirements. After drafts of regulations in 2003 and 2004, a final regulation was introduced in 2005 and passed. So, although the legislation was in place in 2002, it did not come into force as law until July 30, 2005.

A consumer agreement is an agreement between a supplier and a consumer in which the supplier agrees to supply goods or services for payment. The agreement is typically drafted by the supplier. The new Act sets out many rights and obligations which now apply to all consumer agreements. The Act provides that any ambiguity that allows for more than one reasonable interpretation of an agreement will be interpreted in favour of the consumer. "Fine print" is pretty well abolished. If a supplier is required to disclose information in the agreement, the supplier cannot hide it in fine print. The information must be delivered in a form which the consumer can easily read.

The goods sold to a consumer are subject to an implied warranty that they are fit for the purpose intended. In other words, if a supplier sells a "forever" sharp bread knife that is rust-free, it had better work. Prior to the new Act, suppliers of personal development services, such as services for fitness and diet, were not subject to an implied warranty. Now the supplier is deemed to warrant that the services supplied under a consumer agreement are of a reasonably acceptable quality.

If a consumer agreement includes an estimate, the supplier cannot charge the consumer an amount that exceeds the estimate by more than 10 per cent. If the supplier tries to charge more, the consumer may demand that the supplier provide the goods and services at the estimated price.

Lemon Law

You buy a brand new snowmobile with state of the art technology from a local dealer. You take it out for its first weekend trip of the winter season. Within 10 minutes of using the snowmobile, it bogs down, or cuts out, on you despite the fact that your hand is on the throttle giving the engine gas. The bogging down occurs sporadically during the course of the weekend trip. Sometimes it happens in five minute or ten minute intervals, or nothing would happen for one hour and then it would occur again.

You deliver the snowmobile back to the dealer to get it repaired. The dealer and the manufacturer think the problem is with the computer that controls the snowmobile. They re-programme the computer and tell you that everything is fine now. You go on another trip. Same problem. The dealer repairs it again. You go on another trip. Same problem. You ask the dealer for your money back. The dealer says no. You sue the dealer and the manufacturer on the basis that you bought "a lemon".

In these circumstances, a court will likely make a finding in your favour against the dealer. The test is this: the snowmobile is "a lemon" if it completely fails to function for the purpose intended despite repeated attempts to repair it. There are two legal principles at work in lemon law. There is a fundamental breach of the contract with the dealer because you did not get what you bargained for. There is also legislation that protects you, the Sale of Goods Act. Every purchase of goods comes with an implied warranty that what you purchased works. The snowmobile dealer is liable because it breached the implied warranty.

What about the manufacturer? In many cases, manufacturers give you an express warranty only to repair defective parts. In this case, since you did not buy the snowmobile from the manufacturer, the manufacturer is not liable for the breach of contract or the breach of the implied warranty which is part of the sale of the goods. It is only liable within the terms of its express warranty to repair defective parts. A court may find that the manufacturer is only liable for the cost of a new snowmobile computer. However, if personal injury had resulted from the bogging down, such as a rear-end collision by another snowmobile, the manufacturer may be directly liable because of negligent manufacture. If the vehicle had been a truck used for business instead of a snowmobile, the manufacturer may be liable to the truck owner for loss of profit.

CONTRACT

The Law of Contract

The law of contract governs our lives every day in many ways from hiring a tradesman to purchasing a product. The traditional theory of contract is that it is based on a bargain. A bargain requires an offer, the acceptance of that offer, and the exchange of "consideration" between the parties to the contract. For example, a vendor offers to sell an appliance to a person for $50 and that person accepts the vendor's offer. The exchange of offer and acceptance gives rise to an enforceable contract for the sale of the appliance. The vendor's contractual consideration is the appliance. The purchaser's contractual consideration is the $50 payment. Each party to the contract acquires a mutual obligation to the other party to exchange the consideration promised. If either party fails to perform the obligation, there is a breach of the contract and the other party may enforce it in court.

Some cases defy the traditional theory of contract because they cannot be explained by a bargain analysis. An example is a "unilateral" contract. Everyone has seen an advertisement offering a reward for finding a missing pet. A unilateral contract is created between the parties when a person responds to the offer of a reward. The "promisee" need not communicate to the "promisor" that he or she will look for the missing pet. The offer is accepted by the promisee's performance, that is, by looking for the pet. If the promisee finds the pet and returns it to the promisor, the promisee is entitled to the reward. Fortunately, in this example, there will be a happy owner waiting with open arms and the reward will be paid. However, in other circumstances where the reward is not forthcoming, the unilateral contract is enforceable in court.

An objective standard is applied to determine whether a contract arises between the parties. Although the actual intentions of the parties are considered, they are not as important as what a reasonable person would conclude about the parties' actions despite what they actually thought.

Certain contracts must be in writing, such as an agreement of purchase and sale relating to land. However, many contracts are simply oral agreements. If an oral agreement meets the objective standard for establishing a contract, it is as enforceable in court as a written contract.

Frustrated Contracts

Believe it or not, there is such a thing as a frustration of a contract. The "frustration" has nothing to do with people's feelings. It is governed by the doctrine of frustration of contracts at common law and under the Frustrated Contracts Act. The frustration may come about when the parties to a contract cannot perform it, or cannot continue to perform it, due to some outside event not related to the conduct of the parties or contemplated by them. There can be no frustration if the outside event results from the voluntary act of one of the parties, or if the possibility of such event was contemplated by the parties and provided for in the agreement. Illness or physical incapacity is an example. A contract of employment may be frustrated, or declared to be at end without compensation to either party, due to an employee's illness or incapacity. This will depend on the terms of the contract, the type of employment, the expected duration of employment, and most importantly, the prospects of recovery for the employee.

The Tenant Protection Act expressly provides that the doctrine of frustration of contracts and the Frustrated Contracts Act apply to tenancy agreements in Ontario. Here are the facts of a decided case. A tenant leased a room located above a laundromat for one year. The laundromat created a lot of heat from the clothes dryers and the tenant's room had poor cross-ventilation. The landlord had installed air conditioning in the room to compensate for the poor ventilation. However, the lease did not require such installation. For a period of three months in the summer, the air conditioning was not working because it broke down. Two months before the end of the lease, the tenant informed the landlord that she was being transferred in her employment, and thereupon vacated the premises. The tenant refused to pay the rent for the last two months because the air conditioning had not been operating for the three month period in the summer.

The landlord sued for the two months rent but the action was dismissed. One of the legal grounds for the court's dismissal was that the lease had been partially frustrated because of the breakdown of the air conditioning equipment. Was the case correctly decided on the basis of a frustration of contract? I will leave it to you to decide.

Contract Interference

Tim Horton's was a franchisor and had a franchise agreement, or contract, with Donut King, a franchisee, which ran 12 Tim Horton franchises in Ontario. A male employee of Donut King was apparently sexually harassing female employees of Donut King which was contrary to Tim Horton's workplace harassment policy with Donut King set out in the franchise agreement. This led to the termination of the franchise agreement between Tim Horton's and Donut King. Tim Horton's then sued the Donut King employee, among other defendants, alleging that the employee had interfered with Tim Horton's economic relations with Donut King by inducing the breach of contract. The basis of this lawsuit is the tort ("the wrong") of intentional interference with contractual relations. Tim Horton's had to prove five things against the employee: (1) knowledge of the contract, (2) an intention to bring about a breach of the contract, (3) conduct which results in the breach, (4) damage to Tim Horton's, such as loss of profit, and (5) the lack of anything that might justify what the defendant did. Fortunately for the employee, the court did not think that he intended to bring about a breach of the franchise agreement and he was let out of the lawsuit.

Other scenarios may bring a different result. A high-powered insurance agent has a binding contract with his broker and makes a lot of money for the broker. The competing broker in town offers this agent a better deal and the agent moves over to the competing broker. Has the competing broker interfered with economic relations?

The position of professionals is another matter. For example, a lawyer may advise a client that it is a good idea to breach his employment contract because the company is in financial trouble. A doctor may recommend to a patient that he should leave his job because it is too stressful. Neither professional will be exposed to the scourge of litigation for performing their professional duties. Even the president of a company is protected from an allegation of contractual interference when he or she decides in good faith that it is not in the best interests of the company to perform a contract.

CRIMINAL LAW

Sentencing in Criminal Law

Punishment for crimes committed, of course, goes back millennia. The biblical phrase "an eye for an eye" readily comes to mind. In Canada, the criminal law, including the law of sentencing, derives almost entirely from the Criminal Code which was first enacted in 1892. The Code owed a great deal to English law and, prior to 1892, the criminal law of England, including its law of sentencing, applied to Canada.

Sentencing is the modern process for determining an appropriate sanction for a crime committed. Sentencing comes in various forms and in various degrees because the fundamental principle under the Criminal Code is that a sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender. Punishment has been the most common sanction throughout history because people viewed it as a retribution or revenge for the crime. It has a deterrent value as well. It is meant to deliver a message to the individual offender to deter him or her from future crime. It is also meant to be a general deterrence to others who may be contemplating crimes and know that punishment is the end result when caught.

Incarceration, the strictest form of sentencing, removes the criminal risk from society for the period of the sentence. Obvious examples are imprisonment for murderers and sex offenders. But, sentencing may include the positive element of post-offence rehabilitation, not just the negative element of deterrence. Rehabilitation will depend on the nature of the offence committed. Thus, a drunk driving conviction may require the offender to attend programmes on alcohol addiction and abuse. A "John" who is convicted for picking up a police officer posing as a prostitute invariably leads, in Toronto, to a "classroom" programme with other Johns conducted by a former prostitute who explains the world she came from.

As in most areas of the justice system, there is an element of discretion in sentencing which rests heavily on the shoulders of the judge. A judge must consider the many aggravating and mitigating factors in the decided cases when sentencing an offender. Aggravating factors include the brutality of the offence, the use of weapons, and multiple victims or incidents. Mitigating factors include a guilty plea, evidence of remorse, and prior good character.

Identity Theft

I was recently told a story about identity theft. My friend was sitting in his office in Haliburton one day, and unknown to him, his charge card was being used in Hamilton at a sporting goods store to purchase over $4,500 of sporting goods. He went to Toronto the next day to do some shopping. While shopping, his charge card was suddenly rejected on a purchase. He thought that was strange and so he phoned the charge card company. The charge card company told him that they had already left a phone message in Haliburton asking to verify the large sporting good purchase in Hamilton because it was not the usual pattern of his purchases and raised suspicion. The charge card had reached its limit and so the Toronto purchase was rejected for that reason. Of course, my friend was nowhere near Hamilton the day before.

The charge card company explained to my friend that they regularly monitor patterns of purchase to detect fraud. An unusual purchase pattern raises suspicions. The company said that what probably happened was that, when a normal purchase was made by my friend, and he was not keeping an eye on his card, the store swiped the card a second time using a concealed electronic device (perhaps under the counter) to copy the magnetic strip on the back. A new physical card was then created with the friend's name and with the magnetic strip. My friend's identity had been stolen.

The charge card company immediately sent my friend a new card and cancelled the old card. They conducted an investigation and determined it was fraud. My friend was not charged the $4,500. Have you noticed that most stores no longer ask for identity of the person using the charge card? The retail store had to pay the $4,500 because the store had not checked for identity.

If you do not want to be a victim of identity theft, always keep an eye on your charge card when making a purchase. Good advice, but certainly difficult to do in a restaurant, or on the Internet. Be suspicions, as well, of phone calls asking for charge card information.

"Identity theft" is really a new buzzword in the electronic age for good old-fashioned fraud. The forgery of signatures or the impostoring of a person are classic examples of identity theft.

Relitigation in Criminal Law

You may have seen the movie "Double Jeopardy" about an accused and a murder. There is a very old principle of criminal law that an accused may not be charged twice for the same offence because that would place the accused in jeopardy twice. Since about 1900 in Canada, criminal lawyers have also been applying principles barring relitigation of issues in criminal cases. This is called "issue estoppel," meaning that the relitigation of the issue or fact is estopped, or stopped, because the issue has already been decided in a previous criminal proceeding.

For example, an accused may be charged with separate and distinct offences but both offences arise from the same alleged facts. If the accused is acquitted of one of the charges, the court has made a finding that the alleged facts sustaining the charge were not proven. The issue of those alleged facts has been determined. The Crown is, therefore, estopped from relitigating this issue in the second charge. Usually, the second charge is withdrawn. The test is that the question of fact in both offences must be vital and fundamental to convicting the accused.

A decision from a jury trial, rather than from a judge alone trial, is problematic for issue estoppel when a general verdict of not guilty is rendered since it is not be possible to determine on which issue the jury based its verdict.

Issue estoppel in criminal law is not reciprocal as it is in civil law where it can be used by both sides of a dispute. It is not available to the Crown. It is solely a defence for the accused.

DAMAGES

Mitigation of Damages

The term "damages" is a lawsuit term meaning the pecuniary losses that a person ("the plaintiff") suffers as a result of the conduct of another person ("the defendant"). The term "mitigation" in the law of damages means the reduction of this loss and refers to the conduct of the plaintiff that diminished or might have diminished the loss. The basic rule of mitigation is that the plaintiff is not entitled to compensation for a loss that could have been avoided by taking reasonable action. Underlying this rule is the principle of causation. Losses that could reasonably have been avoided are losses caused by the plaintiff's failure to take the steps to avoid those losses. Those losses are viewed as losses not caused by the defendant. Thus, the plaintiff has a "duty to mitigate" but the burden is on the defendant to show that the plaintiff acted unreasonably in failing to mitigate the loss.

An example from the case law illustrates the duty to mitigate. This was a personal injury case where the plaintiff suffered a whiplash. The court stated: "With respect to general damages, she suffered a standard whiplash injury from which she suffered considerably for a period of about a year. She has no permanent disability. There is evidence that she discontinued wearing the cervical collar and discontinued therapy treatments due to pressures imposed on her by a supervisor. It was open to her to go to her Union executive to file a grievance against her supervisor's conduct in telling her to either give up her therapy or give up her job. She did not take such action although it was available. The defendant cannot be held responsible for this problem . . . The evidence is clear that the physiotherapy treatments she was receiving at the Rehabilitation Centre and the wearing of the collar was assisting her recovery. She discontinued taking the prescribed treatment and to this extent failed to mitigate her damages . . . I would assess general damages for pain and suffering at $3,000.00. In arriving at this figure, I have taken into consideration her failure to mitigate. The total of the special [loss of wages] and general damages is therefore $ 7,209.92, of which the plaintiff shall recover from the defendant 70%; that is, $ 5,046.94." In this case, there was an issue of the plaintiff's contributory negligence which reduced the total damages by 30%. Did the plaintiff act unreasonably in failing to file the grievance?

Personal Injury Damages

When a person ("the plaintiff") sues another person ("the defendant"), the plaintiff seeks remedies from the court. Most of the remedies sought are to compensate the plaintiff financially. These remedies are called damages. One type of damages is general damages in a personal injury case which are awarded for intangible losses that a person suffers due to physical injuries allegedly caused by the defendant, such as pain and suffering and loss of enjoyment of life.

In 1978, a group of damages cases called "the trilogy cases" was decided by the Supreme Court of Canada. At that time, the court placed a ceiling of $100,000 on personal injury damages. The court was very concerned that such awards could vary too greatly across the provinces and escalate beyond acceptable levels as had happened in the United States. Over time, the ceiling, or rough upper limit, has increased to take into account inflation. Thus, by the year 2000, the ceiling was in the range of $275,000.

When a plaintiff sues for pain and suffering, the plaintiff must work within the confines of the rough upper limit and should not expect a lot of money for minor injuries. A person who ends up in a wheel chair with little, if any, use of his or her arms, could expect to be in the upper limit range while a slip and fall accident causing the plaintiff some temporary back strain would probably be worth no more than a couple of thousand dollars. Although it would appear that the trilogy cases set up a kind of "meat chart" analysis, the relevant question for the court is not simply how serious the plaintiff's injuries are but what function money can serve in the circumstances. The Supreme Court expressed it this way: "[The award] should not depend alone upon the seriousness of the injury but upon its ability to ameliorate the condition of the victim considering his or her particular situation. It, therefore, will not follow that, in considering what part of the maximum should be awarded, the gravity of the injury alone will be determinative. An appreciation of the individual's loss is the key and the "need for solace" will not necessarily correlate with the seriousness of the injury." The court also stated: "The award must be fair and reasonable, fairness being gauged by earlier decisions, but the award must also of necessity be arbitrary or conventional. No money can provide true restitution."

Punitive Damages

One type of damages you may read about in the newspaper, especially about cases in the United States, is punitive damages. As the name suggests, punitive damages are designed to punish a wrongdoer. To meet the test in Canada, the conduct of the wrongdoer must not be ordinary conduct. The conduct must be so high-handed, malicious, vindictive, and oppressive as to offend the court and warrant the court's censure as being unacceptable to community standards.

One Ontario case of interest dealt with fraudulent transfers of property and mortgages by one of the defendants to his wife, friends, certain companies, and a family trust. The court found that the family trust was a complete sham because that defendant was really the owner indirectly of all of the assets of the trust. What really got the court upset, however, was how the defendants conducted their defence in the litigation. Here are some of the judge's comments: "In light of the conduct of the defendants throughout the proceedings to obfuscate, delay, be less than forthright in their evidence, their conduct warrants punitive damages . . . This was accomplished through lies, deceit, false affidavits, and fraudulent conduct involving municipal authorities. All of this behaviour, directly or indirectly, had a profound affect on the plaintiffs and the litigation." The plaintiffs had already been awarded $2 million in general damages. The court added another $200,000 in punitive damages.

In England, punitive damages are more narrowly applied than in Canada. They are limited to situations such as oppressive or arbitrary conduct of government officials or where the defendant's conduct results in profit that cannot be fully restored to the plaintiff by general damages.

The United States, of course, is notorious for awarding large punitive damages compared to Canada. One reason is that they have more jury trials. U.S. juries hear evidence relating to the harm not only suffered by the plaintiff but also to the harm suffered by third parties from the systemic wrongdoing of the defendant. Recent U.S. examples are the cases of corporate financial wrongdoing where juries are willing to "make an example" by awarding large punitive damages. I wonder what will happen to Lord Black.

Death and Damages

In the early days of the law, if you were the breadwinner and died because of the wrongful act of another, the family had no recourse in the courts for compensation ("damages") against the wrongdoer. The saying was that the wrongdoer was better off killing the breadwinner than injuring him or her because, if the breadwinner survived, he or she could launch a lawsuit for damages for injuries suffered. This changed in England, where much of our law originated, in the 1850's. Today, all of the provinces in Canada have legislation in place permitting family members to launch a lawsuit.

The damages in an action for wrongful death are not for the grief of the loss or pain and suffering but for actual financial losses. When the breadwinner dies, there is great impact on the spouse and children because of the lost financial support. Claiming this loss from the wrongdoer is the primary claim for wrongful death. A car accident is an example of wrongful death. Calculating this loss is an accounting issue and will depend on such things as the age of the deceased breadwinner, the type of employment and benefits, and how young the dependant children are at the time of death.

What about the wrongful death of a woman who was an unpaid homemaker? This was debated by the Supreme Court of Canada as early as the 1880's when a wife was killed at a railway crossing. The court was divided. Some judges viewed the loss of homemaker services, not as an economic loss, but as a "sentimental loss" not quantifiable in dollars. Surprisingly, given the times, the majority of the court disagreed. Here is what one of them stated: "I must confess myself at a loss to understand how it can be said that the care and management of a household by an industrious, careful, frugal and intelligent woman, or the care and bringing up by a worthy loving mother of a family of children, is not a substantial benefit to the husband and children; or how it can be said that the loss of such a wife and mother is not a substantial injury but merely sentimental, is, to my mind, incomprehensible. And if the injury is substantial, the only mode the law could provide for reimbursing the husband and children is by a pecuniary compensation, and so, in my opinion, in the eye of the law, the injury is a pecuniary injury." Thus, in 1885, the court ordered that the railway pay the family the, then, large sum of $5,800.

Compensation for Inconvenience

Many people represent themselves in the small claims court without a lawyer. They are described by the court as "self-represented" and they come to court seeking compensation ("damages") for some wrongdoing. The wrongdoing could be the result of a negligent act or a breach of contract. The damages they seek are their direct losses, such as personal injury as a result of an accident, or the cost of hiring another tradesman because the tradesman they contracted with walked off the job with the deposit in hand.

Often, the self-represented litigant will also ask the court for damages for their lost time and their frustration or anger caused by the wrongdoing. While these damages are not a direct result of the wrongdoing, a court may compensate a litigant for such damages if the litigant can show the court that the damages are not too remote from the wrongdoing. The basic principle of damages is that the plaintiff is entitled to be put, so far as money can do it, in the position that the plaintiff would have occupied if the wrong had not been done.

The damages claimed for lost time and frustration or anger are often called damages for inconvenience. One example is in the purchase of a car. You buy a car thinking that it is a demo when it is really a used car. In the first year of your ownership, you have to bring the car in for repairs almost every month. In such a case, a court may award you compensation for the inconvenience arising from the repeated trips to the repair shop because they arose from the misrepresentation made when you bought the car. Another example is in the construction of a house. The contractor promises you that the house will be completed by a certain date. The house is not fully completed by the promised date but you have to move into it because you sold your previous house based on the completion date. You live in the completed part of the house while construction continues all around you for the next month. A court may compensate you in these circumstances. But remember this is not the United States. In both examples, the court will likely only award you $1000 or $2000 as damages for the inconvenience, if that.

DOG OWNERS

Dog Attacks

Dog owners in the County of Haliburton, as elsewhere in Ontario, are governed by the Dog Owners' Liability Act when a dog attack occurs. The Act provides that a dog owner is liable for damages resulting from a bite or attack by the dog on another person or domestic animal. What the dog owner must understand is that this legislation mandates an absolute or strict liability regime for dog owners. When the dog attacks, the dog owner is liable. It does not matter that the owner was careful with the dog, or did not know it might hurt somebody, or made efforts to prevent it from causing injury. One Ontario judge has described the situation this way: "This statute recognizes that all dogs have the potential to become dangerous. An owner keeps it at his peril and has a duty to properly control his dog and to prevent it from harming others. Where the dog does cause harm, the owner is strictly liable regardless of fault because a duty has been breached."

The definition of "owner" under the Act includes "a person who possesses or harbours the dog." Certain conditions must be met for a person, who is not the licensed owner, to be deemed to harbour a dog. The intention of the person must be to take care of the dog. Taking care of a dog requires, among other things, sheltering it, feeding it, and exercising it. The person must also temporarily assume the responsibilities toward the dog which a dog owner customarily assumes, such as discipline. A person who simply allows the dog to be in the person's home or on that person's property, in the presence of its owner when the dog attacks someone, does not make that person a harbourer, or "owner," of the dog within the meaning of the Act.

The only legal help a dog owner has under the Act is the extent of liability. The court may reduce the damages awarded in proportion to the degree to which the fault or negligence of the victim caused or contributed to the damages. Conduct, such as aggressive body language towards the dog or loud and abusive shouting that would incite the dog to retaliate are examples that may warrant a reduction in damages.

Many dog attacks occur with young children. The courts have held that the mere touching of a dog by means of a friendly hug or pat does not warrant a reduction in damages. Attacks to the face are common. In one dog bite case, the court stated: "Damages for scars and lacerations arising out of different kinds of injuries attract the higher end of the scale when the scars are to a plaintiff's face, and remain visible and predominant, as opposed to scarring which is cosmetic only and hidden, either in the hairline or in other lines in the face."

DRINKING AND DRIVING

Drunk Driving

It is a criminal offence to drive a motor vehicle with over 80 mg per 100 ml of alcohol in your blood. This is commonly called an "over 80" charge and applies whether or not you show any physical signs of impairment due to the alcohol. The over 80 offence does not take into account the tolerance of alcohol which some people have, thus beguiling the physical signs of impairment. It is also an offence to drive while your ability to drive is impaired by alcohol as evidenced by physical signs of impairment whatever your blood alcohol level is. While the over 80 charge is proven by the technical evidence of breathalyzer samples, impaired driving requires evidence based on a police officer's observations. Physical signs of impairment, as you can imagine, include slurred speech, bloodshot eyes, and problems with walking the line when invited to police headquarters. In practice, both charges are laid when the blood alcohol level is over 80 but one charge is dropped or stayed, usually the impaired driving charge, when the other charge is proven because you cannot be convicted twice for an offence based on the same material facts. Double jeopardy!

The principles of sentencing which are applied to other criminal code offences apply to drinking and driving offences. In considering a fine or imprisonment in addition to a suspended driver's licence, the court considers mitigating and aggravating factors when sentencing the convicted person. Some of the aggravating factors are: a recent criminal record for driving charges, committing the offence when disqualified from driving, a blood alcohol level of over 160, bad driving on a busy road, and causing an accident, especially physical injury. Mitigating factors include: being a first offender, simply being stopped by the RIDE programme, no evidence of bad driving, and the completion of alcohol treatment or counselling programme as a result of previous drinking and driving convictions.

Tavern Drinking

There are many sad stories in the law books about drinking in a tavern and driving home. In one case, a man had been drinking in a tavern where he regularly drank to excess. He lost control of his car, hit a rock wall in a single car accident, and was rendered quadriplegic as a result. In another case, two men were drinking in a tavern for some time. One of the men left the tavern and went to his car which was located in the tavern parking lot. He was tired and concerned about driving after drinking several beers. He sat in the passenger side of the car with his feet up. A few minutes later, the other man went to the car from the tavern. The man in the car told him to come back in about an hour to check and see if he was ready to drive. The other man went back to the tavern. The man in the car turned on the car radio and placed the car keys in the glove compartment. The next thing he recalled was hearing the other man shouting a warning. He was still in the passenger seat. The other man was driving the car, lost control, and was killed.

Many tavern owners have been sued. The law is clear, both under the general law and under the Liquor Licence Act, that a commercial vendor of alcohol, such as a tavern, has a duty to its patrons and others to ensure that the tavern does not serve alcohol in quantity which would either intoxicate or increase the patron's intoxication. Taverns do not escape liability simply because a patron does not exhibit any visible signs of intoxication. And if drinks are refused when a patron exhibits signs of intoxication such as being too loud, starting arguments, knocking over drinks, falling down, creating problems for the staff, or upsetting other patrons, that is not good enough. Taverns also have a duty to take affirmative action to prevent intoxicated patrons from driving. Where it is reasonable to expect that a patron has come by car, there is a heavier duty on the tavern staff to keep an eye on the patron when the patron departs to check to see if the patron is driving and to arrange safe transportation, such as, a taxi.

Many tavern owners and their servers are certified with the Server Intervention Program set up by the Addiction Research Foundation of Ontario to assist them to evaluate and monitor patrons' drinking and to prevent intoxicated patrons from driving.

Social Hosting

Everyone entertains guests at their homes and often there are some refreshing beverages served. Some parties do get a little out of hand (even I have been to them) and excessive alcohol consumption by your guests can occur. Last year, the Supreme Court of Canada rendered their first decision in what they called social hosting, that is, home entertaining. Here are the tragic facts of this case. There was a New Year's Eve party at a private home. The party was a BYOB party. The host provided only a small glass of champagne to each guest at midnight. One of the guests left the party at 1:30 a.m. He was drunk and drove his car right into oncoming traffic and collided head-on with another car. One of the passengers in the other car was killed and three others seriously injured. The driver had drunk 12 beers at the party over two and a half hours and blew well over 80: 225 mg per 100 ml at the time of the accident. He is now serving 10 years in jail.

A unanimous seven member panel of the court heard from the plaintiffs and the defendants but also from MADD Canada and the Insurance Bureau of Canada. The law relating to duty of care can be complicated and is often fact driven with results depending on the case. The court recognized that claims against private hosts for alcohol-related injuries to the motoring public caused by a guest constitute a new category of claim under the law. In other words, a duty of care may or may not arise depending on the facts. On the particular facts of this case, the host had no duty of care to the motoring public partly because it was a BYOB party. There were no facts in the case to prove that the host was implicated in creating a risk to the motoring public.

"It might be argued that a host who continues to serve alcohol to a visibly inebriated person knowing that he or she will be driving home has become implicated in the creation or enhancement of a risk sufficient to give rise to a prima facie duty of care to third parties . . . We need not decide that question here. Suffice it to say that hosting a party where alcohol is served, without more, does not suggest the creation or exacerbation of risk of the level required to impose a duty of care on the host to members of the public who may be affected by a guest's conduct."

The Supreme Court case is new. It recognizes, in principle, the duty of care of social hosting and will be applied depending on the facts. In the meantime, be careful when hosting parties.

EMPLOYMENT

Dismissal from Employment

An employer and employee are not married for life. Often, an employer will bid farewell to an employee for business reasons, such as downsizing, and, in these circumstances, the employee will be dismissed with compensation based on the length of employment.

Dismissal from employment without compensation involves the issue of whether the employer dismissed the employee for just cause, that is, for good reason. Examples of just cause are poor work performance or absenteeism from work. If just cause is proven, the employer is not required to compensate the dismissed employee. The employee, however, may wish to argue that he or she was wrongfully dismissed, that is, dismissed without just cause, and should receive compensation.

The employee has one of two forums to contest a dismissal from employment. One forum is to file a claim under the Employment Standards Act with the Ministry of Labour. Under the Act, the maximum that an employer can be ordered to pay is $10,000. The other forum is the courts. An employee may sue in the small claims court for under $10,000 or in the superior court for higher amounts. An employer can only be made to respond to a wrongful dismissal allegation once, so if an employee loses in one of the forums chosen, that is the end of the case against the employer.

Constructive Dismissal

An employer and employee are not married for life. One of the ways the employment relationship is severed is by constructive dismissal. This may occur when an employer acts unilaterally to change the terms or conditions of employment. Such conduct often amounts to a repudiation of the employment contract by the employer which then permits the employee to sue for damages for wrongful dismissal.

Constructive dismissal may arise in several ways. An obvious example is money. There is very little debate that a significant reduction in the remuneration of an employee will constitute constructive dismissal. An area of dispute is whether the employee was hired to perform a particular job or whether the employer may assign the employee to other duties. Many court decisions maintain that an employer does have the right to change an employee's duties where there is no compelling evidence of the terms of the contract. However, where there is such evidence, the assignment of a new position, inferior in status and different in scope from the prior position, may amount to a demotion and hence, constitute constructive dismissal.

Another area of concern is a change in the geographic location of the workplace by the employer. The general rule is that an employer has the right to make a reasonable change in the location of the workplace provided that there is no written contract restricting relocation. In other words, an employee is not entitled to a job for life in a place of the employee's choosing. However, the employee is entitled to reasonable compensation for the move.

The issue of day to day treatment may also be litigious. An employer owes a duty to its employees to treat them fairly and with respect. An employer who subjects employees to treatment that renders competent performance of their work impossible or continued work intolerable may be faced with a constructive dismissal lawsuit.

Employment and Non-Competition Clauses

An employer and an employee may enter into a contract of employment when the employee is hired to work in a business. If the business has clients or trade secrets it wishes to protect, the employer may require the employee to sign a non-competition agreement relating to what happens after the employee is no longer working in the business. The agreement is called a restrictive covenant and it prevents a former employee from soliciting the clients of the business or from using the trade secrets of the business.

There has been much litigation over restrictive covenants. A business often seeks an injunction to stop a former employee from soliciting its clients or using its trade secrets. The former employee may defend such a lawsuit on the basis that the restrictive covenant is not enforceable as a matter of public policy because it is an unreasonable restraint on trade.

Courts scrutinize the meaning and effect of restrictive covenants. To enforce a covenant, a business must show that it has a proprietary interest requiring protection. Trade secrets are commonly protected. Clients of a business may also be protected where there is a significant degree of customer loyalty in the business. If the restrictive covenant goes beyond the immediate protection of the proprietary interest to restrain competition generally, the covenant is most likely to be struck as unenforceable because the employee has the right to use the personal skill and knowledge acquired in the former employment elsewhere.

The covenant, in addition, must be reasonable between the employer and employee in regard to geographical space and time. Covenants prohibiting client solicitations within a 20 mile radius of a business for one or two years have been upheld by the courts. An example is a local insurance broker and its clients. Unequal bargaining power is another factor considered by the courts.

Before entering into an employment contract, it is prudent for each party to the contract to obtain the advice of a lawyer on the enforceability of a restrictive covenant contained in it.

Labour and Employment Law

There are various new developments in the area of labour and employment law. You may have heard, for example, about the TTC in Toronto attempting to impose drug and alcohol testing. This is a trend among employers with employees in safety-sensitive jobs, such as driving a bus. The obvious purpose for such testing is to avoid workplace accidents caused by impairment from drug and alcohol use on the job.

There have been human rights challenges to such testing, whether on the job testing or pre-employment testing. In one case, a large multi-national company had a hiring policy requiring all applicants to pass a pre-employment drug test. One applicant was a recreational cannabis user. The applicant failed the test and challenged the policy in the courts arguing discrimination. The appellate court concluded that the policy was not discriminatory because the testing was directed at the actual effects suffered by recreational cannabis users and how this could impact on job performance.

Another hot topic these days is workplace violence. Employers are exposed to lawsuits by employees or customers resulting from injury in the workplace due to violence. This is a security issue for employers and many of the big companies now employ security officers on the job. According to the Criminal Code, a security officer is justified in using reasonable force to protect another person from a violent act. Thus, a security officer may use baton and handcuffs when facing an actively violent person without exposing the employer to a potential lawsuit. But employers may be exposed to liability for the acts of its security officer if the officer uses force that is not legally justified or uses excessive force.

There are also new provisions in the Criminal Code for prosecuting an employer for criminal negligence causing death when a workplace accident results in the death of an employee. The first successful prosecution occurred this year in Quebec. An employer was found negligent when it allowed an employee to operate a machine when its motion detector safety mechanism was deactivated. The employee was killed trying to clear a jam in the machine. The employer was fined $110,000. Surprisingly, no one became a guest of Her Majesty the Queen.

EVIDENCE

Judging Credibility

Judging credibility is considered by some to be an art. One veteran trial judge had the following to say about judging credibility:

"With respect to the oral testimony of the witnesses I have heard and observed, I am entitled to believe the whole or a part, or to disbelieve the whole or a part, of the testimony of any witness, and to weigh the evidential value of the testimony that I find acceptable and believable, and therefore, credible. Credibility concerns, generally, the assessment and weighing of the testimony of a witness. It is in essence, believability; the recognition of a witness's worthiness to be believed; the truthfulness of his testimony. Testimony that is not plausible or reasonable in itself may be rejected on that basis alone, that is, that it is not plausible or reasonable and, therefore, not worthy of belief.

There are numerous factors to be considered in determining credibility generally, and no real set of rules to follow. It is a matter in which many human characteristics, both strong and weak, must be taken into consideration. Ultimately, the task is left to good common sense and the accumulated wisdom and experience of years of ordinary, everyday living. In assessing the credibility of a witness generally, the Court may consider the integrity and intelligence of the witness, and the witness's appearance of sincerity and truthfulness in the witness stand; whether the witness was candid, frank and fair, forthright and responsive to questions asked or evasive or hesitant; and whether the witness was biased or had a personal interest or lack of personal interest in the outcome of the trial. More specifically, the Court may consider the witness's memory, the capacity to remember, and the ability to describe clearly what was seen and heard; whether or not the witness has any particular reason to assist him in recalling the precise event and what was said; and whether or not there were inconsistencies in the witness's testimony at trial, or in what the witness said at trial and on a prior occasion under oath or otherwise. Innocent discrepancies in minor matters are often unimportant. Discrepancies portrayed in detail on relevant matters may be deemed to be something more than innocent discrepancies, and they must be looked at very carefully in assessing credibility."

Judging Credibility #2

Our sage, veteran trial judge had the following additional guidelines about the art of judging credibility:

"The appearance and demeanour of the witness and the impression made as to the witness' honesty and truthfulness is also only one of the factors to consider in determining the witness' credibility. The finding of credibility should not depend solely on which witness made the better appearance of honesty and sincerity in the witness stand. If credibility was decided on that basis alone it would lead to a purely arbitrary finding, and justice would depend to a large extent on how and who made the best impression in the witness stand.

Where there are conflicting and contradictory accounts, the judge should consider what facts are beyond dispute or indisputable, add to those facts such other facts as seen very likely to be true, and then examine which of the conflicting accounts best accords with those facts. The conflicting testimony of a witness may be judged to be unreliable if his evidence is, in any serious respect, inconsistent with the undisputed or indisputable and otherwise found facts. When the judge has done his best to separate the true from the false by these more or less objective tests, the judge should consider which story is more probable. The test of the truth of the story of a witness in cases of serious conflict must be its harmony with the preponderance of probabilities which a practical and informed person would readily recognize as reasonable in the light of the existing circumstances and conditions. The judge endeavours to determine, if possible, which of the conflicting stories is more consistent with the probabilities and the surrounding circumstances and conditions when examined in the background of the evidence as a whole. "

Hearsay

You have all heard the phrase "it's hearsay." Hearsay evidence is an oral or written statement made in court by one person about a statement made out of court by another person. The object of the court evidence is to establish the truth of what is contained in the out of court statement. However, the statement is inadmissible in court.

There are two reasons for the exclusion of hearsay evidence. The out of court evidence is not given under oath and it is not subject to cross-examination. The rule against hearsay evidence is of great antiquity and can be traced back to the 1400's in England where such evidence was first rejected on the basis that it was not evidence given under oath. By 1700, the hearsay rule was well established in a growing urbanized and industrialized England and the evidence was further rejected at that time on the basis that cross-examination of the out of court person was not available.

There is an interesting exception to the hearsay rule. A hearsay statement of a dying person may be admissible in court in homicide cases provided certain requirements are met. A critical requirement is to prove that the dying person must have believed that death was imminent when the statement was made. Courts have looked at the point of death as so solemn an event that every motive to commit a falsehood is gone inducing the dying person to speak the truth before God as if under oath before a court of law.

Other hearsay statements are also admissible in court. If a person makes a statement against his or her interest, the statement may be admissible. An example is a statement made against the person's pecuniary interest, such as "I owe the money." Confessing to a crime is often considered to be a statement made against a person's penal interest. Claims by Canadian aboriginals to fishing and hunting rights over specific lands have been proven by the admissibility of oral history to establish that such activities occurred in the past.

Expert Evidence in Court

Most evidence at a trial involves testimony on subjects with which we are all familiar. Examples are testifying on the type of shoes a person was wearing when that person slipped and fell in an icy parking lot or whether the driver of a car smelled of alcohol at the time of a car accident.

However, a trial judge will at times need specialized evidence to assist in the determination of a case. This specialized evidence is called opinion evidence and often involves the issue of negligence of a professional person. Such an allegation requires proving the accepted standard in the industry for the delivery of professional services. This is done by calling an expert in the field to give an opinion on what the standard is and whether the professional on trial has met or fallen below that standard. If the professional has fallen below the standard, negligence is proven.

For example, in a medical malpractice lawsuit, a doctor will be called by each of the plaintiff and defendant to prove the accepted standard in the industry. This may involve a "battle of the experts" debating, for example, whether the standard of a doctor practising in a rural community is different from the standard of a doctor practising in a city like Toronto. Another example is a contractor who builds a house but the roof collapses due to the snow load in the winter. Was the roof properly built? Should engineered trusses have been used? These are questions to be answered by experts.

Whether your case is in the Small Claims Court or in the Superior Court of Justice, always keep in mind that you cannot prove or defeat an allegation of professional negligence without the assistance of expert evidence.

FAMILY LAW

Paternity

Who is the father? The determination of paternity is a necessary and material step in the establishment of the obligation to support a child. Unlike support and custody, which can change with different circumstances, the issue of paternity is a biological fact and a decision on it is binding on everyone, not just on the child and mother. In family law, the determination of paternity is usually bound up with an application for support. Generally speaking, courts are reluctant to make a finding of non-paternity upon technical grounds, or upon the failure to tender evidence.

A fact situation will illustrate the point. In an application for support, the mother did not appear for a blood test and did not appear in court on her application. The support application was dismissed. Another support application was brought three years later and the alleged father argued that the issue of paternity had been determined in the first application on the basis that the application was dismissed for want of prosecution because of an adverse inference drawn by the court on the failure to appear for a blood test. However, the court held that the second application was not barred because the first application was not heard on its merits. The court noted that it must be careful not to overlook the best interests of the child despite the neglect of the mother in not submitting to a blood test. The only way in which the best interests of the child could properly be determined was for the court to hear evidence on the issue of paternity and then make a determination of the issue.

However, courts may discourage the relitigation of a paternity issue between young unmarried parents. One judge has stated the reason this way: "In many circumstances such as this, when the parties enjoy a relatively pleasant relationship the "possible father" may agree to a paternity finding and later when the relationship has deteriorated or when more personal sexual information is discovered concerning the private matter of sexual intercourse between the mother and other men, i.e., other "possible fathers", the matter is sought to be placed back before the court. This does not seem to be consistent with the best interest of the child . . ."

Child Support

Child support is a fact of life when a marriage breaks down and there are children involved. One of the recent areas of concern in family court is whether a parent must support an adult child who repudiates the relationship between them. One of the more common areas is whether or not attendance in a post-secondary institution will be a sufficent reason to entitle the child to support from a parent. As a result of a seminal case in British Columbia in the early 1990's, courts now consider a number factors in determining this issue because child support is simply not a conclusion which follows automatically from proof of attendance at the institution. Relevant factors include the following: (1) whether the child is in fact enrolled in a course of studies and whether it is a full-time or part-time course of studies; (2) whether or not the child has applied for or is eligible for student loans or other financial assistance; (3) the career plans of the child, that is, whether the child has some reasonable and appropriate plan or is simply going to college because there is nothing better to do; (4) the ability of the child to contribute to his own support through part-time employment; (5) the age of the child; (6) the child's past academic performance, that is, whether the child is demonstrating success in the chosen course of studies; (7) what plans the parents made for the education of their children, particularly where those plans were made during cohabitation; (8) in the case of a child who has reached the age of majority (19 years), whether or not the child has unilaterally terminated the relationship with the parent from whom support is sought. In this seminal case, the court denied child support because the child was proceeding at a leisurely pace through the university system. In other words, the child had nothing better to do.

Spouses and Family Law

In family law, there are two kinds of relationships which create legal rights and obligations between spouses, married relationships and common law relationships. In order for such rights and obligations to arise between common law spouses, the spouses must have been cohabitating continuously for a period of three years, or the spouses will be considered to be in a common law relationship if they are in a relationship of some permanence as the natural or adoptive parents of a child.

Married spouses and common laws spouses have the same rights and obligations with respect to financial support if the relationship breaks down. However, that is not the case with respect to property, such as the house that they may be living in. Under The Family Law Act, only married spouses may apply to the court for an equal division of the property they may own, such as the matrimonial home. The intention of the Act is that the value of all assets acquired by either or both spouses by virtue of the marriage relationship be shared equally upon marriage breakdown. The Act does not address this issue as between common law spouses.

This does not mean that the common law spouses have no rights or obligations with respect to property once their relationship breaks down. The courts have utilized general law doctrines called equitable doctrines, or fairness doctrines, to try to achieve a just result between common law spouses. For example, if the male spouse owns farm land where they live but both common laws spouses partake in the farm chores to maintain the farm business and operation, a court may apply equitable doctrines to give the female spouse some percentage of the farm based on her working contribution once the relationship breaks down. As well, if she made a financial contribution to the farm, that may also be taken into account. Common law spouse may wish to consider entering into a domestic contract to clarify their relationship with respect to property.

Parental Responsibility

Parents beware! You may be liable to pay for property damage caused by your child. Consider this scenario. When you are away at work on weekends, you usually have your 18 year old daughter babysit your 15 year old son so that he does not get into trouble. That arrangement is successful for a while but one day the 18 year old falls asleep on the sofa giving the 15 year old a unique opportunity. He takes the keys to the parents' car, takes it for a spin, but gets into a car accident causing property damage to another car. The property damage is repaired through insurance. What can the insurance company do to recover the cost of the repairs? It can sue the parents in the small claims court. The lawsuit is governed by the Parental Responsibility Act which became law around 2000.

In this legislation, there is a reverse onus. Once the car accident has been proven, the parents must satisfy the court that they were exercising reasonable supervision over their son at the time that he took the car for a ride. The legislation lists several factors that the court may consider in determining whether the parents were exercising reasonable supervision at the time. Some of the factors are: the age of the child, the prior conduct of the child, the potential danger of the activity, the physical or mental capacity of the child, including any psychological disorders, and the parents' parenting skills generally.

In defending the lawsuit, the parents might argue that they were completely unaware that their son had an interest in driving the car. The incident was completely out of character for the son and not foreseeable. The son was a normal healthy teenager giving no reason for the parents to be concerned about him engaging in any type of dangerous activity. The weekend regime established by the parents regarding the supervision of their son was prudent and reasonable and was working well before this incident.

The standard imposed by the Parental Responsibility Act is one of reasonableness, not perfection. The standard is an objective one determined by taking into account both the practical realities of what ordinary people do and what judges believe they ought to do. It is recognized by the courts that the reasonable person may make mistakes and errors of judgment for which there is no liability. The Act only applies to the small claims court with a monetary jurisdiction of $10,000.

INJUNCTIONS

Injunctions

Injunctions are obtained through a lawsuit and they are of two kinds: injunctions to prohibit someone from doing something and injunctions to require someone to do something. Normally, the lawsuit will seek an interlocutory injunction so that the injunction is in place immediately, until the trial occurs. At the trial, the plaintiff will then seek a permanent injunction.

In granting or refusing an interlocutory injunction, the court applies three tests. The first test is that the plaintiff must demonstrate that the lawsuit has a serious question to be tried. An example of a serious question is someone blockading a right of way to property. The first test will be determined by the judge on the basis of common sense and an extremely limited review of the lawsuit on its merits. Unless the lawsuit is frivolous or vexatious, a judge must consider the second and third tests.

In the second test, the plaintiff is required to demonstrate that "irreparable" harm will result if the interlocutory injunction is not granted. "Irreparable" refers to the nature of the harm rather than its magnitude. If the nature of the harm is financial losses, rather than access to property, the harm may or may not be irreparable depending on the circumstances.

In the third test, the court must assess the balance of inconvenience to the parties until the trial occurs. There is a clear inconvenience to the user of a right of way if the user is blockaded from his or her property. Indeed, where an interlocutory injunction is sought to prohibit interference with property rights, the injunction is so strongly favoured by the courts that it is more accurate to state that the injunction is the presumed remedy.

A plaintiff seeking an interlocutory injunction must make an undertaking ("a promise") to the court to pay for any financial losses if it ultimately appears at trial that the granting of the interlocutory injunction has caused damage to the defendant.

INSURANCE

Liability Insurance

There are many people in Haliburton who provide professional or quasi-professional services to people in the County. The service person could be a contractor building a home, or a real agent selling a home, or a fuel company filling an oil tank for the winter months. All of these service people must perform their services adequately, that is, within the normal standards of their business. There are occasions, however, when mistakes are made by service people. The roof to the new home is not built with engineered trusses and cannot take the snow load. The real estate agent makes a reckless representation exaggerating the acreage of the property for sale. The fuel company fills the oil tank but the tank overflows and causes oil to seep into the basement.

These types of mistakes may give rise to a lawsuit against you for alleged negligent performance of your services. Many people in business have liability insurance to respond to such a lawsuit. Indeed, every prudent business person who is in the service sector providing professional or quasi-professional services should have such insurance. Otherwise, you expose your home and your savings to seizure after a judgment.

There are good things and bad things about insurance companies. Liability insurance provides you with a lawyer to defend you in a lawsuit and the insurance company pays for the lawyer. As well, if you are found to be negligent in your services, the insurance company will pay for the losses covered under your policy. However, what many insurance companies do is try to escape from their obligations under the insurance policy even though you have paid for the insurance. They may try to do this in many ways. One common way is that they will say that you did not notify them about the claim against you in a timely fashion. A liability policy is a "claims made and reported" policy. When your customer says that you were negligent, this is the time to claim under your policy. You must notify your insurance broker as soon as possible so that they are not prejudiced in their investigation of the claim by the passage of time due to late reporting. A common mistake made by professionals and trades people is that they do not report the claim when they should. You may think that the customer is not serious about the claim or that the claim is really small and you do not want your premiums to go up as a result of reporting it. However, your assessment of the situation may come back to haunt you when you are sued a year later and your insurance company refuses to get involved. Before you know it, you have paid a lawyer many thousands of dollars to protect your home and savings and you have also sued your insurance company.

Lawsuits and Insurance

An insurance policy is a contract between you and your insurance company that protects you in two important ways. The policy will pay for your loss if your home is accidentally damaged by fire or by water pipes bursting. It will also pay for a lawyer to defend you if you are sued for a peril that is covered under your policy, such as a slip and fall on your property.

If you are a tradesman with negligence insurance, your insurance company will also pay for a lawyer if, for example, you are sued because the roof of the building you worked on collapsed. In construction litigation, many trades are named as defendants but not all may be found to be negligent by the courts. Even if you think that you were not negligent, you must defend the lawsuit and the expense of a lawyer, which can be costly in this kind of litigation, will be paid by your insurance company.

An insurance company may refuse to pay for a loss or refuse to defend you on the basis that you were not insured for the peril. For example, your homeowner's policy may not cover you if you are running a business from your home and your customer slips and falls on your property. Where there is a refusal to cover you, you should consider suing your insurance company to dispute the policy. You must commence your lawsuit within one year after the loss occurs.

JUDGMENTS

Default Judgments

Someone knocks on your door and hands you court papers - a statement of claim. You are sued by the bank for $25,000 because you guaranteed a friend's loan. The friend is also sued. He tells you not to worry and that he will take care of it. Two months later, the friend files for bankruptcy but you do not know this. He has not taken care of the loan and lawsuit. Five months later, you apply to lease a car. The leasing company does a credit check on you and you learn, for the first time, that there is a judgment against you for the $25,000. You do not qualify to lease the car because of the bad credit check. What has happened?

When you were handed the statement of claim, you had 20 days to respond with a statement of defence. Because no defence was filed with the court, the bank went ahead and "noted you in default" because you failed to file a defence. As a result of this procedural act, the bank was no longer required to give you notice of any further steps the bank might take against you in the lawsuit. The bank took the further step of signing judgment against you for the $25,000 - a default judgment. What do you do now?

You should immediately hire a lawyer to move before the court, that is, to ask the court, to set aside the default judgment. You must address three issues with the court. You must explain any delay in moving before the court after becoming aware of the default judgment. So, it is imperative that you move as soon as possible and not ignore your legal problem.

You must explain the reason you were in default in the lawsuit. You will tell the court that your friend said he would take care of the loan and lawsuit. In other situations, a common explanation to the court is that the defendant did not actually receive the statement of claim. This is especially true in the Small Claims Court where the plaintiff, who is not your friend, may simply mail the claim to you at what the plaintiff believes to be your last known address. You may have already moved from that address.

Finally, you must prove that you have an arguable defence. Usually, this is achieved by filing with the court a draft of the statement of defence that you propose to file with the court if the judgment is set aside.

The court will sometimes impose terms on setting aside a default judgment. If your response to the three issues is a very weak one, a court might require you to pay some of the $25,000 into court as a term to set aside the judgment.

Double Satisfaction

It's a long way from Mick Jagger's early rock'n roll hit "I can't get no satisfaction" to the exciting doctrine of double satisfaction but here is the story. First of all, there has to be a lawsuit to get some satisfaction. If the claim in the lawsuit or the judgment based on the lawsuit has been satisfied by payment, that payment wipes out or destroys any case ("cause of action") against other persons who were in some measure responsible for the same loss. In other words, the person who suffered the loss cannot pursue a second payment because this constitutes an attempt at double recovery or double satisfaction and is barred by the courts.

A court decision illustrates the application of the doctrine of double satisfaction. The plaintiff sued an architect, a general contractor, and a roofer for building defects to a garage and roof. A separate allegation was made against the architect with respect to the driveway. The general contractor paid into court a sum of money in full satisfaction of the claims of the plaintiff against it for the garage and the roof and the plaintiff accepted it. The architect moved to strike out those portions of the statement of claim in which allegations were made against the architect with respect to the garage and roof. The action was successfully stayed with respect to the garage and roof claims because of the payment by the general contractor. The litigation was left with only the driveway problem between the plaintiff and the architect.

A party to a lawsuit may also acknowledge the satisfaction of a judgment by signing a document and filing it with the court. The document tells the public that the judgment has been paid. And Hey Mick! the legal document is actually called a "satisfaction piece."

Judgments Binding on the World at Large

A judgment in a lawsuit is typically only binding on the parties to the lawsuit. Such a judgment is called a judgment in personam or inter partes. There is, however, another kind of judgment which is not only binding on the parties to the lawsuit but is also binding on the world at large. The lawsuit commences as a dispute between the parties but its subject matter is the determination of the status of a particular legal entity or physical thing. Such a judgment is called a judgment in rem, "a judgment about the thing." An example of a judgment about the status of a legal entity is a court ruling that a union local is the bargaining agent for employees with respect to negotiations with an employer. An example of a judgment about the status of a physical thing is a ruling that a road over private property is a right of way. Declarations of paternity or maternity are also judgments in rem. Such rulings are conclusive against all persons. The relitigation of the status of the thing or person is prohibited for all time.

Some courts have held that notice to interested persons, not involved in the lawsuit, is not required. However, other courts have held that, when the judgment will be adjudicating on the status of land, all persons allegedly having an interest in the land must be made aware of the lawsuit. In Ontario, the Court of Appeal has specifically held that a judgment in rem will not be allowed to stand when residential property owners are not afforded an opportunity to be heard on the issue of whether their road is a prescriptive right of way, that is, a right of way because of its use for over 20 years. Notice to interested persons is often accomplished by public advertising of the lawsuit.

Determining whether a decision is a judgment in rem is sometimes difficult. One test is that, if there is no appeal review of the lower court's decision, it may not be binding on non-parties.

Criminal Decisions in Civil Proceedings

Consider this scenario. A person is convicted of assault and battery after an argument in a tavern. The convicted person is then sued in the civil courts by the victim of the assault for personal injury. May the victim rely upon the conviction as proof that the assault and battery occurred?

A conviction in a criminal court is admissible as prima facie evidence in a civil proceeding. This means that the conviction is considered evidence that the assault and battery did occur but the question for the court to decide is what weight, or probative value, to give to the conviction in the civil proceeding. Is the conviction conclusive evidence of the assault and battery such that the victim suing need not relitigate the issue? Or may the convicted person challenge the conviction in the civil proceeding?

There are two kinds of convictions: convictions after a trial and convictions after a guilty plea. A convicted person in a civil proceeding may argue for the right to relitigate the conviction resulting from the trial. A court will consider a number of factors in determining the issue, such as whether there was a fair criminal trial, a full opportunity to present a defence, and capable criminal counsel representing the accused. In addition, the court will consider whether there is new evidence to tender in the civil proceeding which may establish innocence or cast doubt on the conviction.

A conviction after a guilty plea generally has greater probative value than a conviction after a trial because a plea of guilty is an admission adverse in interest. However, an explanation for the reason the accused pleaded guilty may be relevant evidence in considering the relitigation issue. For example, the accused may testify that it was cheaper to plead guilty and pay the fine (if that was the sentence imposed) than to pay a lawyer to defend the criminal charge. Or, in more serious matters, the accused may testify that a quick plea of guilty was a matter of expediency to avoid possible publicity.

Accordingly, when charged with a criminal offence, a person should consider whether there is the possibility of a subsequent civil proceeding after the criminal matter has been disposed of.

LAND DISPUTES

Freezing Land in Lawsuits

Lawsuits involving land are common in the County of Haliburton. Examples are disputes over rights of way and property lines. There may also be a dispute over the purchase of the land itself. A purchaser buys a rural or water front property but the deal does not close. The purchaser wants the property because it is a unique piece of land. He or she is worried that the property may be sold to someone else. What should the purchaser do?

The purchaser should start a lawsuit and claim in the lawsuit a "certificate of pending litigation." A certificate of pending litigation is a legal document that can be registered against the disputed land to prevent the owner from selling the land until the lawsuit is disposed of. To obtain a certificate, the purchaser must first bring a motion before court to establish an "interest" in the land. One example of an interest in land is a lawsuit resulting from an aborted closing of a real estate transaction based upon an agreement of purchase and sale. Upon signing the agreement of purchase and sale, the purchaser gains an interest in the lands. Another example is a lawsuit involving lands owned by a partnership. If a plaintiff seeks a declaration in a lawsuit that he or she is a partner of the partnership, such a claim may establish an interest in the partnership lands.

An owner of land, whether vendor or partner, may seek to discharge the certificate that is registered against the lands. In determining the discharge issue, a court must look at all relevant matters between the parties, including the intent of the party in acquiring the land, whether the land is unique, and whether damages would be a satisfactory remedy to replace the certificate with or without other security in place.

There is an important caveat to remember when considering a certificate of pending litigation. A plaintiff who registers a certificate without a reasonable claim to an interest in land is liable for damages sustained by any person as a result of the registration. Such damages could occur in a rising real estate market because the certificate makes the lands unmarketable for the vendor.

A Property Sale by Court Order

Jointly owned properties can create legal problems if one owner wants to sell. Consider this example. A house or cottage is owned by two or more people. The owners may be family members or business partners. One of them wants to sell because there is a rift in the relationship, or for other reasons. The other owner will not agree to list the property for sale. What can be done?

People owning property jointly are not bound to the relationship forever. If a sale cannot be agreed upon amicably, there is legislation available to resolve the dispute. The Partition Act provides that any person who has an interest in land with another person may bring an application before court to order that the property be sold. The test is whether it is more advantageous to the owners that the property be sold rather than partitioned. The obvious example is a cottage shared by siblings who no longer get along. The cottage will be sold. The court's discretion is only limited to cases where the applicant has behaved maliciously toward the other owner.

One weakness in this nineteenth century legislation is that there is no discretion to order a right of first refusal in the purchase of the property. Any owner wanting to own the property as sole owner must make an offer when the property is listed for sale in the open market. It is, therefore, prudent for such an owner to attempt to purchase the property from the other owner privately before the matter escalates into a court proceeding. Agreeing upon the market value of the property is often the stumbling block but, if market value can be settled, a successful purchase is net of real estate commissions.

Adverse Possession of Land

Adverse possession of land is possession of land similar to a squatter's right to land. It gives to a person ownership of a part of another's lands because of the way that person has used the lands for a period of time. Fenced lands relating to a surveyed property line are an example. If your fence does not run along the surveyed property line but runs over the neighbour's lands to demarcate the property line, you may have possessory title, or ownership, to that part of the neighbour's lands you are using.

A person claiming adverse possession is essentially a trespasser. To determine possession of the lands in court, a claimant must meet a threefold test: (1) actual possession of the disputed lands for a period of ten years, (2) the intention of excluding the true owner from possession, and (3) the actual exclusion of the true owner from possession throughout the ten year period. The test is a question of fact and the facts relied upon must be considered relative to the nature of the lands and the particular use and enjoyment of it being made.

A true owner defending an adverse claim may argue that the possession was not adverse because the claimant acknowledged the right of the true owner to the disputed lands. As well, an adverse claim may be defeated if there was a mutual mistake as to title or boundary lines, or if there was an honestly held belief that the claimant was the rightful owner of the lands. If you think that your rights as true owner may be at risk, you should consider instructing your lawyer to send a demand letter to the person occupying your lands to assert your legal rights to it. You should also have your lawyer check which registration system your land is registered in. Adverse possession claims accrue under the land registration system established under the Registry Act. However, most lands in the County of Haliburton have now been converted from the registry system to the land registration system established under the Land Titles Act. When that takes place, the clock stops on the ten year period needed to establish adverse possession and the conversion to land titles extinguishes any further adverse possession claim because of this.

A Garden in Cottage Country

Squatters' rights are alive and well in cottage country! Here is a case which was decided in February. John and George were neighbours in cottage country. Both used their properties as seasonal summer cottages. John claimed squatters' rights over 15 feet of George's property. He argued that he and his predecessors in title had occupied the disputed lands for over 45 years. John's lands had been in his family since 1926. He testified that the disputed lands were used from 1932 to 1940 when his parents installed a septic system for their cottage. He stated that George's predecessors never objected, at that time, that John's family were using George's land. A water reservoir built by John's mother in 1951 was wholly situated on the disputed lands. George's predecessors again never objected to it being located where it was built. From 1963 to 1996, John's family used the entire area of the disputed lands as flower gardens to beautify the cottage property and they continued to maintain the area by mowing the grass and planting smaller gardens on the disputed lands.

The court held that John had proved his case for more than 10 years, which is the time period required to prove squatters' rights. The court found that John and his family enjoyed "open, notorious, constant, and continuous use" of the disputed lands from at least 1963 until 1996 when the area was used as flower gardens. One issue in the case was whether the summer seasonal use of the cottage defeated John's claim because the disputed lands were not occupied in the winter. The argument was that there was no "continuous use" of the disputed lands. The court concluded somewhat weakly that, although John and his family only used the property as a summer cottage, they maintained the property throughout the year by, for example, visiting the property during the winter to check on it after severe winter storms.

The law that was applied in the case is the law relating to adverse possession. The judge explained two scenarios where the law may apply: "The first includes those situations where people assert title by adverse possession arising from his or her trespassing or squatting. These have been referred to as the "inconsistent use" cases. The use of the trespasser is openly inconsistent with the intended uses of the land by the legal owner. The second line of cases involves scenarios in which title by adverse possession is obtained because of a mutually held mistake or ignorance as to who holds rightful ownership over a tract of land." Which scenario applied to John?

The Line Fences Act

There are many land disputes between neighbours in the County of Haliburton. Litigating these disputes in the court system can be a costly experience and the result not necessarily satisfactory even to the successful party. One reason is that the neighbours still have to live next door to each other. Or one of them finds that it is simply better to sell and move away.

There are ways to resolve a neighbour dispute without recourse to the court system. Binding mediation or arbitration are two alternatives. If there is a dispute over a neighbour's fence, legislation called the Line Fences Act may assist you. Under the Act, a landowner has a right to construct and maintain a fence to mark the boundary between the owner's land and adjoining land, or to repair the fence. Where the owner has not entered into a written agreement with the adjoining owner for sharing the costs of the construction or repair of the fence, the owner may notify the clerk of the local municipality in which the land is situated that the owner desires "fence-viewers" to view and arbitrate as to what portion of the fence each owner shall construct or repair and maintain.

Once the clerk is notified, the clerk will appoint, not one, but three fence-viewers to arbitrate the issue. The fence-viewers will attend the site and view the location of the proposed fence or fence repair. They may hear evidence and examine witnesses under oath. In making their decision, the fence-viewers will consider several factors: the suitability of the fence to the needs of each of the adjoining owners, the nature of the terrain on which the fence is to be located or repaired, the benefit to both owners of having the boundary between their lands marked by a fence, and the nature of the fences in use in the locality. Most importantly, the fence-viewers have the authority to order that each owner pay one-half of the costs incurred in the fence construction or repair.

Where an owner is dissatisfied with the decision of the fence-viewers, the owner may appeal the decision to a referee within fifteen days. As the poet, Robert Frost said a long time ago "Good fences make good neighbours." The Line Fences Act helps to make good fences and keep good neighbours.

Shoreline Ownership

If you own waterfront property to the shoreline, you are a riparian owner, meaning you own the bank ("ripa") of the lake to the water's edge. But where is the water's edge in Haliburton? There is a high water mark in the spring and a low water mark in the fall. The lakes are drawn down over the summer to feed the Trent-Severn Canal system to the dismay of many waterfront owners, and the growing protest of a few. On some lakes, the draw down is greater than six feet.

Surprisingly, the law in Ontario was clearly defined in 1852 and definitively settled 25 years ago in the 1971 case of Ontario (Attorney General) v. Walker, affirmed by the Supreme Court of Canada. The case started with a very lengthy trial over the ownership of beaches on the north shore of Lake Erie in the Township of Bertie, commonly known as the Thunder Beach area. The trial judge held that a riparian owner owns to the low water's edge, adopting an 1852 decision of an appellate division of Upper Canada, as it then was. Here is what the trial judge said:

"In the case of Parker v. Elliott (1852), 1 U.C.C.P. 470, the majority of the Court held that in the case of inland waters, a grant having a river or lake boundary extends to the water and that the law of foreshore as it is applied in England with respect to tidal waters is not properly of application in the inland waters of the Province of Ontario, and that the distinction of high and low water marks will not hold, save where the tide exists . . . any Crown patent which indicates that one of the boundaries of the lands granted is to be a boundary of water, then establishes that boundary as at the water's edge [lower water mark] and not upon any bank or high water mark unless, of course, the grant clearly reserves by description or otherwise a space between the lands granted and the water boundary or unless the boundaries of the lot can be so clearly delineated by reference to an original plan of survey as to clearly except or reserve to the Crown a space between the lands granted and the water's edge."

And who owns the land under the water? The Province by virtue of the Beds of Navigable Waters Act.

LEASES

Commercial Leases

A commercial lease creates a legal relationship between a landowner, the landlord or lessor, and a business person, the tenant or lessee, to rent premises for a business purpose. The lease itself is often a lengthy, single-spaced document on legal size paper setting out the terms and conditions of the relationship in hard to understand legalese. The commercial lease is historically treated as an actual conveyance of an interest in land which creates a property relationship between the landlord and the tenant rather than a contractual relationship for the ongoing use of the land which could also characterize the relationship because the lease is a contract. Courts have grappled with this characterization, sometimes applying concepts from property law or concepts from contract law to resolve the rent issue on a repudiation of the lease.

A lease dispute may arise when a tenant abandons the premises and seeks to repudiate the lease. The landlord has three options. Firstly, the landlord may refuse to accept the repudiation and elect to keep the lease alive. In this cumbersome option, the landlord has no right to enter the premises or to re-lease them. The landlord may sue for lost rent only as it occurs in the unexpired term of the lease. Secondly, the landlord may expressly or impliedly accept the repudiation thereby causing a surrender of the lease. The return of keys by the tenant and the acceptance by the landlord is cogent evidence that the lease has been surrendered. However, it is insufficient in itself because the return of keys could be for a purpose other than taking possession of the premises. For example, a landlord may accept the keys for security reasons. For the doctrine of surrender to apply, the landlord must take physical possession of the premises for a purpose inconsistent with the continued existence of the lease. For example, the landlord may occupy the premises. When this occurs, the property relationship is at an end and the terms of the lease obliterated. The landlord cannot sue for prospective lost rent for the unexpired term of the lease.

A recent third option in this ancient land law was developed by the Supreme Court of Canada in a 1971 decision. This decision made it possible for landlords, upon repudiation of the lease by the tenant, to elect to terminate the lease but, with notice to the defaulting tenant, that damages will be claimed for prospective lost rent for the unexpired term of the lease.

LEGAL SYSTEM

Common Law and Statute Law

The people of Ontario are governed by two kinds of law: the common law and statutory law. The common law is the law as pronounced by judges on a case by case basis, "judge-made law." The origins of the common law lie in the thousand year evolution of it in England. Today, it remains a major source of the rules and principles of our legal culture. The law of contract and the law of negligence, both important areas governing our lives, are based on the common law of England. By its very nature, judge-made law creates new common law on a slow incremental basis. While judges may be sensitive to the times in which they live, there are rarely broad sweeping changes that occur in the common law because judges must respect the precedent value of previous decisions.

The legislature is the source of legislation, or statutory law, which also governs our lives. Significant legal or policy changes may be brought about by legislation enacted by a particular government. A recent example is the federal legislation to recognize same sex marriages prompted by the Ontario Court of Appeal which had already decided that the common law definition of marriage was in conflict with the Charter, a statutory law.

Statutory law and common law affect each other. Legislation may codify the common law giving statutory force to common law principles without completely displacing the common law. For more than a century, criminal law has been codified in the Criminal Code but the common law concepts of mens rea (intent) and natural justice continue to influence the jurisprudence. Legislation may conflict with the common law and displace it to the extent of the conflict. An example is the Occupiers' Liability Act, discussed in my previous legal column, which replaced the common law duty of care required of occupiers of premises. Ironically, most rules of statutory interpretation are judge-made rules often designed to preserve the common law from legislative encroachment. A basic rule of statutory interpretation is the presumption that the legislature does not intend to change the common law unless expressly stated in the legislation. Thus, in the Occupiers' Liability Act, the statute expressly states that "this Act applies in place of the rules of common law."

The Effect of Legislation #1

The rule of law governs our lives and is a cornerstone of the justice system in Canada. When the province passes legislation to change the law, the legislation cannot reach into the past and declare the law to be different from what it was. The reason for this is that it would violate the rule of law. A fundamental principle of the rule of law is that people should have advance knowledge of what the law is when making choices or making plans for the future. Thus, when legislation is passed, there is a presumption against the retroactive application of the law contained in the legislation.

An example will illustrate the presumption. The case involved an amendment to the Teachers' Pension Act in British Columbia and a challenge to the presumption by the wife of a retired teacher. In the pension legislation, teachers were entitled to choose one of four retirement plans upon retirement. The husband retired and chose the "single life" plan. This plan maximized the pension benefits to him during his lifetime but provided no survivor benefits for his wife after his death. One year prior to his death, the B.C. Legislature passed an amendment to the legislation stating that, when a teacher is married on the date the teacher chooses a retirement plan, the teacher shall be deemed to have elected that 60 per cent of the pension will be paid to the surviving spouse upon the teacher's death. The husband died the following year and the surviving wife argued in court that she was now entitled to 60 per cent of the pension because of the amendment. The court held that the husband had made his choice under the prevailing legislation at the time. The husband's pension plan and the wife's non-entitlement to it were fixed at that time until both of their deaths. To apply the amendment now for future pension entitlements to the surviving wife would be a retroactive application of the amendment. The court also reasoned: "To intercede in this scheme, by retroactively changing the election of individual retirees after payments have been made to them, would leave the plan under funded and thus destroy its actuarial integrity."

There are often exceptions in the law. If the legislation makes an express statement indicating that the legislation is intended to act retroactively, courts will conclude that the retroactive effect of the legislation was intended by the members of the Legislature who passed the new law but they will limit or minimize its operation as much as possible.

The Effect of Legislation #2

Promissory notes are written statements that a person owes money to another person at a certain interest rate. They are often lending documents made on demand and called demand promissory notes. Lawyers use them in estate planning or when there are loans among family members. In these situations, no payments of interest or principal may occur for many years. Lawyers were shaking in their boots in 2006 when the Ontario Court of Appeal came down with a decision on demand promissory notes not to their liking. Our highest provincial court held that the limitation period for demand promissory notes begins to run as soon as the note is issued and not following a default after a demand for payment. A limitation period simply means that you must launch your lawsuit within a certain period of time or you are barred from doing so by the passage of time. What this meant for lawyers preparing demand promissory notes for their clients was that notes issued after January 1, 2004, when the basic limitation period was changed from six years to two years, were barred two years after issuance unless there had been payments or a written acknowledgment of the debt.

As a result of the appellate decision and its impact on lawyers, fierce lobbying occurred with the province, including lobbying from the Ontario Bar Association, to change the Limitation Act about demand promissory notes. Just 18 months after the 2006 decision, the government passed legislation retroactively changing the law that our appeal court had made. The amendment to the legislation states that the time starts to run for the limitation period from "the first day on which there is a failure to perform the obligation, once a demand for the performance is made." In other words, time starts to run, not when the demand promissory note is issued, but when there is a default following a demand for payment. For some reason, the retroactive effect of the amendment only goes back to January 1, 2004 when the new Limitation Period was passed. The amendment saves lawyers from lawsuits because the legislation takes the unusual step of reaching into the past and declaring the law to be different from what it was. But is it fair to the borrowers who were freed by the Ontario Court of Appeal?

The Difference Between a Court and a Tribunal

There are two main forums for resolving a legal dispute: a court of law and an administrative board or tribunal. A court of law is an ancient adjudicative forum with inherent jurisdiction in legal matters independent of any statute which may affect it. Its rules of procedure are complicated and it is constricted by longstanding rules of evidence. All legal matters can be brought in a court of law except those matters delegated exclusively to the expertise of a tribunal.

The proliferation of tribunals as an adjudicative forum is a relatively new phenomenon. A tribunal is created by statute and its powers and jurisdiction are governed by statute. Tribunals are specialized "courts" dealing with a narrow area of law, such as, workers' compensation (Workplace Safety and Insurance Board) or tenant rights (Ontario Rental Housing Tribunal), and their procedure is usually streamlined to dispense justice in a quick, inexpensive, summary manner.

There are many differences between a tribunal proceeding and a court proceeding. In a tribunal proceeding, there is usually no provision for the exchange of formal pleadings, such as a statement of claim or defence. There is no right to have disclosure of documents or oral evidence prior to the hearing. Unlike courts, tribunals often accept hearsay evidence and unsworn testimony. While a court is bound by its findings once judgment is pronounced, a tribunal decision is not considered final unless the statute so provides and may be varied or reversed where it seems just or desirable to do so.

A tribunal decision may ultimately be reviewed by a court of law through a process called judicial review. In this "appeal" process, a court is limited in its review to determining whether the tribunal decision meets the standard of reasonableness. Considerable deference is given to the tribunal's expertise in the judicial review process.

The Doctrine of Stare Decisis

The doctrine of stare decisis is the guardian of the development of stable general principles of law. The phrase "stare decisis" is the abbreviation of a longer Latin phrase which means "to stand by decisions and not to disturb settled matters." The doctrine is a cornerstone of the Canadian hierarchical system of justice which comprises (1) the Supreme Court of Canada, (2) each provincial appeal court, and (3) each provincial trial court.

The decisions of each court in the hierarchy are binding on each court below it and must be followed. The Supreme Court of Canada has exclusive appellate civil and criminal jurisdiction across Canada and its decisions must be followed by all provincial appeal and trial courts. Even comments in a decision by the Supreme Court which are not fundamental to its decision have a binding force on all lower courts. The decisions of each provincial appeal court are also binding on all courts below it in the province. However, they are not binding in other provinces although they are often given the same respect. It has been stated that there can be no stare decisis between judges of the same court and that they follow the judgments of others in the same court as a question of judicial collegiality where the facts are identical or similar. Nevertheless, they cannot ignore applicable decisions and, if they refuse to follow them, they must provide strong reasons for declining.

The basic principle of the doctrine is that judges sit in court, not with the right to give judgment according to what their individual opinion is as to what the law ought to be, but to give judgment according to what they find stated by authorities whose opinions are binding upon them. Without the uniform and consistent adherence to these authorities, the administration of justice would become disordered, the law uncertain, and the confidence of the public in it undermined.

Notwithstanding this noble sentiment, it is now commonly accepted that the Supreme Court of Canada and provincial appeal courts may overturn their previous decisions where there are compelling reasons for doing so and they have exercised their discretion on a number of occasions.

Contempt of Court

From time to time, you will have read in the newspaper about strikers defying a court order not to strike or about demonstrators protesting too vigorously and disobeying a court order. Courts take the orders they make very seriously and, if you do not abide by an order, you may find yourself in jail.

There are two kinds of contempt of court. Ex facie contempt is an act of contempt of the court which takes place outside of the courtroom, that is, not in the face of the court. An example in the small claims court is what is called a judgment debtor examination. A plaintiff who has a judgment for the payment of money against a defendant is a judgment creditor and the defendant is a judgment debtor. If the money is not paid, the creditor has a right to examine the debtor about the debtor's assets and employment.

The clerk of the court issues a notice of examination ordering the debtor to appear at a specific time and place to be examined. If the debtor does not appear in court for the examination, a court may order a contempt hearing to determine if the person failed to attend the examination wilfully. If the debtor can explain his failure to attend, for example, because the debtor did not receive the notice examination since it was mailed to an old address, the court will simply order another examination. If the debtor cannot explain his failure to attend, a court may order the debtor to be jailed for up to 40 days. This sounds harsh but the small claims court has, in fact, ordered debtors to be entertained by Her Majesty. It is the wilful non-attendance that constitutes the contempt not the failure to pay the judgment. Debtors' prison of the nineteenth century where people were sent when they did not pay their debts was abolished a long time ago.

The second kind of contempt is in facie contempt, or contempt in the face of the court. The debtor appears for the examination before the court but refuses to answer questions about assets or employment. Instead of jail, a judge may give the debtor a period of time to purge the contempt by answering the questions. Another method is to fine the debtor an amount of money and, if the fine is not paid by a certain date, a warrant for the debtor's arrest will automatically issue.

Human Rights Code

The Ontario Human Rights Code is one of the earliest human rights codes in Canada. It goes back a few decades now but in June 2008 major changes were made to it to more effectively provide a human rights system in Ontario. The system now contains three essential parts: (1) the Human Rights Tribunal of Ontario, (2) the Human Rights Legal Support Centre, and (3) the Ontario Human Rights Commission.

The main section of the Code is entitled "Freedom from Discrimination". Every person in Ontario has a right to equal treatment, without discrimination, because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, gender, sexual orientation, age, marital status, family status, or disability. The right to equal treatment applies to services and goods you receive, as well as to facilities you use. Services provided by stores or restaurants, for example, are to be free from discrimination, as well as facilities such as public parks and recreation centres. The right to equal treatment also applies to "the occupancy of accommodation." This term refers to housing. There can be no discrimination in regard to renting an apartment or the buying or selling of a home or the use of a common swimming pool. The other important area under the Code is the right to equal treatment with respect to employment. "Employment" is a broad term in the Code. It covers anything from applying for a job to dismissal from a job. It covers employees, independent contractors, and even volunteers.

If you think that one of your rights under the Code has been violated, you may file an application with the Human Rights Tribunal of Ontario to determine the complaint. The Human Rights Legal Support Centre may assist you with the Tribunal application, including legal representation at a hearing of the complaint. The role of the Ontario Human Rights Commission, the third essential part of the human rights system in Ontario, focuses on the broader aspect of developing policies to eradicate the roots of discrimination. In discrimination matters affecting the public generally, the Commission may bring its own application to the Tribunal or seek to intervene in an individual's application before the Tribunal when the broad public interest may be affected.

Aside from an individual's application to the Tribunal, the prosecution of a person for an infringement of a right under the Code is permitted with the consent of the Attorney General. Upon conviction, the person is liable to a fine up to a maximum of $25,000.

LIBEL AND SLANDER

Libel and Slander

Libel and slander actions are lawsuits involving the defaming of a person's character. They are often called defamation actions. A person can defame another person's character in two ways. If the defamatory statement is spoken, not written, it is slander. If the defamatory statement is written, it is libel.

In each case, the plaintiff must prove that the defaming words were communicated to a third party. A typical example is the publication of a libellous statement in a newspaper. The plaintiff must also prove that the words complained of actually refer to the plaintiff. It does not matter if the plaintiff is not expressly named in the newspaper provided that he or she is sufficiently identified by a designation or description.

The newspaper statement must be libellous. This means that the words complained of must be capable of libelling the plaintiff and must actually libel that person. The test is whether reasonable people in the community where the publication was made would understand the statement in the newspaper to convey a meaning that discredits the plaintiff. For example, the words themselves may have a double meaning or innuendo. In some circumstances, the meaning of the words cannot be understood by examining the words themselves but must be understood in the context of special facts known to the community in which the plaintiff moves although those facts may not be known to the general public.

There are several defences to a defamation action. The defence of justification is always a complete defence because it involves proving the truth of the words used. The defence of fair comment is more burdensome. The defendant must prove that the words complained of are a comment or opinion based on true facts. The comment must be on a matter of public interest, such as the activities of a municipal councillor, and it must meet the objective test that a fair-minded person could honestly express that opinion based on the true facts. The defence of qualified privilege attaches to certain false statements when made in the discharge of a public duty. An example is a letter from a township clerk to a reeve about the conduct of a certain person which turns out to be erroneous.

Libel and slander actions are difficult lawsuits, technical in nature, and not easily won.

LITIGATION COSTS

Reducing Costs of Litigation

The Superior Court of Justice has recently made significant changes to the civil rules of procedure which govern a civil lawsuit as it proceeds through the court system to trial. The changes are the most dramatic since the rules of procedure were fundamentally revamped 25 years ago. The main focus of the changes is to reduce the high costs of litigation.

What now governs all of the rules is the rule of proportionality. It states that "[i]n applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding." This is an important change. It mandates that litigation should be conducted in a manner that takes into account what is at stake in the litigation. For example, a court has always exercised its discretion when ordering that the successful party be reimbursed by the unsuccessful party for lawyer's fees and out-of-pocket expenses ("legal costs"). As a general rule, you never recover all of your legal costs in a lawsuit but, in the past, you could expect about 50% reimbursement. With the new rule on proportionality, a court will likely approach the costs issue differently. If the lawsuit issues are straightforward and the amount involved is $100,000 but you spend $50,000 on legal costs (which is easy to do), it is doubtful that you will be awarded $25,000 in costs as the successful party because the legal costs you incurred are not proportionate to what was involved in the litigation. The proportionality rule is telling litigants, and their advocates, to spend less when less is at stake.

The rule will have a dramatic effect on pre-trial disclosure. A litigant is entitled to an oral examination for discovery of all adverse parties prior to trial in order to find out, that is, to discover what the adverse parties' evidence will be a trial. In the past, this stage of the litigation process has been much blamed for the high costs of litigation because of the endless hours spent on examinations. Now, there will be an actual time limit on examinations. Under the new rules, each party is limited to seven hours of examination regardless of the number of adverse parties being examined. The parties may agree to more hours but, if there is no agreement, the party wanting more time must seek permission from the court. When considering permission, the court will look at factors, such as the amount involved, the financial position of the each party, and the amount of time that would be reasonable for such an examination.

The Costs of a Lawsuit

Lawsuits in the Superior Court of Justice are expensive for both the plaintiff and the defendant. There are two kinds of costs involved: the legal fees arising from services provided by a lawyer and the out of pocket expenses of a lawsuit, such as government charges in the court system, the preparation of document briefs, and the payment of expert witnesses. The out of pocket expenses in a lawsuit are often substantial and should be recognized as such by the litigants and their lawyers. If the plaintiff wins, the plaintiff is entitled to have a portion of his or her legal costs paid by the defendant. If the plaintiff loses because the lawsuit is dismissed, the defendant is entitled to a similar award of costs.

An award of costs is determined by a "cost grid" scheme based on two sliding scales: a partial indemnity scale and a substantial indemnity scale. An example is the hourly rate of a lawyer in a lawsuit who has been in practice between 10 and 20 years. The costs grid permits the court to fix the hourly rate on a sliding scale up to $300 per hour under the partial indemnity scale, and up to $400 under the substantial indemnity scale.

The court has discretion in fixing both the hourly rate of a lawyer and the out of pocket expenses in a lawsuit. Factors which the court may take into account include the amount claimed and the amount recovered in the lawsuit, the complexity of the lawsuit, and the conduct of a party who tended to shorten or lengthen the lawsuit. For example, if the trial is unduly long due to the fault of the winning litigant, the court may substantially reduce the counsel fee of the litigant's lawyer for each day of trial to express the court's disapproval.

Always keep in mind that the winner of a lawsuit, whether plaintiff or defendant, never recovers one hundred percent of the legal fees and disbursements paid out. If the court grants costs on a partial indemnity scale, the winning litigant will recover only part of the costs incurred in the lawsuit. If the court grants costs on a substantial indemnity scale, the winning litigant will recover most, but not all, of the costs incurred in the lawsuit.

LITIGATION DOCTRINES

One Lawsuit for Each Case

A plaintiff may only sue once in the court system for each case. He or she must bring forward the entire subject matter of the case at one time and claim every court remedy which flows out of the subject matter of the case. There is no opportunity to sue in a second lawsuit for something that was inadvertently or intentionally left out of the first lawsuit. The legal doctrine which prohibits more than one lawsuit for each case is called the doctrine of res judicata. Res judicata is a Latin phrase which means that "it has passed into a matter adjudged." The plaintiff is "estopped" (stopped) from launching a second lawsuit.

The doctrine also applies to the defendant. He or she must bring forward every defence based on the subject matter of the plaintiff's case at one time and any related counterclaim to the plaintiff's claim.

The doctrine of res judicata is a fundamental doctrine of the justice system in Canada and it is based on two traditional policy considerations: firstly, the ground of public policy that it is in the interest of the public that an end be put to litigation, and secondly, the ground of individual right that no one should be twice vexed by the subject matter of the lawsuit. Other considerations include the courts' scarce resources and the additional financial burden to the litigants.

Abuse of Process

Judges have an inherent discretion to control the process of the courts to prevent an abuse of process. There are many forms of abuse of the court's process. Some examples are: inappropriate behaviour in court by one of the parties, no legal status to sue, a frivolous lawsuit primarily meant to annoy someone, and a person starting too many lawsuits in the court system at one time. A common form of abuse of process is the doctrine of abuse of process by relitigation. A litigant is not permitted to be involved in the same issue of litigation more than once.

The Supreme Court of Canada has recently given clear definition to the doctrine of abuse of process by relitigation in the case of Toronto (City) v. CUPE. In Toronto, an employer, at a grievance arbitration, relied upon an employee's conviction of sexual assault from a previous criminal proceeding in order to establish that the employee had engaged in conduct which justified a dismissal from employment. The arbitrator ruled that, while the employee's criminal conviction was admissible as evidence, the union, on the employee's behalf, could relitigate the conviction in the grievance arbitration. The Supreme Court of Canada firmly disagreed and applied the abuse of process doctrine to "estop" the relitigation of the conviction. The court stated that there were two important factors to be considered in applying this discretionary doctrine. The interests of the individuals in revisiting the issue are not the decisive factor but rather the integrity of the judicial decision-making process. In addition, the finality of a criminal decision is of utmost importance where complainants testifying on behalf of the Crown, and other witnesses testifying in the criminal proceeding, may be exposed to the stressful task of re-testifying against the accused who is now a party in a civil proceeding.

Estoppel Doctrines

The word "estoppel" is derived from Old French, literally meaning "stoppage." The law of equity, or fairness, has developed several estoppel doctrines to deal with situations people find themselves in when one person relies upon another person's conduct or words. The doctrines are estoppel by conduct or representation, estoppel by deed, promissory estoppel, and proprietary estoppel.

Proprietary estoppel relates to land and has these essential elements. An equity arises between two people when an owner of land ("A") induces, encourages or allows the person claiming the estoppel ("B") to believe that B has or will enjoy some right or benefit over A's property. In reliance upon this belief, B acts to his or her detriment to the knowledge of A. A then seeks to take unconscionable advantage of B by denying the right or benefit which B was expecting to receive. An example is when A says to B: I will give you a deeded right of way over my land if you do not oppose my township application for rezoning of the land which B was intended to oppose. B agrees. The application is granted and A refuses to grant the deeded right of way.

A different kind of estoppel is an estoppel per rem judicatam. This is an estoppel applied in the court system and the Latin phrase literally means "it has passed into a matter adjudged." A plaintiff may only sue once in the court system for each case. He or she must bring forward the entire subject matter of the case at one time and claim every court remedy which flows out of the subject matter of the case. There is no opportunity to sue in a second lawsuit for something that was inadvertently or intentionally left out of the first lawsuit. This estoppel doctrine is usually called the doctrine of res judicata. The plaintiff is "estopped" (stopped) from launching a second lawsuit. The doctrine also applies to the defendant. He or she must bring forward every defence based on the subject matter of the plaintiff's case at one time and any related counterclaim to the plaintiff's claim.

Collateral Attack

There is a litigation doctrine in the court system called the doctrine of collateral attack. While the doctrine may sound a little esoteric, it is often used by advocates and judges when a second lawsuit challenges a court order made in the first lawsuit. The doctrine was first applied in Canada in 1922 but rarely used by the courts - only 80 decisions in 60 years - until it came to prominence in 1983 when the Supreme Court of Canada applied it. Since that time, there have been over 1800 decisions addressing the doctrine of collateral attack.

Normally, court orders or administrative orders are attacked directly by appealing the order. Collateral attack cases involve a party, bound by an order in the first lawsuit, who seeks to avoid compliance with that order by challenging the order itself and its enforceability, not directly through an appeal of the order, but indirectly (collaterally) in a second lawsuit. The order being attacked usually involves an activity. A party is ordered either to do something or to refrain from doing something.

The doctrine is applied in administrative law when a second lawsuit involves the non-compliance with an administrative order made in the first lawsuit, for example, an order under environmental legislation to clean-up a gas station leak. The doctrine is also commonly considered in criminal law when the second proceeding involves the breach of a court order and the accused argues, as a defence, that the order is invalid. A collateral attack in criminal law often involves the breach of a pre-trial order, such as a probation order, which has not been appealed. As one criminal court judge has stated: "In Provincial Court, where the volume and speed of cases is often onerous for all concerned, and countless statutory orders such as, inter alia, weapons prohibitions, license prohibitions, and probation orders, undertakings, recognizances, all containing prohibitory terms, are daily made, it is imperative that such orders, once made with statutory jurisdiction, be treated as valid unless and until they are found on appeal to be invalid." In other words, the fundamental policy behind the doctrine of collateral attack is to maintain the rule of law and to preserve the repute of the administration of justice. If a condition of a probation order is breached and the accused faces a separate criminal proceeding for breaching the condition, the accused cannot challenge the validity of the probation order in the breach proceeding. That would be a collateral attack. The only opportunity to challenge the probation order is to appeal it directly before the breach has occurred.

Vexatious Procedures

Some people like to sue other people again and again. Repetitive litigation is a frequent occurrence in family law where the litigants' emotions often run high. But you will also see it in civil law where a person may, for example, sue a bank again and again after the bank has foreclosed on that person's business. Most provinces now have vexatious proceedings legislation to thwart these lovers of litigation. The legislation establishes a statutory doctrine that may be used by the courts to bar a litigant from actually commencing a lawsuit without first obtaining leave of the court to do so. In Ontario, vexatious proceedings legislation dates back to 1930 but as late as 1979 there were still very few cases decided under the Ontario legislation. Now, however, we have a litigious Canadian society.

There are many criteria used to declare a vexatious litigant. Generally speaking, vexatious lawsuits are lawsuits brought for an improper purpose, including the harassment and oppression of other parties for purposes other than the assertion of legitimate rights. A general characteristic of these lawsuits is that the grounds and issues raised in a previous lawsuit tend to be rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who have acted for or against the litigant in earlier proceedings. In observing the personality of the litigant, courts have used the terms "mean-spirited" and "nasty" and observed that the nastiness conveys itself through to the legal process itself. As a result, the pleadings in the lawsuit are often replete with extreme and unsubstantiated allegations in language that is vitriolic, offensive, and defamatory.

A declaration of a vexatious litigant is an extraordinary remedy because such a declaration limits a person's fundamental right of access to the justice system. However, once a declaration is made by the court, the onus shifts to the estopped litigant to seek leave to commence another lawsuit. The estopped litigant must satisfy the court that the intended new proceeding is not vexatious, or an abuse of process, that there are reasonable grounds for the new proceeding, and that a great or substantial injustice will occur if leave is not granted. When a declaration is made, one jurist has expressed it in interesting language: "The parties have gorged on court resources as if the legal system were their private banquet table. It must not happen again."

SLAPPs

In Canada and in the United States, there is a growing phenomenon of abusive litigation called SLAPPs. A SLAPP is an acronym, or an abbreviation, for a strategic lawsuit against public participation. These lawsuits are usually libel and slander actions brought against crusading individuals or public interest groups by big companies to stifle public criticism about them. Some SLAPPs go even further. One gun manufacturing company, for example, sued several public interest groups for millions of dollars alleging that they intentionally interfered with its contractual relations with customers. When the big companies resort to the courts, the public criticism often ceases because the issues are now before the court. Where necessary, injunctions are sought to quiet the bad publicity. The corporate goal of SLAPPs is to intimidate and eliminate critics, deplete the critics' financial resources, and stall the issues in the court system. The court system is used to thwart the rights of citizens to speak out publicly about corporate behaviour or corporate manufacturing of certain products, such as guns.

Judges have always had an inherent power to control abusive litigation but this power appears not to be working with SLAPPs. Most judges are extremely reluctant to deprive litigants from being heard on the merits (a full hearing of the case) and so they naturally tend not to intervene in a SLAPP to dismiss the lawsuit at an early stage on the basis that it is a frivolous or vexatious lawsuit.

In the United States, more than half of the states have enacted anti-SLAPP legislation to stop this lawsuit trend by permitting the courts to promptly dismiss any lawsuit that is clearly abusive in nature. Among the new tools given to the courts is the procedural ability to shift the burden of proof from the defendant to the plaintiff if the abuse of the court system is obvious. In other words, the big company must prove why the SLAPP it has launched should not be dismissed right away. In Canada, some of the provinces have attempted to introduce their own ant-SLAPP legislation but without much success. Anti-SLAPP Bills were introduced in New Brunswick in 1997 and in Nova Scotia in 2003 but were never passed. British Columbia enacted anti-SLAPP legislation in 2001 but it was repealed a few months later.

LITIGATION LIMITATION PERIODS

When Can You Sue?

Ancient Ontario laws regarding limitations periods for lawsuits were swept away on January 1, 2004, to the relief of lawyers and their clients. These laws dated from the nineteenth century and were contained in legislation called the Limitations Act and in some later acts. This legislation was about the limited time period in which you may commence a lawsuit before you are barred from doing so. It was confusing to say the least. If you suffered injuries from a slip and fall on a municipal sidewalk, you had to sue within three months, but if your slip and fall was in a grocery store parking lot, you had six years to sue. If you were suing for negligence, you had to sue a police officer within six months, a doctor within one year, a car driver within two years, and an architect within six years.

This has now all changed. Under the new Limitations Act, there is a two year limitation for most claims. A claim is defined as a lawsuit to remedy an injury or damage that occurred as a result of an action or omission. For example, an action could be the negligent act of driving on the wrong side of the road. An omission could be the failure to perform the terms of a contract. The new Act also applies a discoverability rule. The limitation period runs from the time that a claim (injury, damage, etc.) is discovered. The discoverability date is the date a reasonable person ought to have known of the claim. The law is simpler now but there still remain complicated transition rules between the old and the new law.

Limitation Periods

In the civil law court system, you cannot wait forever to launch a lawsuit. Each province in Canada has specific legislation about how much time you have to sue once you know, or ought to have known, that you have a case against someone else. The legislation is often entitled "A Statute of Limitations." The Supreme Court of Canada has set out three reasons for limitation periods:

"There are three rationales and they may be described as the certainty, evidentiary, and diligence rationales ...Statutes of Limitations have been long said to be statutes of repose .... The reasoning is straightforward enough. There comes a time, it is said, when a potential defendant should be secure in his reasonable expectations that he will not be held to account for ancient obligations. The second rationale is evidentiary and concerns the desire to foreclose claims based on stale evidence. Once the limitation period has lapsed, the potential defendant should no longer be concerned about the presentation of evidence relevant to the claim ...Finally, plaintiffs are expected to act diligently and not "sleep on their rights"; statutes of limitations are an incentive for plaintiffs to bring suit in a timely fashion."

A defendant may use the expiry of a limitation period as a defence in a lawsuit. There is also another defence that a defendant may put forward. It is called the doctrine of laches. To have the benefit of this defence, a defendant must prove delay on the part of the plaintiff in launching the lawsuit and either acquiescence by the plaintiff showing acceptance of the defendant's conduct or a situation which has caused the defendant to alter his or her positon in reasonable reliance on the plaintiff's acquiescence of the status quo.

Promissory Notes

LITIGATION LOSSES

The Concept of Damages

A plaintiff usually sues a defendant for damages, that is, for financial compensation. There are two kinds of damages. Liquidated damages are damages that are easily quantifiable by a calculation. Unliquidated damages are damages that are harder to quantify and the court must determine the amount.

An example of liquidated damages is a loan of $25,000 that a borrower has agreed to pay back to a lender in monthly instalments. The agreement includes a term that the whole outstanding amount becomes due and owing if the borrower fails to make the monthly payments. The borrower defaults on the monthly payments. The amount of the damages is easily determined by deducting the actual monthly payments from the $25,000 loan.

An example of unliquidated damages is a septic system deficiency. A purchaser buys a property based upon a representation that the 15 year old septic system is in good working order. The septic system immediately backs up and needs to be pumped out regularly. The purchaser installs a new septic system for $10,000. The vendor is clearly at fault for the misrepresentation but how much is the vendor liable for? The purchaser bought a 15 year old septic system and now has a new one. There is a betterment issue here and, normally, a trial judge will discount the $10,000 to reflect what was purchased. To quantify these damages, the court will need evidence from the plaintiff to determine the value of a new versus an old septic system.

In considering the amount of damages to award a plaintiff, a court will consider what steps, if any, the plaintiff has taken to lessen the damages suffered. There is a positive duty on the plaintiff "to mitigate the damages." An example is a tenant who has defaulted on a one year lease after three months occupancy. A landlord who is asking the court for compensation for the remaining nine months must show the court the advertising efforts made to re-rent the premises.

LITIGATION MEDIATION

Mediation

Mediation in a lawsuit is common practice throughout Ontario. Whether a case is a family law case or a civil law case, mediation is often helpful. It is different from a pre-trial conference which is a mandatory settlement conference held before a judge with the lawyers representing the parties, and usually without the parties present. A mediation is an alternative dispute resolution session, commonly called an ADR session. It is a private settlement conference between the parties and their lawyers that takes place on consent of the parties in the dispute.

There are many businesses specializing in mediation services. The mediators are usually lawyers who have taken special courses in mediation. There are also retired judges who offer mediation services. Some mediators are known for their expertise in a particular area of the law, such as real estate or family law. The mediator is a neutral facilitator who will assist the parties in reaching their own settlement. The mediator does not provide an assessment of the merits of the issues in dispute unless requested to do so by all parties. He or she never offers legal advice since each party at the mediation has a lawyer present. However, the focus is not always on the legalities of the lawsuit and the parties are expected to take an active role in the mediation.

In order for a mediation to work, open and honest communications are essential. To encourage such communications, the parties and their lawyers are required to sign an agreement stating that all negotiations, documents submitted, and statements made in the course of the mediation are absolutely privileged, confidential, and without prejudice. If the mediation fails to settle the dispute, the parties must prove their claim and defence independent of the communications made in the course of the mediation.

A mediation brief is submitted by each party before the mediation. The mediation itself usually begins with a general round table discussion before the mediator. The parties may then break off into separate groups in different meeting rooms with the mediator, and later resume with a general meeting. The cost of a mediation for one-half a day can be in the neighbourhood of $750.00 for the mediator's fees and board room facilities, shared equally between the parties. The cost is often worth the effort whether settlement is reached or not.

LITIGATION MOTION

A Motion in a Lawsuit

A motion is a hearing in court before the trial of a lawsuit. It often involves seeking a court order to resolve some procedural dispute as the lawsuit proceeds to trial. For example, a party may be refusing to produce certain documents to the other party on the basis that the documents are protected by a solicitor-client privilege or the party may be refusing to answer certain questions in an examination for discovery (the disclosure examination) on the basis that the questions are not relevant to the subject matter of the lawsuit.

The motion is heard in open court but there are no witnesses giving oral evidence. The parties file written evidence in the form of affidavits. An affidavit is a statement by a party of the facts relied upon in the motion based upon direct knowledge, or upon information and belief, and the affidavit is sworn before a lawyer. There may also be cross-examinations on the affidavits to test the veracity of their contents and the cross-examinations are typed up and submitted to the court as transcripts of the evidence. To facilitate the court's assessment of the motion, the "moving" party often submits a concise statement of the facts and the law relied upon and the responding party may file a reply statement.

A motion is an expensive interlocutory proceeding and should only be taken when the expected results will significantly help a party's case. However, some parties, with the financial resources, will motion the other party "to death" and this can wear down the litigation resolve and the financial resources of the responding party.

LITIGATION REPRESENTING YOURSELF

Self-Represented Litigants

Many people cannot afford a lawyer to represent them in court. This often happens in the small claims court and in family court but it also happens in criminal cases and in civil lawsuits. The court calls people representing themselves "self-represented litigants." You may think that this is a recent phenomenon because of the high cost of litigation but courts have struggled with the issue of self-representation since Confederation when, for the first time, the signature of a lawyer was no longer required on a statement of claim.

Today, the courts have developed a set of guidelines to assist judges when they encounter self-represented litigants before them. One purpose of the guidelines is to promote equal justice between the parties when there is a self-represented litigant and a represented litigant. Thus, the presiding judge may explain the court process, inquire whether the self-represented litigant understands the process and the procedure, provide information about the law and evidentiary requirements, modify the traditional order of taking evidence, and question witnesses.

Another purpose of the guidelines is to promote rights of fair access to the court system for such litigants. For example, in view of the value of legal advice and legal representation in the court system, judges may refer these litigants to available sources of legal representation which they may not be aware of, such as representation through Legal Aid plans, pro bono assistance from lawyers, and legal aid clinics.

However, self-represented litigants must also be pro-active. They are expected to familiarize themselves with the relevant legal practices and procedures pertaining to their cases. They are expected to prepare their own cases and they are required to be respectful of the court process and the administrators within it. Judges and administrators have no obligation to assist them if they are disrespectful, abusive, or unreasonable in their demands.

LITIGATION SETTLEMENT OFFERS

Offers to Settle in a Lawsuit

Almost all civil lawsuits settle before trial. The reasons why parties settle a lawsuit vary. For example, a party may find that he or she has evidentiary problems with proving a case at trial or a party may find that the high stress of litigation is too much. Most often, however, it is the limited financial resources of the parties that play a large role in settling a case.

One way to place financial pressure on a plaintiff or defendant is to make an offer to settle. Offers to settle expose parties to costs sanctions in a lawsuit, that is, which side will be paying some, or most, of the legal fees of the other side at the end of the day. Here is an example of how it works. The plaintiff sues the defendant for $50,000.00 on July 1, 2002. On December 1, 2002, the plaintiff makes an offer to settle for $25,000.00. The parties go to trial on May 1, 2003 and the plaintiff is awarded $35,000.00. Because the plaintiff was awarded more at trial than the amount set out in the offer to settle, the court will penalize the defendant for not accepting the offer to settle. The defendant will be ordered to pay virtually all of the legal fees for the lawyer's work performed on behalf of the plaintiff between December 1, 2002 and May 1, 2003.

Plaintiffs or defendants may think that their lawyer is not fighting for them if the lawyer encourages settlement but that is often an unfair assumption. Under the Rules of Professional Conduct which govern lawyers, there is a positive duty upon a lawyer to advise and encourage a client to settle a lawsuit whenever it is possible to do so on a reasonable basis.

LITIGATION STAGES

Stages of a Civil Lawsuit

A civil lawsuit is different from a case in family law or criminal law. The subject matter involves disputes over such things as land, or a contract, or a will. It also may involve a wrongful dismissal, or personal injury, or the collection of a loan.

The lawsuit, or action, begins with a document called a statement of claim. The claim sets out the "cause of action" which puts forward the reasons for a case against another person. The person claiming, or complaining, is called the plaintiff. The person defending the lawsuit, the defendant, replies to the claim with a statement of defence putting forward the reasons that the claim should not succeed.

After this exchange of statements, the plaintiff and defendant must disclose to each other all relevant documents. These are listed in an affidavit of documents. The parties then conduct an oral questioning of each other to discover what evidence will be relied upon at trial. This examination for discovery takes place in an office setting without a judge present. But the examination is conducted under oath and is similar to a court examination of a witness that you see on TV.

The last stage of the action before trial is a pre-trial conference which takes place before a judge. The purpose of the pre-trial is for the judge to give an opinion on the merits of the claim and defence and to encourage settlement. The vast majority of civil lawsuits settle before trial to avoid the legal expense involved in going to trial.

A Pre-Trial Conference

Whether you are in litigation in the Small Claims Court or in the Superior Court of Justice, you will be involved in a pre-trial conference. A pre-trial conference is a non-binding settlement conference before trial. It is an informal meeting between the parties (the litigants) and their legal representatives in the presence of a judge in his or her chambers (office).

The content of the meeting is strictly confidential and cannot be used at trial. The pre-trial judge, as well, is prohibited from hearing the trial. Because of the confidential nature of the meeting, the parties are encouraged to speak freely and candidly. They should be prepared to explain their legal positions in a thorough manner and to present important documents that they are relying upon. The pre-trial judge may also speak candidly, and sometimes bluntly to the parties, in this informal setting.

The role of the pre-trial judge is to weigh the pros and cons of the case. He or she will give the parties a reasoned opinion on how the case may turn out if it goes to trial. The opinion from an experienced judge, who has spent the needed time to debate the issues with the parties, is definitely worthy of serious consideration. Trials are expensive. One party wins, the other party loses, and the loser usually has to pay much of the winner's legal costs, that is, the winner's legal fees and expenses. So, whether you are the plaintiff or the defendant, you owe it to yourself to consider settlement at the pre-trial or shortly afterwards. Settlement at this stage not only saves time and money. It avoids the stresses of a trial and it gives the parties the power to resolve the dispute on their own, rather than waiting months for a trial and decision.

Lawsuits

There are two types of lawsuits in the court system. The usual lawsuit is one commenced by a statement of claim and is called "an action." This type of lawsuit requires the opposing side, the defendant, to file a statement of defence. Once these "pleadings" are exchanged, the parties provide each other with documentary disclosure by identifying what documents they have in their possession relevant to the material facts in the case. The identification of documents comes in the form of a sworn affidavit of each party listing the documents called an affidavit of documents.

The next stage in the action is an oral disclosure session called an examination for discovery. The parties conduct an oral questioning of each other to discover what evidence will be relied upon at trial. This examination takes place in an office setting without a judge present. But the examination is conducted under oath and is similar to a court examination of a witness.

All actions must have a pre-trial conference before they proceed to trial. The purpose of the pre-trial conference is for a judge to give an opinion on the merits of the claim and defence and to encourage settlement. The vast majority of civil lawsuits settle before trial to avoid the legal expense involved in going to trial. The pre-trial judge is disqualified from hearing the trial. If there is no settlement, there will be a trial with the presentation of viva voce evidence of witnesses to determine who wins and who loses.

The second type of lawsuit in the court system is called an application. The main difference between an application and an action is that an application does not have a trial with vive voce evidence of witnesses. The reason for this is that an application only deals with cases where there are no material facts in dispute. For example, applications are suited for determining the rights of individuals when they depend on the interpretation of a document, such as a deed, a will, or a contract. An application is determined by the court solely on evidence set out in affidavits and cross-examinations on affidavits. All of the evidence is on paper. There are no live witnesses. Applications are, therefore, summary in nature and cost effective. It is a good procedure to use to get a legal matter decided quickly if it meets the test that there are no material facts in dispute.

MORTGAGES

Old Mortgages

Everyone knows that there are things that you do when you are young that need some undoing when you get older. I won't talk about most of those things, just about legal things. You are young back in the 1960's and want to go back to the land. You buy a piece of land in Haliburton in 1965, maybe it is waterfront or maybe not. You are young and you do not have a lot of money. You buy the property for $7,000 but you only have $4,000 in your bank account. The vendor likes you and agrees to take back a mortgage for $3,000 which gets registered on title to your property. You dutifully make the monthly mortgage payments to the vendor, as mortgagee, whom you have come to know personally. When you make the final payment you mail the mortgagee a note saying that this is the last payment, please write me back confirming that the mortgage has been paid in full. You get the letter from the mortgagee and file it away.

Decades go by. You build a cottage on the property. More decades go by and you finally decide to sell it in 2009. Your lawyer checks the title to the property and finds that the 1965 mortgage is still on title to your property. The lawyer tells you that you cannot sell until the mortgage is discharged (removed) from title to the property. The lawyer and you try to contact the mortgagee so that the mortgagee can simply sign discharge papers. However, the mortgagee is deceased. What can you do to discharge the mortgage? In order to discharge the mortgage, your lawyer must make a special application to the court. An application of this kind typically must prove two things. Firstly, you must explain to the court the reason you are not delivering the court papers to the mortgagee. In your case, the mortgagee is deceased so the proof is easy. In other cases, you may have to demonstrate the steps you have taken to locate the mortgagee. Secondly, you must prove to the court that the mortgage has been paid off. In your case, this is easy because you have the written confirmation. In other cases, you may have bank statements or cancelled cheques to help prove that the mortgage has been paid off. Once you obtain the court order, your lawyer will have to register it on title to your property before the mortgage is considered discharged.

Mortgage Enforcement

A mortgage is a contract between an owner of property and a lender for the loan of money. The amount of the loan is secured by registering the mortgage against the owner's land. The property owner is "the mortgagor," the lender is "the mortgagee."

When a mortgagor has defaulted in paying the mortgage, the mortgagee has two remedies against the mortgagor. The mortgagee may either sell the mortgaged property by means of power of sale proceedings and be paid out from the proceeds of sale, or the mortgagee may obtain title to the mortgaged property by means of a foreclosure action.

Before either enforcement remedy is exercised, the mortgagee will make written demand on the mortgagor to bring the mortgage into good standing by paying up the mortgage arrears and any accrued legal costs. It is important for a mortgagor to make every effort to comply with this demand. It is much easier to borrow a little money from family or friends at this early stage than to attempt a major refinancing to pay out the entire mortgage after the onslaught of enforcement proceedings.

In a power of sale proceeding, the mortgagor has between 35 and 45 days to pay the money due under the mortgage. If the sale of the mortgaged property proceeds and the mortgage debt has not been fully satisfied, the mortgagee is entitled to sue the mortgagor under the mortgage contract to recover the shortfall.

In an action for foreclosure, the mortgagee takes the land and cannot pursue the mortgagor for any shortfall under the mortgage. However, foreclosure may have some attraction to a mortgagee in a depressed real estate market where power of sale proceedings will lead to a substantial shortfall and the mortgagor has no financial means to pay it. The mortgagee may prefer to take the land and wait for a better selling market to cover the shortfall.

NEGLIGENCE

The Law of Torts

Every day in Ontario people suffer harm as a result of the activities of other people or businesses or governments. The harm is often to their person or to their physical property. The law of torts determines when a person or corporation who causes harm, the "tortfeasor," must pay compensation to the person who suffers it. The word "tort" is derived from the French word meaning "wrong." The law of torts is the law of wrongdoings.

The nature of the tortfeasor's conduct is an essential element of the law. The conduct must be intentional or negligent to establish liability. Conduct is intentional when a person intends the consequences of that person's actions. Intentional infliction of mental suffering is an example. Conduct is negligent when a person allows a situation where there is a reasonable foreseeability of the risk of harm to another person. A slip and fall caused by icy steps is an example. There are also a few torts where liability extends to innocent or accidental conduct, the torts of strict liability.

Tort law does not compensate a person for all losses resulting from the conduct of another person. The nature and breadth of the losses are scrutinized to determine what are compensable damages and what are not compensable to that person. The remoteness of the loss flowing from the specific wrongdoing is often the test to restrict an award of damages. Quantifying damages is sometimes difficult. Personal injury losses are more easily quantifiable than defamation of a person's reputation.

Tort law, therefore, is inherently moralistic because it demands that a person be responsible and accountable to another person for the consequences of that person's wrongful actions.

Law of Negligence

One of the main principles of law is the law of negligence. The main purpose of the law is to maintain and enforce expected standards of care in relationships between people. It is a fluid and dynamic law because it is always responding to current situations. What may not have been a case of negligence 30 years ago may be a case of negligence today. For example, the failure of a physician to warn a patient of the risk of HIV infection in 1980, when performing artificial insemination, may not have been a case of negligence then because the risk was not known at the time but would be a case of negligence today because the risk is now well known.

To establish a case of negligence, the plaintiff must prove the following: (1) a duty of care has arisen between the plaintiff and defendant, (2) the defendant breached the standard of care which was required to meet that duty, and (3) the plaintiff suffered damages (losses) resulting from the breach. Negligence may occur when providing information or advice. An example is an accountant failing to give proper tax advice. Negligence may also occur when performing an act. An example is an insurance agent who fails to provide the proper insurance coverage for a building contractor.

If the negligent act results in physical injury to the person, the negligent defendant "takes the victim" as found. This is the "thin skull" rule. The defendant is liable for all physical injury to the victim even though the victim had a pre-existing physical condition, such as a thin skull, which made the injury more serious than for an average person.

There are two main defences to a case of negligence. If the plaintiff voluntarily assumes the risk, the defendant cannot be liable for the damages suffered. If the plaintiff contributes to the damages by negligent conduct, the defendant is liable but the plaintiff's damages are reduced. The damages suffered by a plaintiff who trips over a sandwich board sign, which is there to be seen, may be reduced by 50 per cent or more.

The "Thin Skull" Rule

The "thin skull" rule is an old English rule of law which applies in Canada to acts of negligence (a tort) by one person (the tortfeasor) against another person causing personal injury. An example is a slip and fall in a shopping mall parking lot which is not properly kept clean of snow and ice in the winter. The principle is that the tortfeasor is liable for the plaintiff's injuries even if the injuries are unexpectedly severe owing to a pre-existing condition, such as a thin skull, when severe head injuries result from the slip and fall. The tortfeasor must take his or her victim as the tortfeasor finds the victim and is, therefore, liable even though the plaintiff's injuries are more dramatic than they would be for a normal person.

A decision of the Supreme Court of Canada released in May 2008 revisited the "thin skull" rule. Culligan is a manufacturer and supplier of drinking water in rural areas such as Haliburton. The plaintiff replaced an empty bottle of drinking water with a full bottle and saw a dead fly and part of another dead fly in the unopened replacement bottle. Obsessed with the event and its "revolting implications" for the health of his family, he developed a major depressive disorder, phobia, and anxiety. He sued Culligan for psychiatric injury.

The Supreme Court held that, as the manufacturer of the drinking water, Culligan owed the plaintiff, as consumer, a duty of care in supplying bottled water to him, and it breached the standard of care by providing the plaintiff with contaminated water. The court also held that the plaintiff met the requirement of personal injury because he suffered a debilitating psychological injury which had a significant impact on his life. However, the court held that, although the breach caused the injury in fact, it did not do so as a matter of law. The court stated that "the law expects reasonable fortitude and robustness of its citizens and will not impose liability for the exceptional frailty of certain individuals." The plaintiff failed to meet the test of foreseeability, namely that it was foreseeable that a normal person would suffer serious injury from seeing the flies in the bottle of water he was about to install but did not drink. Unusual or extreme reactions to events caused by negligence are imaginable but are not reasonably foreseeable. In legal circles, a debate is ensuing whether the venerable "thin skull" rule has been "watered down." What do you think?

Personal Injury Lawsuits

A personal injury lawsuit involves suing someone for financial compensation ("damages") for injuries that a person has suffered. The injuries may be caused by a negligent act, such as a slip and fall on a greasy floor in a food store. Or the injuries may be caused by an intentional act, such as an assault and battery in a tavern.

The damages that are sued for are usually of three kinds. There are pain and suffering damages which involve assessing the physical and mental injuries suffered and how they affect a person's life. There may also be loss of income damages because the person cannot work for a period of time as a result of the injuries. Special damages are those out-of-pocket expenses that a person has incurred, such as the cost of physiotherapy or medication.

To prove personal injury damages, the injured person must produce all relevant documentation. This will involve obtaining medical records of attendances at a hospital emergency room and visits to the family doctor. The person may also be required to produce past income tax returns to prove previous levels of income. Receipts to prove special damages as a result of the injuries will also be required.

There may be good defences to a personal injury lawsuit either to prove that the defendant was not in any way at fault ("liability") or to weaken the liability issue and reduce the amount of the damages. On liability, the defendant may argue that the injured person contributed to the event which caused the injury, for example, by the type of shoes worn in the store or by provoking the assault by drunken behaviour. On damages, the defendant may canvas issues with the injured person that may be sensitive, such as a history of mental health problems or a failure to declare income in a tax return. Such defence tactics often promote early settlement for less than the financial compensation claimed.

Negligent Police Investigation

In 2007, the Supreme Court of Canda recognized the tort (the wrongdoing) of negligent investigation by police officers. In this case, the suspect was investigated by the Hamilton police, arrested, tried, wrongfully convicted, and ultimately acquitted after spending more than 20 months in jail for a crime he did not commit. The police officers thought that the suspect had committed ten robberies. There was some evidence linking the suspect to the robberies, including a police tip, eyewitness identifications, a potential sighting of the suspect near the site of one of the robberies, and witness statements that the robber was aboriginal, which the suspect was.

However, during their investigation, the police also had information that two Hispanic men, one of whom looked like the suspect, were the robbers. Two similar robberies occurred while the suspect was in custody. After the suspect was acquitted following a second trial, he brought a civil action that included a claim in negligence against the police based on the conduct of their investigation.

At issue before the Supreme Court was whether, as a matter of law, the police could be sued for neglgent investigation. The court held that the police are not immune from liability under the law of negligence and the tort of negligent investigation exists in Canada. Police officers owe a duty of care to suspects. The relationship is clearly personal, close, and direct. A suspect has a real interest in the conduct of the investigation. The court stated that "at stake are his freedom, his reputation and how he may spend a good portion of his life." The court also held that this new tort is consistent with the values of the Canadian Charter of Rights and Freedoms because it fosters the interest of the public in responding to failures of the justice system.

The decision was not unanimous. Three of the nine judges dissented. They stated that the tort of negligent investigation should not be recognized in Canada because a private duty of care owed by the police to suspects would necessarily conflict with an officer's overarching public duty to investigate crime and apprehend offenders. On the facts of the case before the court, the court held that the police officers' conduct, considered in light of police practices at the time, met the standard of a reasonable officer in similar circumstances. The suspect's claim in negligence was dismissed for this reason.

Private Investigators

A private investigator was hired by an employer to surreptitiously investigate suspected theft and drug dealing at the employer's plant in southern Ontario. Following the investigation launched by the employer, a 62 year old employee, who was a long-standing employee and supervisor at the plant, was fired and arrested for theft. He was handed over to the police "on the spot" at his workplace. Unfortunately, the name of the employee, Correia, had got mixed up with the similar name of another employee, Corriero. Apparently, the private investigator did accurately supply the employer with the name of Corriero as the real suspect, an employee who was 40 years younger than Correia. However, the employer mistakenly, and perhaps negligently, identified Correia as the culprit to the police.

There were several issues before the court. One of the issues was whether the former employee could sue the private investigator for negligence. The faithful employee alleged in the lawsuit that the private investigator was careless in his investigation which had led to damages suffered, including post-traumatic stress disorder. You can well imagine what it would be like to be wrongfully arrested on the job in front of fellow employees you have worked with for many years.

The Ontario Court of Appeal determined, as a matter of legal principle, that the former employee could sue the private investigator. The Court of Appeal stated: "As the private sector becomes more and more involved in activities that were traditionally within the sphere of public policing, the greater the likelihood that their negligence could lead to wrongful arrests and even convictions. We see no incoherence in requiring a private investigator to be careful in its investigation; surely the client would expect nothing less from the investigator." Having determined the new legal principle, the court left the factual issue of whether this particular private investigator was negligent in his investigation to be determined by the trial court on another day. The possible negligence of the employer in identifying the wrong person to the police would also be determined by the trial court.

Good Samaritans

One of the main principles of law is the law of negligence. The main purpose of the law is to maintain and enforce expected standards of care in relationships between people. To establish a case of negligence, the plaintiff must prove that a duty of care has arisen between the plaintiff and defendant and that the defendant has breached that duty.

Negligence claims are often made against professionals who have provided services to an individual. The lay person is not usually in a relationship that gives rise to a duty of care but such a relationship may occur when he or she tries to help someone, as a Good Samaritan, at the scene of an accident or emergency. The courts have held that a person who stands by while another person is in peril owes no duty of care to that person to help. However, a duty of care does arise once the person voluntarily undertakes to help that person.

In Ontario, prior to 2001, there was no legislation in place to address the situation of a Good Samaritan. The courts established the standard of care owed by the Good Samaritan ("the common law".) The Good Samaritan had to take reasonable steps when assisting a person in peril. The test of "reasonableness" was to be viewed in the context of the immediate and pressing emergency facing the Good Samaritan, often called "the agony of the moment" principle.

In 2001, Ontario passed the Good Samaritan Act to give incentive to people to help when encountering an accident or emergency. This legislation has changed the common law by lowering the standard of care owed by a Good Samaritan to a person in peril. The test for the liability of a Good Samaritan is now one of gross negligence. The Act states that a Good Samaritan "is not liable for damages that result from the person's negligence in acting or failing to act while providing the services, unless it is established that the damages were caused by the gross negligence of the person."

Not everyone who assists at the scene of an accident or emergency is covered by the "gross negligence" standard of the legislation. There are only two categories. Health care professionals, such as ambulance personnel, are covered. And your basic Good Samaritan is covered, namely any person who voluntarily assists "without reasonable expectation of compensation or reward." In many rural areas, such as Haliburton, volunteer fire fighters regularly appear at the scene of an accident or emergency. If they are receiving some form of compensation from the township, they may not be covered by the "gross negligence" standard but by the higher standard of reasonableness.

Negligent Misrepresentation

A diamond merchant kept his diamonds in a safe which was protected by an alarm system supplied by a security firm. Although the alarm system was as effective as any other system on the market, senior personnel at the security firm knew that it could be circumvented by a person who possessed the required technical knowledge. After a burglary at the premises of another diamond merchant who was protected by a similar alarm system supplied by the same security firm, the diamond merchant asked the security firm to send someone to inspect his alarm system. The security firm sent out a new employee who had been on the job just one week and did not know that the system could be circumvented. He made an inspection of the installation at the premises of the diamond merchant. The employee asserted to the diamond merchant "even our own engineers could not go through this system without setting an alarm." The safe was broken into and a substantial quantity of diamonds was stolen by thieves who had circumvented the alarm.

The security firm was found liable and had to pay the diamond merchant for his losses. The reason: negligent misrepresentation. Why? The employee of the security firm had negligently made an erroneous statement. To the diamond merchant, the employee possessed special skill and knowledge of the alarm system. The employee knew or ought to have known that, when he made the statement, the diamond merchant was relying upon his skill and knowledge. He owed a duty of care to the diamond merchant in the circumstances but breached that duty when he negligently made the erroneous statement. No one ever found out whether the circumvention was due to the complicity of employees of the security firm or of the other diamond merchant, or other thieves.

NUISANCE

The Law of Nuisance

An owner of land has the right to an unfettered use and enjoyment of the land and is protected by several real property (land) laws. For example, an owner is protected from another person trespassing on the land by specific legislation, the Trespass to Property Act. An owner is also protected by the law of nuisance which has evolved on a case by case basis (the common law) for over a century. The best known case in this area is Rylands v. Fletcher and the law of nuisance is most often referred to as the rule in Rylands v. Fletcher.

The rule applies to damage caused to land and other property by the escape of something from a neighbour's lands. Common situations in the law of nuisance are odours, smoke, fumes, and herbicides escaping from adjoining lands in such a way that they affect the use and enjoyment of neighbouring lands. Other situations are wild animals escaping from a zoo or golf balls from a golf course. The interference must be unreasonable and there must be actual damage to the neighbour's property to support a lawsuit. It does not matter whether the escape of the subject matter is intentional or due to negligence. The wrongdoer is strictly liable if damage results.

Although the main purpose of the law of nuisance is to balance the interests of owners of adjoining lands, not every interference with the use of land will constitute a nuisance and the courts have a wide discretion to be sensitive to the particular facts of each case and the history of the neighbours' relationship.

A View from Your Property

An owner of land has the right to an unfettered use and enjoyment of his or herland and is protected by several real property (land) laws. One example is the law of nuisance which has evolved on a case by case basis (the common law) for over a century. The rule often applies to damage caused to land and other property by the escape of something from a neighbour's lands. Common situations are odours, smoke, fumes, and herbicides escaping from adjoining lands in such a way that they affect the use and enjoyment of neighbouring lands. Noise may also constitute a nuisance.

What about the view from your property in the pristine landscape of Haliburton? You live on rural property and have a pleasant view of a stream meandering through your neighbour's property. Your neighbour constructs a two car garage and shop blocking your view of the stream. What can you do? The law in Ontario is clear that a loss of enjoyment of a view does not constitute a nuisance by the neighbour. One leading author on the topic described in this way: "By way of contrast, although a plaintiff has been held to be entitled to clean air, free of odours, smoke, gases, and peace and quiet, he is not entitled, at least so far as the law of nuisance is concerned, to enjoy a pleasant or attractive view. If the defendant's conduct produces an eyesore that is visible to the plaintiff, the latter cannot claim the protection of the law of nuisance. A defendant, it seems, can make his property as ugly as he chooses, and he will remain immune from liability under the common law." But, perhaps, a township bylaw may apply.

It is not uncommon to buy rural property in southern Ontario and years later the province builds a highway through the farm fields you are looking at. The government has been sued for such an intrusion on a person's aesthetic view. The case went all the way to the Supreme Court of Canada but without success. Here is what the court said: "I agree with the Court of Appeal that what the appellants complain of here is the loss of prospect or the loss of view. There are as well the elements of loss of privacy, but in essence the complaint is that once they dwelt in a rural setting with a pleasing prospect and now they are confronted on one side of their land at least with a modern highway. It is a claim for loss of amenities. That the use of the highway will constitute a disruptive element is probably true but that is a field of damage which may not be considered."

Drainage Problems with Neighbours

There are two ways that water drains from rural land, and both occur here in the County of Haliburton. One way is by a stream or creek a natural watercourse. A natural watercourse is established when water flows along a defined channel, with a bed and banks, for a long period of time. It is not essential that the water supply be continuous or that it provides a water source for flora or fauna. It is sufficient if the water rises periodically from natural causes and reaches a plainly defined channel of a permanent character. Spring run-off by a small stream flowing to a lake is a good example. The stream is often dry in the summer months.

A natural watercourse is protected by various government bodies like the Ministry of Natural Resources. You cannot divert the direction of the water flow or obstruct its flow without getting yourself into deep trouble. You may find that the watercourse adjacent to your property is full of brush and debris clogging the flow of water, which is then backing up onto your property. You may remove the brush and debris to get the water moving downstream. However, before removing these obstructions, you should estimate the flow and volume of water being held back upstream in order to determine whether the channel downstream can accommodate the sudden increase in flow without damage to neighbouring lands. You could very well be liable for the damage downstream.

The second way that water drains from land is from the surface. Surface water is water that falls as precipitation ultimately finding its way to a natural watercourse. Unlike a natural watercourse, it has no defined course and no right of drainage. If surface water of a neighbour flows to a neighbour at a lower elevation, and the higher neighbour has done nothing to collect or concentrate the flow of water from the lands, a court will not penalize the higher neighbour because the law recognizes that water flows downhill naturally. However, suppose eavestrough water is deliberately collected and drained to the lower neighbour's land eroding those lands. Since this water is surface water with no right of drainage, the lower neighbour could dam the water at the property line to protect the lands from eroding. The lower neighbour could also take legal action due to the erosion.

PENSIONS

The Canada Pension Plan

Every working person is required to contribute to the Canada Pension Plan. There are various benefits under the Plan, some of which you may know about, some of which you may not. You are, of course, eligible for a retirement pension. You may choose to receive a full pension at age 65. Or you may apply for a reduced pension at age 60 under certain conditions.

Another benefit under the Canada Pension Plan is a death benefit to be paid to the estate of the deceased contributor or directly to the person who pays for the funeral. There is also a survivor's pension which the Plan will pay to the spousal survivor of the deceased contributor. An important benefit, perhaps not as well-known, is the contributor's entitlement to a disability pension. This is different from the provincial disability pension under the Ontario Disability Support Program Act. Under the provincial system, you do not make contributions and part of qualifying is that you cannot have any more than $5,000 in your bank account at any one time. The Canada Pension Plan is a federal plan where you are entitled to a disability pension if you meet the criteria for disability. The criteria are, unfortunately, quite stringent. To qualify you must have a severe and prolonged mental or physical disability. The legislation states that a disability is prolonged if it is determined that the disability "is likely to be long continued and of indefinite duration or is likely to result in death." To prove this criterion, you will have to provide the government with some persuasive medical reports. A disability is considered severe if it is determined that you are "incapable regularly of pursuing any substantial gainful occupation." The severity criterion has been definitively interpreted by the Federal Court of Appeal. The court rejected the idea that a disability applicant must be incapable, at all times, of pursuing any conceivable occupation. The court instead applied a more lenient "real world" test. The applicant must be "incapable of pursuing with consistent frequency any truly remunerative occupation." In applying this test, the court stated that the government must consider the particular circumstances of the applicant, namely, the applicant's age, education level, language proficiency, and past work and life experience.

PERSONAL PROPERTY

Bailment

A relationship of bailment may occur when you leave your suit with the dry cleaners or leave your car with an attendant in a parking lot. You are the bailor and the owner of the dry cleaners or of the parking lot is the bailee. The law of bailment arises in any circumstances when there is a delivery of personal property by one person to another for a particular purpose with the intention that the personal property will be returned when the purpose for which the property was delivered is accomplished. It is not related to the term "bail." In criminal law, bail is given as security for the temporary release of a prisoner pending trial.

In bailment, the personal property is in the custody of another person usually based on a payment of money. While in that person's custody, the custodian is bound to use due care in keeping and preserving the property entrusted. The standard of care is higher than in a situation where the property is delivered to another person gratuitously, that is, for no reward at all. The standard is the standard that a careful and vigilant person would exercise in the custody of his or her own personal property of a similar description and character in similar circumstances.

Thus, when personal property, such as your suit, is damaged or lost while in the custody of the bailee, the onus is on the bailee, not the bailor, to prove either that he or she took appropriate care of the property or that the failure to do so did not contribute to the damage or loss. The bailee, however, is not an insurer. In the absence of negligence, there is no liability in a bailment relationship for damage to or loss of the property due to an accident or fire or due to the unauthorized acts of employees acting outside the scope of their employment.

The bailee also has another defence, usually arising in parking lot cases. The issue is whether the parking lot owner merely granted the car owner a license to park or assumed the responsibility of the safe custody of the car as a bailee. The circumstances under which car keys are transferred to a parking lot attendant are crucial to the issue. A ticket given by the attendant to the car owner stating, in writing, that "all cars are parked on the premises at the owners' risk" may exonerate the parking lot owner.

POWER OF ATTORNEY

Power of Attorney

Illness may befall you and affect your ability to manage your personal and business affairs or make decisions about them. Many people have a power of attorney ready to be exercised in such a situation. A power of attorney is a legal document signed by you to authorize a person whom you trust to make decisions for you when you are not able to make decisions for yourself. It may apply to both your personal life and your business life.

What happens if you have not signed a power of attorney and you can no longer make decisions for yourself? A difficult legal situation arises for your business and your family. A business colleague or family member will have to make an application to court in order to make decisions for you. The legislation involved is called the Substitute Decisions Act and it permits a person to become the "guardian" over your personal care and over your personal and business property.

A court application to become a guardian involves a fair amount of legal work. The person seeking guardianship will have to prove that you can no longer take care of yourself and your property. This usually involves affidavit evidence from two doctors. A "Guardianship Plan" must be filed describing how the guardian will look after your personal care. As well, a "Management Plan" must be filed describing how the guardian will manage your business and personal property. These documents are delivered to the Public Guardian and Trustee who acts in your best interest at the court hearing. When the business and personal property involved is of some value, the Public Guardian often requires that the guardian post a bond as security. All of the expenses involved in the court application and in obtaining the bond are paid by you. Needless to say, it will cost you less to have a signed power of attorney ahead of time and it will also be easier on your business colleagues and family members.

PROVINCIAL OFFENCES

Provincial Offences

Federal offences are offences under the laws of Canada enacted by Parliament in Ottawa. Examples are an impaired driving charge under the Criminal Code or a marijuana offence under the Controlled Drugs and Substances Act. Provincial offences are offences under the laws of Ontario enacted by the Legislature in Toronto. Examples are a careless driving charge under the Highway Traffic Act or a trespassing offence under the Trespass to Property Act.

The court procedure for provincial offences is governed by the Provincial Offences Act. The commencement of a provincial offence proceeding often starts with a "Summons to the Defendant" to appear in court on a certain date. If there is a plea of guilty on that date, the court will then hear submissions on the type of sentence that should be imposed given the nature of the offence. If there is a plea of not guilty on the first date, the court may proceed with a trial or adjourn the matter at the request of the Crown or the defendant to a fixed trial date. The trial establishes whether the offence has been committed by the defendant. If the defendant is found guilty of the offence, submissions will then be made on sentencing. Factors the court will take into account in imposing a sentence include the seriousness of the offence, the protection of the public, deterrence, the age of the defendant, and whether there was a guilty plea.

Dog Owners' Liability

In Ontario, dog owners may find themselves liable to pay for the wrongful acts of their dogs. The Dog Owners' Liability Act governs the situation. The Act provides that a dog owner is liable for damages resulting from a bite or attack by the dog on another person or domestic animal. However, the extent of the liability may be limited. Although the liability does not depend upon the owner's knowledge of the dog's propensity or the owner's fault or negligence, the court will reduce the damages awarded in proportion to the degree to which the fault or negligence of the plaintiff caused or contributed to the damages. Guard dogs attacking trespassers intent on committing a crime are exempt unless the keeping of the dog on the premises was "unreasonable" for the purpose of the protection of people or property.

In addition to a lawsuit in the civil courts to obtain monetary compensation, a dog owner may be prosecuted under the Provincial Offences Act for the bite or attack or because the dog behaved in a menacing manner. The court has wide powers to order measures for more effective control of the dog, including that the dog be confined to the owner's property at all times, or muzzled or leashed when in public places. The court may also order that the dog be destroyed. In considering an order, the court may take into account various factors, such as the dog's past and present temperament and behaviour, the seriousness of the injuries caused by the bite or attack, the dog's physical potential for inflicting harm, and unusual contributing circumstances tending to justify the dog's action.

In August 2005, the highly publicized pit bull legislation came into force in Ontario. The legislation amended the Dog Owners' Liability Act. It prohibits future pit bull ownership in Ontario and imposes strict requirements on existing pit bulls including a requirement that all pit bulls be sterilized. "Pit bull" is defined as a pit bull terrier, an American pit bull terrier, a Staffordshire bull terrier and an American Staffordshire terrier. "Pit bull" also includes any dog that has an appearance and physical characteristics that are substantially similar to those dogs. The owner of an existing pit bull must ensure that the pit bull is secured at all times when in public places with a muzzle and a leash no longer than 1.8 metres in length. There are some exemptions, however, for approved dog shows and flyball tournaments.

Officially Induced Error

Consider this scenario. A retailer in the big city is in the risky business of selling videos which are close to the line. He is careful to sell only videos which have been approved by the Ontario Film Review Board. In fact, he regularly seeks and pays for the film review board approval of particular videos before putting them in his store for sale. The police raid his premises and he is charged under the Criminal Code for illegally selling the approved videos.

The retailer defends the charge relying upon the board approval of the videos. He is acquitted on the basis of an officially induced error. In this case, the court made three findings. It held that the Ontario Film Review Board is charged with determining which films may be shown in Ontario, that the general public understands that the board is the body which approves films for play in Ontario, and that the board is the logical choice to look to for anyone seeking advice about whether a film can be legally sold in Ontario.

For the defence to apply, several elements must be proved. The officially induced error must be an error of law. The accused must consider the legal consequences of his actions and seek legal advice. The advice must come from an appropriate official and need not be in writing. The official must be one whom a reasonable person would consider responsible for advice about the particular law in question. Finally, the accused must demonstrate reliance on the erroneous official advice.

The advice of officials of any level of government, federal, provincial, or municipal, may induce an error of law and trigger this defence provided that particular government body is responsible for the law in question. So, if you are thinking of making some changes to your shoreline, and you talk to an official from the Ministry of Natural Resources, and he says: "Go ahead. You don't need a work permit," keep good notes of the conversation. You never know when your lawyer will need them.

REAL ESTATE TRANSACTIONS

Land Registration

The purpose of land registration is to provide a uniform system of registering instruments (documents), such as deeds which create or transfer interests in land. A search of title then discloses the ownership of the land and the restrictions and obligations that may affect its use, such as a right of way over the land. There have been two land registry systems operating in Ontario for a century and more, namely, the registry system under the Registry Act established in 1795 and the land titles system under the Land Titles Act established in 1885. The registry system produces an inventory of instruments affecting title to land. It has been described as nothing more than a large deed box where documents are deposited in the local registry offices. Unlike the registry system, the land titles system produces a statement of the title in a parcel register, rather than an inventory of instruments that must be looked at. The registry system has been the dominant land registry system until relatively recently.

Two significant changes took place in Ontario. In the 1990's, Ontario made a major change when it started phasing out the registry system altogether by converting all registry system registrations to land titles. At the same time, Ontario started implementing electronic property registration capabilities. Ontario was the first jurisdiction in the world to provide electronic registration of land-related documents. The Ministry of Consumer and Business Services began building POLARIS, the Province of Ontario Land Registration Information System with the objective of automating Ontario's land registration system. Electronic land registration was launched as a pilot project by the government in a strategic alliance with Teranet Inc. which developed software called "Teraview" for the purpose. ("Terra" is a Latin word meaning earth.)

Electronic land registration documents rely on encrypted digital signatures identifying the party submitting the document for registration. Documents are created and modified online on behalf of the vendor and purchaser with a property's legal description and ownership information retrieved from Ontario's land titles database and automatically inserted into the electronic document. Thus, from the 1990's, two types of titles existed for a while: paper titles and electronic titles. However, electronic registration slowly became compulsory in many areas of the province. The Haliburton Land Registry Office is one of the last areas in Ontario to convert to land titles and electronic registration. As of July 19, 2010, all registrations in Haliburton must be registered electronically except certain specified documents, such as reference plans.

Buyer Beware

Buyer beware! is alive and well in Ontario. This is an ancient legal concept in land law going back hundreds of years in the English legal system. The phrase "Buyer beware" is really a long Latin phrase, the first two words of which are "Caveat emptor" or "Buyer beware." The full Latin phrase translates as "Let the purchaser, who is not to be ignorant of the amount and nature of the interest, exercise proper caution."

Why is there a caveat emptor system in Ontario? One reason is historical. We inherited an economic system which thinks there should be bargaining freedom between the purchaser and vendor while the contract is in the process of being made and, only after that, should the courts impose themselves on the contract. A sort of laissez-faire attitude from the old days. Another reason is that there should be no guarantee by the vendor of the purchase price of the property. It is up to the purchaser to bargain with the vendor for the lowest price and for the vendor to bargain for the highest price. In other words, fair market value has nothing to do with the real value of land but everything to do with what a purchaser is willing to pay for the land. Thus, if the purchaser's spouse really likes the kitchen or the shop, the purchaser may have to pay more for the property then it is really worth to keep the purchaser's spouse happy.

A final reason for caveat emptor is the contract itself and this goes back to bargaining freedom. The purchaser can protect the purchase by saying in the contract "I want to be sure that I am purchasing this or that when I purchase your property." Thus, Bora Laskin, the most famous judge in Canadian judicial history, said: "Absent fraud, mistake, or misrepresentation, a purchaser takes existing property as he find it, whether dilapidated, bug infested, or otherwise uninhabitable, or deficient in expected amenities, unless he protects himself by contract terms."

Patent and Latent Defects

For real estate commerce to thrive, there must be certainty and finality in the purchase and sale of land. Caveat emptor, or buyer beware, has been the legal doctrine applied for centuries to achieve this goal. The basic tenet is that the onus is on the purchaser to ensure that the property to be acquired is in a satisfactory state for the purchaser's needs. In certain circumstances, courts have recognized that the finality of a purchase may be questioned when there are defects affecting property. The debate centres on whether the defects are patent or latent.

Patent defects are defects which are visible to the eye or which may be considered defects by necessary implication from something which is visible to the eye. For example, a crack in a basement wall tells a purchaser about the immediate condition of the wall itself but it may also speak of a larger structural support issue in the building. The test is whether the patent defect is readily discoverable by ordinary inspection before the closing of the transaction. If the purchaser fails to observe a patent defect on inspection or fails to make reasonable enquiries about the patent defect observed, he or she cannot complain about such a defect later. Caveat emptor applies. A vendor is under no duty to draw attention to a patent defect.

Latent defects are defects not visible to the eye or not readily apparent to the purchaser during ordinary inspection of the property. A vendor may rely upon caveat emptor provided the latent defect is unknown to the vendor at the time of sale. However, if the latent defect is actively concealed by the vendor or if the vendor is reckless in failing to disclose knowledge of it to the purchaser, the vendor may be liable. In these circumstances, caveat emptor does not apply to the purchaser and the purchaser may seek redress in court for rescission of the agreement of purchase and sale or for damages resulting from the latent defect.

Neighbourhood Defects

You have read in my previous columns about the duty of a vendor to disclose a latent or hidden defect in a home which a potential purchaser may not see but which the vendor knows about. What about defects in neighbourhoods? If you live in Walkerton and the purchaser is from out-of-town, do you have to disclose to the purchaser that the water supply in Walkerton has caused personal injury and even death? Closer to home, the Gull River is flooding and the MNR has issued a flood advisory warning. You are a vendor and you live along the Gull River. Do you have to disclose to a potential purchaser that your neighbourhood is subject to periodic flooding?

It appears that the test for disclosing defects in neighbourhoods is whether the defect will affect the health or safety of the purchased property and its owners. An example of a case affecting safety involved a retaining wall on the vendor's property. Behind the retaining wall was a steep cliff. While the vendor owned the property, there was a minor landslide from the cliff area which damaged the retaining wall. The vendor did not disclose this to the purchaser. After the real estate transaction closed, there was a major landslide which destroyed the house. The vendor was liable for not disclosing the defect.

There are many examples of cases involving properties abutting landfill sites which have been converted into park land. Land fill sites produce methane which can lead to an explosion or health concerns if not properly vented. In the landfill cases, disclosure that the park land was formerly a landfill site is necessary to make an informed purchase. This does not necessarily mean a discount in the purchase price of the abutting property. It is true that a prospective purchaser might only be prepared to purchase such a property if the purchase price were discounted to make it more attractive than similar properties further removed from the closed-up landfill site. However, another prospective purchaser might consider that a property abutting a converted land fill site has the offsetting benefit of abutting open space which cannot be developed, for which the purchaser is not required to a pay a premium.

Waterfront and a Shed

Buying waterfront property can have its uncertainties. You may see a property prior to signing an agreement of purchase and sale with the vendor. You like what you see and expect that is what you will be conveyed on closing. However, before closing, there is a problem with the property and the character of it has changed. Can you refuse to close? At issue legally is whether the vendor can convey substantially what you bargained for.

A recent case illustrates the legal problem of a deficiency in a property being conveyed. The purchaser bought a property for $640,000 which contained a cottage built on the top of a steep incline that sloped down to the lake. The purchaser walked down the incline and saw a large shed at the shoreline used to store watersports equipment. Before closing, the local township issued a work order to the vendor to move the shed because it was too close to the waterfront. The purchaser maintained that the location of the shed beside the lake was of considerable importance to her. She refused to close the transaction because she felt that the relocation of the shed substantially affected her use and enjoyment of the property.

The legal test involved in cases such as this one is primarily objective but there is also a consideration of the purchaser's subjective views. The law is summarized by one judge: "The materiality of the deficiency is to be determined essentially on an objective basis. However, this is not to say that the subjective views of the purchaser are to be ignored. Far from it. There may be instances where a certain purchaser has agreed to buy a piece of property for a specific, legitimate and bona fide purpose, only to discover that some deficiency in title will render this use impossible. Here, the purchasers' refusal to close is neither arbitrary, capricious nor without real consequence. In this type of case, the court would still be required to look at all of the circumstances but would be entitled, in its overall assessment, to place greater emphasis on the legitimate but frustrated needs of the purchaser."

The purchaser sued for the return of a $20,000 deposit. The vendor counterclaimed for $60,000 because the vendor later sold the property for $580,000. The purchaser testified that she bought the property for her family to enjoy over the summer months. The main focus of their outdoor activities would be centred on the dock and the waterfront. The convenience of the shed to store water skis, water toys, and other sports paraphernalia was a swaying factor to them in their decision to purchase it. Who do you think won?

Septic Systems

Vendors and purchasers of rural property in the County of Haliburton should be careful when they deal with representations (warranties) in their agreements of purchase and sale about the working condition of septic systems, or they may end up in court. A common representation, inserted by the vendor, is the following: "The vendor warrants, to the best of his knowledge and belief, that the septic system is in good working order as of the date of closing." A few weeks after the closing, the purchaser detects foul odours from the house drains and discovers that the septic system is now not in good working order.

The purchaser is faced with the weasel words "to the best of his knowledge and belief." All the vendor has to do is prove that he had an honest and reasonably based belief in the truth of his representation. Here is his evidence: "The septic system has been working fine for the last 10 years that I have owned the property." "I get the septic tank pumped out every two years. Here are the bills." "I have never smelt a sewage odour or saw a sign of malfunctioning of the septic system." Courts tend to accept such evidence, if uncontradicted, because the representation is starkly qualified by the weasel words. The purchaser's case against the vendor will be dismissed.

But, if you are the purchaser, there is another way of phrasing the representation. Simply delete the weasel words. Then, the representation will be: "The vendor warrants that the septic system is in good working order as of the date of closing." Two weeks after the closing, the septic system starts to back up into the toilet and bathtub on almost a daily basis. The purchaser calls a septic tank repairman who discovers that the solid content of the septic tank is quite heavy and causing a blockage on the inlet side of the tank. As well, the tank is running well above its normal level of 6 to 8 inches below the lid of the tank. What should the vendor have done? In this case, the court held that the vendor should at least have opened the tank lid and checked the level and content of the tank. A vendor who signs an unqualified representation without any verification testing prior to signing it, is reckless in his conduct and may be liable to the purchaser.

Home Inspectors

It is common practice in the County of Haliburton for a purchaser of cottage property to hire a home inspector to inspect the cottage as a condition of the agreement of purchase and sale. If the home inspection report is not satisfactory to the purchaser, the purchaser may withdraw from the real estate transaction with the return of the purchase deposit without deduction or penalty. This condition may be useful because cottage construction varied in the area over the years. Some cottages were built in the 1950's, or earlier, with different construction techniques than contemporary cottage construction and Building Code compliance. There were also the inevitable cottage additions which were connected to the original cottage building, by one roofing technique or another. And then, there is the foundation and crawlspace under the cottage for the purchaser to consider.

In terms of the law, a home inspector is a professional who must meet certain reasonable standards of care. These standards are the standards of practice of the governing home inspector's association in Ontario. In brief, the usual home inspection is general in nature and is performed by a visual inspection only. A home inspector cannot be held responsible to the purchaser for a problem that is not readily apparent by a reasonable visual inspection. For example, if the crawl space under the cottage has no point of entry, the home inspector is not required to break an entry into the crawlspace to view it. The inspector cannot be found liable for what may be found there if the purchaser later opens the crawlspace and finds it to be damp and mouldy with rotting floor joists.

Two other important factors have been considered by the courts in considering negligence claims by a purchaser against the home inspector. A home inspection is not a Building Code compliance inspection. Commenting on Code related issues is beyond the scope of a home inspection. Such issues often require on-site construction details unavailable to the home inspector and intrusive, destructive testing to assess compliance. Secondly, a home inspection costs about $300.00. The courts have stated that what is reasonable in a visual inspection is to be determined by the costs of the inspection and the known level of expertise of the inspector.

Fraudulent Conveyance

If you owe a good deal of money, I am sorry to say that you can't hide from your creditors by transferring your home out of your name. Here is a true story. In 1992, the wife was injured in a car accident when the husband was driving. The car insurer made statutory no fault benefit payments to her. However, when the insurer learned that the worker's compensation board had also commenced payments to the wife, it made a demand for partial reimbursement because she was getting double the payments for the same accident. Two years later in 1994, the insurer commenced an action against the wife for the partial reimbursement, later obtained a judgment but could not collect on it. While the lawsuit was going on, the wife transferred her share of the matrimonial home to her husband. The deed said that it was transferred for natural love and affection and the sum of $2.00. No purchase money was paid to the wife by the husband for the conveyance.

The insurer found out and started another lawsuit under the Fraudulent Conveyance Act. This Act provides that any conveyance of property made with the intent to defeat, hinder, delay, or defraud creditors is void against those creditors. The husband claimed that the conveyance had been made with the intent of facilitating the sale of the home because the wife was starting to spend long periods of time living overseas. The home was sold to an arms-length third party in 1999 for fair market value and the husband later gave the wife half the proceeds from the sale.

The court did not accept that the home was transferred so that the husband could deal with a sale more readily in his wife's absence. The cheque for one-half of the net proceeds of the sale to the wife demonstrated that the husband had never ceased to acknowledge his wife's interest in the property. The court held that the conveyance of the home to the husband was void since the husband had aided his wife in sheltering from the car insurer her most visible asset. The insurer now couldn't collect from the wife because she was long gone overseas. So, the court granted a tracing order, meaning the insurer could now collect against the assets of the husband to an amount equal to his half of the proceeds from the sale because he was involved in the nefarious conveyance.

Mineral Rights

There are various rights you may acquire when you make a purchase of land in a rural area like Haliburton. You may purchase the surface rights to land, such as the gravel or sand that you want because the land is really purchased to develop a gravel pit or the timber rights to a tract of Crown land for the purpose of logging. You may also purchase the sub-surface rights, such as mineral rights for the purpose of mining.

There has been a lot of talk about uranium mining in the County of Haliburton. Mining in Ontario is governed by the Mining Act. The legislation states that "the purpose of this Act is to encourage prospecting, staking and exploration for the development of mineral resources and to minimize the impact of these activities on public health and safety and the environment through rehabilitation of mining lands in Ontario." The definition of "mine" in the Act is quite lengthy and includes any excavation of the ground for the purpose of winning any mineral. The term "winning" is a technical term which simply means retrieving a mineral from a mine. "Minerals" in the Act is a broad term which includes all metallic minerals, such as gold and silver, and all non-metallic minerals, such as natural gas and petroleum. "Minerals" also includes quarry and pit material but does not include sand and gravel, which is a bit confusing. An issue may occur, as it did in one case in the1960 Mining Act, in interpreting these definitions. A company purchased a gravel pit and in the course of searching the title to the land at the registry office discovered that the mining rights to the land had been forfeited to the Crown because of unpaid taxes. The issue addressed by the court was whether the gravel pit had also been forfeited to the Crown.

Gravel pits are governed by different legislation, the Aggregate Resources Act. The purpose of this Act is similar to the Mining Act and includes the requirement "to minimize adverse impact on the environment in respect of aggregate operations."

Real Estate Transactions and Lawyers

Land registration goes back a long, long time in the legal history of Ontario. In fact, it goes back to about 1795 when Ontario was called Upper Canada. From that time forward until now, a lawyer in the province could represent both a vendor and a purchaser and could register a deed from one to the other. Although most real estate transactions typically involve two lawyers, for various reasons, there are a number of transactions where only one lawyer would normally be involved. Examples are transfers of property from a parent to a child, or between spouses, or from an estate trustee to a beneficiary, or from a personal owner to his or her corporation.

You may have read in the newspaper last year about frauds that have been committed in real estate transactions in the Toronto area. Unbeknownst to you, a fraud artist mortgages your property to the bank under a false power of attorney and takes off with the money. You discover the nefarious act accidentally but you still owe the money to the bank. You make an insurance claim against the one lawyer involved who acted for both sides, the bank and the "owner." You also make a claim against the government's title insurance fund.

Because of the growing number of frauds in real estate transactions and the claims being made by hoodwinked owners, the government is changing the land registration rules in Ontario. Only lawyers will now be able to register deeds transferring ownership. More importantly, for the first time since 1795, almost every real estate transaction transferring ownership will require, not one, but two lawyers. One lawyer must act for the vendor and the other lawyer must act for the purchaser. The government policy for this change is the belief that, having two lawyers involved in each transaction, will significantly reduce the occurrence of title fraud and claims against the government's title insurance fund and the Law Society's insurers.

Thus, virtually all real estate transactions which used to require only one lawyer will now require two lawyers, thereby doubling legal costs for the parties involved.

RIGHTS OF WAY

Categories of Rights of Way

In Ontario, there are four categories of easements, commonly called rights of way, which may arise in land disputes: (1) express rights of way; (2) prescriptive rights of way; (3) implied rights of way; and (4) equitable rights of way. You may find yourself seeking legal advice in regard to one or more these categories of rights of way when neighbourly friendliness is no longer there. Often, this occurs in the County of Haliburton when there is a change of ownership of the user of the right of way or of the owner of the land upon which the right of way travels.

Express rights of way are really a contract between the owner of the land and the user of the right of way. Deeded rights of way are an example. These rights of way are often permanent in nature for cottage access but they may also be temporary in nature. An example is access over property to an antenna tower for cell phone service so long as the tower is there. This type of express right of way may be deemed abandoned or terminated once the antenna is removed from the land.

Prescriptive rights of way are rights of way created by actual use over a period of 20 years. These rights of way must be established by court order and they are hard to establish, partly because 20 years of evidence is not easy to find. Previous owners or users may have moved to another province or, even to the celestial climes where they cannot return to give evidence. But once established, they operate like express rights of way. One difficulty with these rights of way is whether they can increase in use from summer season use to four seasons use, as is now happening in the County with cottage owners moving here permanently.

Implied rights of way and equitable rights of way are rarer categories of rights of way. The implied type occurs when it is clear that there is an intention between the parties to create a right of way but it never gets created. Or the right of way will be implied when the right of way is one "of necessity," that is, you need to get from point A to point B. The equitable type arises where it would not be fair to allow the owner of the land to deny the right of way. For example, the intended user is encouraged to spend money on the reasonable belief that he or she will be granted a right of way by the owner.

Rights of Way

A land dispute between neighbours often involves a right of way issue. A typical case is when Neighbour A has been traversing Neighbour B's land to reach his own land over a number of years. The dispute arises when Neighbour B stops Neighbour A from crossing over the land. Since Neighbour A's right of way, or easement, is not registered on title to Neighbour B's land, like a Hydro easement, the right of way must be established by a lawsuit to make it legal.

Neighbour A must prove that the right of way has been used by him and/or previous owners of his land continuously for a period of 20 years. The right of way must also have been used in a manner that is visible to Neighbour B and used by peaceable means, that is, without threat to Neighbour B. Once established, Neighbour A obtains legal title to the right of way by adverse possession or prescription.

To defend the lawsuit, Neighbour B may argue that he objected to the use of the right of way by periodically blocking it with a chain or vehicle during the 20 year period. He may also argue that the right of way is not reasonably necessary for Neighbour A's enjoyment of his land because Neighbour A can reach his land by another convenient route. Courts generally proceed with caution before granting legal title to Neighbour A because the right of way is obtained without any financial compensation to Neighbour B.

Uses of Rights of Way

A right of way may be created by a deed to property and is commonly called "a deeded right of way." A right of way may also be created by continuous use of the passage way for a period of 20 years and is called "a prescriptive right of way" because it is prescribed or laid down by custom.

Rights of way carry with them certain rules and restrictions which the courts have developed over time. The obligation to construct and repair a right of way is the responsibility of the user who receives the benefit of the right of way, not the owner of the land over which the right of way runs. However, if the use by the owner puts the right of way into disrepair, the user is entitled to demand that the right of way be repaired by the owner. A right of way includes such ancillary rights as are necessary to enjoy it. For example, reasonable access to a right of way must be provided to construct or repair it and the right to excavate the right of way to a reasonable grade is implied as an ancillary right.

The owner may maintain gates across the right of way to preclude use by others provided that the intended user has full use of the right of way. This is generally satisfied by providing a set of keys to the user. The owner may also prevent the user from authorizing the use of the right of way for the benefit of another property adjoining the user's property.

The user of the right of way may increase the use of it provided it is not a radical change to the character of the use of the right of way. For example, a right of way granted by deed, or used by custom, for pedestrian traffic may not be used for vehicular traffic. In some cases, a right of way benefiting a single family home may be increased to benefit others using the property. However, if the user allows the right of way to be accessed by the public or for commercial purposes, this use is likely to go beyond what is considered reasonable by the courts.

Extinguishing Rights of Way

A legal right of way is granted by a deed to property and is commonly called "a deeded right of way." A court reviewing a person's lawsuit to extinguish a deeded right of way will look closely at the wording of the clause in the deed granting the right of way and consider the intention of the parties at the time of the grant. For example, if the right of way is perpetual, it is highly unlikely that a court will extinguish it. If the clause in the deed is silent as to duration, it will be open to the court to consider extinguishing the right of way depending upon other factors.

A factor of considerable importance in cases of extinguishment is whether there is a suitable and convenient alternative access route available to the user of the right of way. Offering such an alternative may defeat an argument that extinguishing the right of way will harm the user of it. Other factors to consider are whether the right of way has become obsolete by reason of changes in the character of the land or the neighbourhood

and whether the right of way was for a specific limited purpose, which has been accomplished.

ROAD, ACCESS

The Road Access Act

The Road Access Act was proclaimed law in Ontario in 1978. It started as a private member's bill by Mr. Maeck, then the MPP for Parry Sound, and was prompted by concerns over access road disputes in cottage country. The purpose of the Act is to prevent the arbitrary closing of a private road by a landowner when to do so would result in preventing access to another person's lands for which the private road serves as a motor vehicle access route.

The Act maintains that an access road is to remain open and not to be obstructed until and unless there is a court order authorizing its closure. Thus, a law-abiding landowner, seeking to close an access road, must initiate a court proceeding, on notice to the access user, and prove that the closure of the access road is reasonably necessary to prevent substantial damage or injury to the landowner's interests or that the access user does not have a legal right to use the road. To receive the protection of the Act, the access user must not have an alternate access route available.

If a landowner barricades an access road without obtaining a judicial closing order, an access user may go to the court and obtain an order that the landowner remove the barricade from the access road.

The refusal to order closure of an access road does not grant to the access user a legal right of way over the land. It is simply a recognition that the access user enjoys the privilege created by the Act of not being considered a trespasser.

The Road Access Act:

Recent Developments

The Road Access Act dramatically affects private rights of land ownership and has been around since 1978. It is about road disputes and about avoiding risks of violence to persons and property generated by the dispute. Here is how it happens in the County of Haliburton: Owner A drives over Owner B's lands to reach Owner A's lands. This has been going on for a period of time with the permission of Owner B, or by acquiescence. This is the only car route to get to Owner A's lands. Otherwise, the lands are landlocked. Owner B sells to Owner C. Owner C does not like what is going on, takes a chainsaw and fells a tree over the road. Owner A gets angry because he cannot get to his lands. Trouble follows. Shotguns are raised.

The Road Access Act comes to the rescue. The purpose of the Act is to prevent the arbitrary, self-help way of closing the road by Owner C when to do so results in preventing access to Owner A's lands for which Owner C's road serves as a motor vehicle access route. Owner C must go to court to obtain a court order to close the road, or Owner A can take him there to argue, without chainsaws and shotguns, whether the road should be closed.

To receive the protection of the Act, the access road must be the only vehicular route to Owner A's lands. Owner C will try to argue that there is an alternative access route available to Owner A, and therefore, the Act does not apply. In one recent case, a landowner maintained that water access is an alternative access because access is available by motor boat but failed because the alternative access must be road access.

Almost everywhere in the County, there are unopened road allowances which may lead to an access user's property, and therefore, could be developed as an alternative access road. In another recent case, the landowner made such an argument. The court dismissed the argument after a careful analysis. It held that the mere existence of an unopened road allowance which cannot be used for vehicular traffic without municipal approval and without road construction and maintenance to municipal standards does not constitute an alternative access. The alternative access must be an existing alternative access, not a potential one.

Road Access Act and the Court of Appeal

The Road Access Act was passed in 1978 to address confrontations that may arise between neighbours who use private roads to reach their property and neighbours who own the private roads. The Honourable Mr. D. McKeough introduced the legislation stating that the government intended "to prevent the arbitrary closing of private roads, especially in cottage country where owners or tenants are totally dependent on these roads for access to their property." The Act is a short statute containing only eight sections but the court decisions over the years have not always been clear and helpful. In 2007, two decisions have been decided by the Ontario Court of Appeal providing authoritative meaning to the Act. The Act applies to prevent a property from being landlocked. The Court of Appeal has held that, where there is an "alternate road access" to the property, the second road access may be closed by the owner. A user may have only one road access over the owner's property. The Court made it clear that the alternate road access must be a usable, existing road. For example, it cannot be a road that has been abandoned for 40 or 50 years and has become overgrown with brush, and it cannot be an unopened road allowance, of which there are many in cottage counrty.

The Court also emphasized that the Act confers on users of an access road only a very limited, temporary right to use the road. The Court adopted, with approval, the following summary from a trial judgment describing this limited statutory right:

"In the end, and in the narrow situations to which it does apply, it creates no proprietary right or interest in the land over which the access road passes. It provides an interim status to the access user whereby the access user is immunized from an action in trespass when travelling on the access road in a motor vehicle for purposes of access only (see Deluca; Cook's Road Maintenance). He or she may not walk on it, use it for their own purposes (except vehicular passage for access purposes only), play on it, or disrupt it. The access user cannot grant the use of the road to others. The access user cannot convey any right to the road on a sale of the parcel of land; Whitmell v. Ritchie, supra. The Road Access Act does not affect property rights, but subjects them to the continued limited use of the road unless and until the owner obtains, after proper notice and hearing, a court order closing the road on whatever conditions are imposed; Cooks Road Maintenance, at para. 45. And, if another access road is subsequently provided, the access user's continuing status under s. 2 ceases because alternate access would then exist."

ROAD, PUBLIC

Cottage Roads and Private Property

Some cottagers in Haliburton gain access to their cottage properties by a road over another person's private property. The road may have started long ago, when an owner, in a neighbourly spirit, permitted a cottager to cut across the owner's private property as a convenience. Time passes, and cottage development increases with many cottagers using the road. The cottagers may now have the illusion that the private road is, in fact, a public road because of all the traffic. Indeed, cottage associations have litigated this very issue in the courts. Some have won, some have lost.

To prove that an erstwhile private road is a public road, there are three ancient legal principles involved. A road becomes a public road by reason of the dedication of the road by the owner of it as a right of passage for the public. "Dedication" means that the owner of the road has either said in so many words, or acted in such way, that the public may infer that the owner was willing that the public should have this right of passage. There must be an intention by the owner to dedicate the road. Often, this is difficult to prove by direct evidence because the original owner is long since dead so this issue is usually proven by circumstantial evidence only, such as the mere fact of the road's existence for a long period of time.

In addition to dedication and intention, the public must show an acceptance of the road as a public road. Factors which may prove this issue are whether public money has been spent on the road for maintenance and repairs and whether the road has been removed from the assessment rolls of the township where the road is situated. If the title to the road has remained in the name of the present owner and predecessors in title and they have paid the taxes on it, cottagers and their associations may lose the case in court rather than win it.

Highway Potholes

This is the time of year for potholes on highways and municipal roads in Ontario. If you have been to Toronto recently, driving the downtown streets, you may end up, as I did, hitting a good-sized pothole and having to pull over to see if the tire was going flat. Under the Municipal Act, each municipality has a statutory duty to keep a road in a reasonable state of repair and, if it does not, it may be sued by the owner of a car damaged while using the road. The statutory duty imposed on the municipality and the statutory right to sue the municipality, if your car needs repair work as a result of hitting a pothole, goes back in Ontario to 1850 when the first legislation was introduced. By 1874, one Mr. Toms et ux. (a common Latin abbreviation back then meaning "the wife") sued the then Township of Whitby. The judge in the case had this quaint statement of the law:

"If the road dedicated were, by reason of a precipice or excavation, or from any other cause, so dangerous that it could not be safely used as a highway, I see nothing to shew that by English law the "parish" or any one whatever was bound, if the public accepted and used the road, to fence or gravel it for the public benefit, against these natural and existing dangers. But if any one were to excavate upon it or near to it, or were to leave any obstruction upon it, or to do anything whatever to it, so as to make travel upon it unsafe, it would be a nuisance; and for any damage resulting, he would be liable."

The test to meet today is a reasonable state of repair in light of all the circumstances, including the character and location of the road. Thus, a back road in our county (which is a municipality) may be maintained differently than a well-travelled county road and may, as a result, not give rise to a successful claim by the car owner. In addition, a municipality is not liable for failing to keep a road in a reasonable state of repair if it did not know, or could not expect to know, about the need to repair a road. Thus, if a car is damaged as a result of a spring wash out of part of a road due to an overflowing culvert, a claim by the owner is not likely to succeed. You must give notice of your claim and of the damages complained of to the clerk of the municipality within ten days of the incident.

Colonization Roads

In the 1850's, the Province of Ontario began to set up a colonization roads programme to encourage settlement in the pre-Cambrian shield area. The area involved was north of the Severn River and south of the French River between the Ottawa River and Georgian Bay. The roads were surveyed and built through the wilderness at great effort in order to open access to this territory.

Colonization roads are public highways and they still surface to this day in legal arguments about whether a particular tract of land is open for public use, such as by ATV associations or snowmobile associations because of a colonization road. Colonization roads were noted in the long dispute over access along Buckslide Rapids in the Township of Algonquin Highlands. Here is an excerpt from the decision in that case: "Prior to the incorporation of the Township in 1866, colonization roads gave access to the Township of Stanhope. At the south end of the Township was the east/west Peterson Road (now Highway 118) and approximately two miles to the west was the north/south Bobcaygeon Road."

Purchasers of land in this area should be cautious because unbeknownst to them an old colonization road may cross the land they are intending to purchase and they may end up entertaining ATV associations or snowmobile associations on their lands. The reason this ghost still lingers in the County of Haliburton is that Crown patents usually contain a provision that colonization roads are specifically excluded from the grant. The Crown patent usually contains the following reservation: "Saving, excepting and reserving the surface rights in and over public or colonization roads or any highways crossing the said Land at the date of these Letters Patent."

SLIP AND FALL

Slip and Fall Accidents

Everyone has heard a story of a friend or relative who has suffered a slip and fall accident. This kind of accident may occur in an icy parking lot in the winter or on a wet floor of a retail store. In Ontario, the law applicable to these accidents is found in the Occupiers' Liability Act. An occupier of premises has a duty of care towards people who use their premises, "the invitees," and may be liable for the injuries caused by the accident.

An occupier is any person who is in physical possession of the premises, for example, a retailer who is renting space in a plaza. An occupier may also be a person who has control over the condition of the premises. A landlord may be considered an occupier if the landlord has agreed to snow-plow the parking lot where the slip and fall occurred.

The legislation states that an occupier of the premises owes a duty to an invitee to take care that the invitee is reasonably safe while on the premises. If there is a situation of danger on the premises, such as a wet entrance way to the premises, an occupier must take reasonable steps to alert the invitee of the danger. A familiar example is a yellow sandwich board sign on a floor stating "Caution! Wet Floor."

While the duty of care rests with the occupier, there is an onus on the invitee to prove that there is a situation of danger requiring the exercise of reasonable care. A "trip and fall" over a trolley in a grocery store used to stock shelves will not normally constitute a danger. People are familiar with such obstacles in grocery stores and their presence can be reasonably expected to be encountered by the invitee.

The Occupiers' Liability Act has been the law in Ontario for thirty years. The legislation replaced the common law duty of care required of occupiers. The common law was more lenient towards occupiers because an occupier was only required to protect invitees from an unusual danger. Some of the provinces in Canada have no legislation similar to Ontario and thus the common law still applies.

SMALL CLAIMS COURT

The Small Claims Court

Access to justice is a concern expressed by both the Chief Justice of Ontario, Roy McMurtry, and by the Chief Justice of the Superior Court of Justice, Heather Smith. The Small Claims Court is considered by them to be one forum where access to justice is available easily and at minimal legal cost. It is the largest and busiest branch of the Superior Court of Justice with 90 locations across Ontario and 370 judges. Nearly half of all civil proceedings are initiated in the Small Claims Court. Typical lawsuits are debt collection, landlord and tenant, wrongful dismissal, breach of contract, tradesmen disputes, and property damage. There are no family law or criminal law matters in the Small Claims Court.

The monetary jurisdiction of the court is $10,000. That means that a litigant cannot sue or recover more than $10,000. Many litigants who have claims in excess of $10,000 will "abandon" the excess so that they can proceed in the Small Claims Court. For example, if a litigant has a claim for $12,000 or $13,000, it is prudent to drop the claim down to $10,000 and proceed under the simple procedure of the Small Claims Court rather than the complex procedure of the Superior Court of Justice. In addition to less procedure, the technical requirements of court evidence are also relaxed. Hearsay evidence, for example, may be admissible and copies of documents, rather than originals, may be admitted as evidence if there is no question of their authenticity. A Small Claims Court judge is required to hear and determine all questions of law and fact "in a summary way," that means decision-making without the legal ridgities of the Superior Court system. Thus, both plaintiffs and defendants are encouraged to represent themselves in the Small Claims Court where the court's mandate is to make justice accessible to the public without incurring high legal fees.

New Rules for the

Small Claims Court

On July 1, there will be new rules for the small claims court. The rules govern the procedure that must be followed throughout a court action by both the plaintiff and the defendant. Some of the rules remain the same but there are many changes.

You will now be able to obtain the forms from a government website at www.ontariocourtforms.on.ca. The forms will no longer be on legal size paper. The statement of claim issued from the court will now have a special seal on it. This innovation will be in place because some people have sent out "mock" statements of claim as a collection mechanism for money owing.

A party may now provide the court with a self-addressed, stamped envelope and receive copies of certain decisions and certain activities on the file if not attending court. Commercial couriers may be used to deliver ("serve") documents. A pre-trial conference is now called a settlement conference and may be conducted by telephone or video. If the defendant has a claim against the plaintiff, the defendant's claim must now be filed within twenty days after filing the statement of defence. Previously, a self-represented party, an agent, or lawyer representing a party at trial could only receive a maximum of $300 for the trial. The new rules have raised the amount to $500 for self-representation and permit the court to award a party a reasonable representation fee at trial if represented. The representation fee is an important new factor to consider when going to trial. Winning or losing at trial may now have serious monetary consequences beyond the amount of money at stake.

There is a significant change in regard to judgment debtor examinations. These examinations take place after judgment and allow the creditor to ask questions about the debtor's financial situation. If the debtor does not attend the examination, the Small Claims Court judge may order the debtor to appear before a Superior Court Judge for a contempt of court hearing. As in any contempt hearing, incarceration is an option.

Other changes may take place. The government recently appointed a law professor to review the Small Claims Court. Part of this mandate is to make recommendations about the structure of the court and the monetary jurisdiction of the court. Two of the provinces already have a ceiling of $25,000. Other provinces are considering an increase to $30,000. Ontario is presently at $10,000.

The New State of Civil Litigation

It is not easy to give a clear definition of civil litigation in one sentence. Civil litigation is a lawsuit that does not involve family law or criminal law. It involves virtually every other aspect of the law. Thus, for example, civil litigation involves the areas of negligence, insurance, banking, product liability, construction, collections, partnerships, estates, leases, real estate, land disputes, injunctions, wrongful dismissal, and fraud.

As of January 1, 2010, there is a dramatic change to civil litigation. The monetary jurisdiction of the Small Claims Court will increase from $10,000 to $25,000. This change is fuelled by the need for citizens to have affordable access to justice and because of the present high cost of civil litigation. In the higher court, the Superior Court of Justice, the cost of a civil lawsuit varies from case to case depending on its complexity. But an average lawsuit could cost between $40,000 and $50,000 to the end of pre-trial for lawyer's fees, out of pocket expenses, and taxes.

With the new $25,000 limit in the Small Claims Court, many cases will now be brought to court more quickly with less cost to the parties because the Small Claims Court has a straightforward procedure to get to the trial door. There is also a companion change in the Superior Court for cases using the "simplified procedure" rules in that court. These rules are a scaled down version of the complicated Superior Court rules used in lawsuits. They will now apply for all lawsuits involving money between $25,000 and $100,000.

The policy behind the simplified rules is to reduce the legal cost of suing or defending for smaller claims by reducing the amount of procedure required in such cases. Less procedure means less expense to the parties. For example, there are no examinations for discovery prior to trial (oral evidence disclosure) under the simplified procedure.

There will be other changes on January 1, 2010. Those cases in the Superior Court that are entitled to examinations for discovery will be limited to one day of examinations. Civil litigation will also be subject to the principle of proportionality. This means that the time and expense involved in a lawsuit must reflect what is at stake.

So in 2010, if your claim is just over $25,000, you should abandon the extra amount so that you can sue in the Small Claims Court or, similarly, if it is just over $100,000, you should abandon the extra amount so that you can sue under the simplified rules in the Superior Court.

SOLICITOR- CLIENT PRIVILEGE

Solicitor-Client Privilege

A solicitor-client privilege arises when there are communications between a client and a solicitor. The privilege belongs to the client, not to the solicitor. A client cannot be compelled, and a solicitor will not be allowed, without the express consent of the client, to disclose oral or documentary communications passing between them in professional confidence. The privilege extends to many forms of communications, including client's instructions given to a solicitor, notes made by the solicitor, and notes made by the client of the communications between the client and the solicitor. Thus, in a lawsuit, the privilege gives a person the right to refuse to disclose an oral or documentary communication on the ground that the communication is one passing between that person and his or her solicitor in professional confidence.

Many administrative agencies, tribunals, and commissions of inquiry have general statutory powers to compel the production of evidence and they may intrude on a person's claim of solicitor-client privilege. An example is a tax investigator under the Income Tax Act. Recently, the Supreme Court of Canada addressed the issue and held that, where privilege is claimed to certain evidence, these investigators cannot examine the evidence, without a court order, unless the statutory power gives them a clear and explicit authority to intrude on the privilege. The court maintained that the assessment and verification of claims of solicitor-client privilege remain the almost absolute preserve of the courts and it re-affirmed the importance of the privilege, stating: "Solicitor-client privilege is fundamental to the proper functioning of our legal system. The complex of rules and procedures is such that, realistically speaking, it cannot be navigated without a lawyer's expert advice. It is said that anyone who represents himself or herself has a fool for a client, yet a lawyer's advice is only as good as the factual information the client provides. Experience shows that people who have a legal problem will often not make a clean breast of the facts to a lawyer without an assurance of confidentiality "as close to absolute as possible". . . It is in the public interest that this free flow of legal advice be encouraged. Without it, access to justice and the quality of justice in this country would be severely compromised."

TAXES

Tax Investigators

The federal Tax Act gives the Canada Revenue Agency ("CRA") broad powers to inspect, audit, and examine a taxpayer's records without a court order. An issue about the extent of the powers of tax investigators came before the Supreme Court of Canada recently relating to unnamed taxpayers. The case involved a CRA investigation into a registered charity affiliated with a private school in southern Ontario. The charity operated a forgivable loan programme as a means of financing the school and its facilities. In its investigation, the CRA expressed concern that the charitable contributions to the loan programme may not have been real charitable donations but rather made by the parents of students attending the school on the understanding that the money would be used to finance the education of their children in lieu of tuition.

The CRA decided that it needed more information to determine the charitable donations it was investigating. As a result, the CRA requested documents from the charity that recorded the identity of each donor and the name of the student who was to receive credit for the donation. The CRA then intended to enquire further of the donors whether tuition had actually been paid over and above the charitable donation. The charity refused to provide the documents arguing that the CRA first needed a court order.

The Supreme Court was divided in its decision, four judges to three. The majority held that the CRA was entitled to the requested information without first having to obtain a court order. It rejected an argument that one of the purposes of the CRA request was, in fact, to reassess the tax returns of donors. The court noted that taxpayers have a low expectation of privacy in their tax records when it relates to tax liability.

Is the decision right based on the close split? As one respected judge said years ago, the Supreme Court of Canada is not right because it is the Supreme Court. It is right because its decisions are the final decisions in the judicial system.

TRESPASS

Trespass to Property

An owner of land or premises is protected from trespassing by the Trespass to Property Act. The key to this legislation is signage. A person trespassing on land or premises must have notice that entry is prohibited. The signage may be general in nature, such as "No Trespassing!" as everyone has seen.

The signage may also be specific in nature. A trail sign on land which specifically permits an activity, such as snowmobiling in the winter, is deemed to prohibit other activities, such as ATVs in the summer. However, if the only signage is a trail sign prohibiting snowmobiling in the winter, then the activity of ATVs in the summer is deemed not to be prohibited. The best thing to do to dispel uncertainty is to have both general and specific signage. An owner who seeks to avoid liability for injury caused by unwanted motorized vehicles should post the appropriate signage.

Prosecution for an offence is normally conducted by the Crown. A person traversing land may have a defence that the person reasonably believed he or she had an interest in the land, for example, as a right of way by use over 20 years. The maximum fine is $2,000.00. A monetary award may also be granted to the owner for damage to the property caused by the trespasser which is enforceable in the Small Claims Court.

For serious and repeated trespassing problems, it is prudent to inform the local OPP detachment that "No Trespassing" signs have been posted on the property. There is no requirement to do this under the legislation. However, there have been situations where the OPP have refused to lay a charge of trespass when they are called to a scene because they do not have the information on file.

Prowling at Night

The Criminal Code protects a rural resident in Haliburton by criminalizing the surreptitious invasion of that person's residential property at night in a manner when the intruder has no lawful excuse to explain his or her presence. The Criminal Code provides that "every one who, without lawful excuse, the proof of which lies on him, loiters or prowls at night on the property of another person near a dwelling-house situated on that property is guilty of an offence punishable on summary conviction." The following is a true story of prowling at night.

One winter's night, a mother was home alone with her four young children, whom she had just tucked into bed. Shortly after 9:00 p.m., she decided to go to the deck to gather the family laundry (now frozen on the line). As she started to go outside, she noticed something hunched over at the base of the deck. At first she thought it was a deer until she saw the shape move in a crouched position into the front corner of the yard where the house met the fence. Growing nervous, she asked, "Who's there?" No answer came. She asked again, more loudly, "Who's there?" A male voice answered, saying that he was "looking for something". The mother asked this time, "What are you looking for? What are you doing here? What do you mean you are looking for something?" The man stood up and quickly ran away.

Needless to say, the mother was frightened. She called 911. The police arrived shortly thereafter. The man was found and arrested. Several days later, a pair of frozen underwear was discovered on the front bushes of a property three doors away. The mother testified that this underwear was with her other laundry when the man was hiding in her backyard.

There was a debate in the courts over whether there is a need to prove that the intruder intended to commit a separate and distinct criminal act to prove a charge of prowling. The Ontario Court of Appeal rejected that argument. It stated: "Instinctively, an occupant or other observer seeing a trespasser moving stealthily or furtively near a home at night, absent other explanation, would conclude that the trespasser's conduct evidences an intention to avoid detection - perhaps because the trespasser has committed, or is going to commit, or is contemplating committing, a reprehensible act. Whatever the prowler's motive, however, it is the act of prowling itself that is an unwarranted invasion that causes anxiety to the observer, and not any reprehensible act that the trespasser may intend to commit, may have committed, or is contemplating committing."

Defending Your Home

The Criminal Code justifies the use of force in defending your home or other real property. It provides that "every one who is in peaceable possession of a dwelling-house or real property, and every one lawfully assisting him or acting under his authority, is justified in using force to prevent any person from trespassing on the dwelling-house or real property, or to remove a trespasser therefrom, if he uses no more force than is necessary." The defence of property is a justificatory defence, meaning that the justification renders lawful what would otherwise have been a criminal act. By its very nature, the defence of property involves a physical confrontation. Most cases where it comes into play are determined by the reasonableness of the force used by the accused to defend the home.

The Supreme Court of Canada has identified four elements to the defence: (1) the accused must have been in possession of a "dwelling-house"; (2) the accused's possession must have been peaceable; (3) the person being removed must have been a trespasser; and (4) the force used to eject the trespasser must have been reasonable in all the circumstances. The term "dwelling-house" means not only your permanent home but includes a temporary residence. A trailer or mobile home may be a dwelling-house. "Peaceable possession" means that the accused had some element of control over the dwelling-house or that the possession of it was not seriously challenged by others. A welcomed guest to a home may become a trespasser. Such a situation could arise in the course of an evening visit when a disagreement arises over politics or family matters and tempers are running high. The guest is asked to leave several times but refuses to do so and, thus, becomes a trespasser. Even in a shopping centre, a visitor may become a trespasser. A court has held that a person who enters a shopping centre as an "invitee" becomes a trespasser when that person starts skateboarding in the shopping centre where there are posted signs prohibiting skateboarding.

How much force to use to evict the trespasser, namely the reasonableness of the force, is the contentious element in this defence and the Canadian jurisprudence is unsettled in regard to the test to apply. The issue is whether the test is an objective test or a test which should take into account what force the accused believed was necessary on reasonable grounds. In its most convoluted form, one judge has stated that the test is to determine whether the accused reacted in a reasonable manner given his or her objectively verified subjective belief that the force was necessary.

Invasion of Privacy

Invasion of privacy comes in many forms. A common example is the intrusion of your geographical space by a neighbour when you have a right to be left alone. It may be caused by blaring music or by trespass on your property. You may also suffer an invasion of privacy when there is publicity about you that places you in a false light, or public disclosure of embarrassing, private facts that are true. If you are a sports hero, there may be a wrongful appropriation of your name or likeness.

The courts traditionally have protected privacy issues through various common law principles such as nuisance, trespass, harassment, defamation, injurious falsehood, deceit, and passing off. But different social realities are emerging. With advancements in technology, such as cell phones taking photographs, personal data of an individual can now be collected, accessed, and disseminated more easily than ever before. And there is a greater public appetite for this information. Some legislation is in place to balance information privacy with the need to collect, use, and disclose personal information in our era of information technology. There are now rules governing the collection, use, and disclosure of personal information by organizations.

Recently, one Superior Court Judge in Ontario took the common law principles a step further. The Superior Court, for the first time, recognized invasion of privacy as a legal principle in its own right. If the case is accepted by other courts at the same level or by the Court of Appeal, there will no longer be a need for a litigant to resort to the many older, traditional principles to protect privacy issues. There will be only one "tort," the invasion of privacy.

Leaning Fences

The Trespass to Property Act addresses situations when a person enters the lands or premises of another person without a legal right to do so. Trespass may also occur when a structure, such as a wall, intrudes onto the lands of another or when an object, such as an eaves trough, intrudes into the airspace of the adjacent property. These trespasses are governed by decisions of the court system ("the common law") not by the statute. When a trespass involves a structure or an object, the trespasser may have a defence if the trespass was not intentional. There are many fences along property lines on the farm lands and cottage properties in the County of Haliburton. Many of the fences are leaning to one side or the other side of the property line.

The New Brunswick Court of Appeal addressed a situation where a fence leaned over a neighbour’s property. The court was dealing with a fence which the neighbour had built wholly on its own property, perfectly straight and flush with the boundary, and which the court found was leaning a few inches in certain places after three years due to the natural forces of snow or frost. The court described the facts of the case as follows: "With respect to the claim that the defendant had in 1955 put up a fence, the top of which 3 years later was found by Sherren (the land surveyor) to project between 33/4 ins. to 13/4 ins. over the plaintiff's side of the line dividing the two lots, I am bound to find that the defence has failed to contradict the findings of Sherren in this respect and that the top of the fence, whether due to frost or snow, encroached in 1958 a few inches over the plaintiff's property." The court likened the leaning fence to the encroachments of boughs and roots which would constitute only a nuisance but not a trespass. The court stated the law, in somewhat archaic language, as follows: "Trespass to land is the act of entering upon land, in the possession of another, or placing or throwing or erecting some material object thereon without the legal right to do so. In all such cases, in order to be actionable as a trespass, the injury must be direct, within the meaning of the distinction between direct and consequential injuries. It is a trespass, and therefore actionable per se, directly to place material objects upon another's land; it is not a trespass, but at the most a nuisance or other wrong actionable only on proof of damage, to do an act which consequentially results in the entry of such objects. To throw stones upon one's neighbour's premises is the wrong of trespass; to allow stones from a ruinous chimney to fall upon those premises is the wrong of nuisance."

TRUSTS

The Law of Trusts

Whenever one person holds legal title to property and is obligated to manage the property for the benefit of another person, a trust relationship is created. The person who holds the legal title is called "the trustee" and the person who benefits from the trust is called "the beneficiary." A last will and testament creates a trust relationship. Upon death, the property of the deceased vests in a personal representative, the executor, who is a trustee of the property for any beneficiaries.

The trustee is in a fiduciary relationship with the beneficiary, similar to the fiduciary relationship of a solicitor and client. However, since a trust relationship cannot exist without trust property, the trustee is required to meet high fiduciary standards because the trustee has the right and power to control property which, in essence, belongs to the beneficiary. There is a strict duty of loyalty to act solely in the best interests of the beneficiary. In other words, the trustee may not permit personal interests to conflict with the responsibilities of the trustee. The key standard is that the trustee must act honestly, with due diligence, and with the utmost candour. The trustee must keep proper accounts, may not delegate fiduciary responsibilities, and certainly may not make unauthorized profits from the relationship.

In order to create a trust, the creator of the trust must have the legal capacity to create it. A mentally incapacitated person, such as an aging person with dementia, will not have the capacity to create a trust. Bankrupt persons and persons under the age of majority also do not have the legal capacity to create a trust. On the other hand, these same persons can be the beneficiaries of a trust. Regarding the choice of a trustee, any person capable of holding property in his or her own right is capable of holding property as a trustee.

Another requirement for the creation of a trust is the three certainties. There must be a clear intention to create the trust, the subject matter of the trust, such as a land lot, must be adequately described, and those who are to benefit from the trust must be described in clear terms. Ambiguous or vague legal drafting of the trust document may lead to litigation about its meaning.

Tracing Trust Money

Assume a friend holds real estate in trust for you while you are away travelling the world. He is the trustee who holds the property for your benefit and you are the beneficiary of the trust. When you return, you find out that your property has been sold in your absence and your friend has taken the money and bought another property. However, the new property is not held in your friend's name but in the name of a stranger. It is not held in trust for you. What can you do to recover your losses?

In these circumstances, you could launch a lawsuit against the stranger for "knowing receipt of trust property." You must prove (a) that the original property was subject to a trust in your favour, (b) that the money from the sale of the property, which your friend received, was taken from you in breach of trust, and (c) that the stranger did not take the property as a bona fide purchaser for value without notice. In other words, the stranger knew or ought to have known that the sale proceeds were impressed with a trust in your favour.

You could then trace the sale proceeds to the new property to establish that the stranger really holds the new property in trust for you because the original sale proceeds were impressed with a trust and are traceable to the new property because they were used to purchase the new property. One court has described the tracing process as follows: "Tracing is based on the retention by the claimant [you] of a beneficial interest in property. It is a process by which a beneficial owner of property traces what has happened to that property, identifies the persons who have handled or received it, and justifies his claim that the property, or the property into which it has been converted, can be regarded as belonging to him."

Instead of launching a lawsuit to assert your beneficial ownership of the sale proceeds against the stranger, you could bring a personal claim directly against your friend for breach of trust. You must make sure, however, that you will be able to collect on a judgment against your friend. If your friend is "judgment proof," your best course of action is to trace the sale proceeds to the stranger's property.

WILLS

Lawsuits Without a Will

Your last will and testament provides for the orderly transfer of your assets to people you want to receive them after you die. Usually, these beneficiaries include family members. Without a will, Ontario legislation provides some protection for the transfer of your assets to your married spouse and children but you still need a will if you want to make a gift to a friend or charitable organization, or to treat a family member specially.

If you die without a will and are in a common law relationship, your common law spouse must go to court to make a claim against your estate and can only do so if the spouse has lived with you for three years or more before you die, or if you have a child together. Other family members that you are legally obligated to support, such as an ailing parent living with you, must also go to court if you do not have a will.

Because there is no one to administer your estate without a will, a family member, even a married spouse, will have to apply to the courts to become the administrator (executor) of your estate.

To avoid the cost of courts after you die, the best thing to do is to have your lawyer prepare a comprehensive will for you now.

Estate Litigation

Many people make a last will and testament ("the testator") to arrange their affairs in an orderly fashion so that there are no estate problems after they pass away because they have no will. However, things do not always work out as planned even when a person is trying to do the right thing.

There are many challenges to the validity of wills after testators are gone although they really will not care about it by then. The following scenario is one type of challenge. You have two wills. In the first will prepared in 1980, you bequeath your estate to your brother and you tell him that is what you are doing. Your brother resides in another country but you were close to him at that time. You prepare a new will in 2005. All wills have a revocation clause revoking previous wills and other testamentary dispositions so you have a comfort level that the 1980 will is gone. Your brother and you have had a falling out. In your 2005 will, you bequeath your estate to your nephew who is your brother's son. The nephew lives nearby and has now taken care of you for years shopping for groceries and doing yard work, among other things, because you are no longer mobile. You die. Your surviving brother hears of the new will and retains a lawyer to challenge the 2005 will. The challenge is based on an allegation of undue influence by the nephew and the fact that the 1980 will was in favour of the brother.

The executor of your estate is now forced to retain a lawyer. Your nephew also retains a lawyer. Extensive and protracted litigation takes place over a couple of years. The court decides that the 2005 will is valid but that the challenge was reasonable in the circumstances. Who pays the legal costs? Generally speaking, there is a longstanding authority in estate cases to pay the costs of the parties out of the estate. There are two main reasons, one private, one public. Where the difficulties with the will are caused, in whole or in part, by the actions of the testator, courts have held that the testator, through his or her estate, should bear the costs of their resolution. The public policy consideration is that it is important that courts give effect to valid wills that reflect the intention of competent testators. Where there are reasonable grounds to question the will, it is in the public interest that such a question be resolved without costs to those questioning the validity of the will. Thus, the nephew received less than intended.

Challenges to a Will

There are several ways to challenge the validity of a will. Two types of challenges are a lack of testamentary capacity, that is, the lack of physical or mental capacity to make a will, and suspicious circumstances in the preparing and executing of a will.

There are many statements in estate jurisprudence as to the requirements for testamentary capacity. The classic statements come from 19^th century English law and are sometimes archaic in expression. Let me express it this way. The testator, who is the person making the will, must have a clear understanding and memory to know, on his or her own, and independent of others: (1) of the nature and the extent of the testator's real property, such as a house, and personal property, such as a car; (2) of the people or legal entities, such as a charity, that are going to receive the bequest; and (3) of the testamentary provisions in the will to be executed. The testator must also express an orderly desire or intention as to the disposition of the estate property.

When a will is challenged on the basis of testamentary capacity, the burden of proving testamentary capacity is not on those challenging the will but on the proponents of the will, usually the beneficiaries. When proving testamentary capacity, a beneficiary may look to the evidence of the lawyer who drafted the will and the lawyer's file notes on meetings with the testator. There are two witnesses to a will, usually the lawyer and a staff member, so the evidence of the staff member would also be important. Another source of proving testamentary capacity is the testator's physician. The clinical notes and records of the physician at the time and before the time of executing the will would be relevant. Medical conditions, such as signs of dementia or Alzheimer's disease could undermine testamentary capacity.

An allegation of suspicious circumstances, such as undue influence, apparent coercion, or fraud, is often found in estate litigation when a will is being challenged on the basis of testamentary capacity. This is so because a physical or mental debility in a testator may leave the testator exposed to nefarious activity of another swaying the testator such that the testator does not fully appreciate the effect of what is being done in the will. Thus, if testamentary capacity is proven, suspicious circumstances may be defeated.

Interpreting a Will

There have been many cases in the courts involving the interpretation of a last will and testament. Most often they are battles between beneficiaries for a bigger piece of the pie. Sometimes the fault is the language used in the will and sometimes a clause found in the will is not in the right place and does not make sense because of that. Nineteenth century courts approached the problem from a grammar point of view. What is the ordinary and grammatical meaning of the words? What does that clause mean when it is after the residue clause in the will? These courts proceeded on the assumption that, in construing a will, it is not what the testator meant but the meaning of the testator’s words that matters. This approach is basically applying the meaning that a philologist would place on the words or clauses of a will. As one judge has colourfully condemned this approach: "In order to discover the meaning the testator intended, you will not get much help from a dictionary. It is very unlikely that he used a dictionary, and even less likely that he used the same one as you."

The modern approach is intention-driven both in regard to the language used and in regard to a situation when a clause in a will is in the wrong place. The Supreme Court of Canada has established that a court must look to the intention of the testator and the surrounding circumstances at the time the testator executed the will. The law is set out in the following quotation: "Each Judge must endeavour to place himself in the position of the testator at the time when the last will and testament was made. He should concentrate his thoughts on the circumstances which then existed and which might reasonably be expected to influence the testator in the disposition of his property. He must give due weight to those circumstances in so far as they bear on the intention of the testator. He should then study the whole contents of the will and, after full consideration of all the provisions and language used therein, try to find what intention was in the mind of the testator. When an opinion has been formed as to that intention, the Court should strive to give effect to it and should do so unless there is some rule or principle of law that prohibits it from doing so."

"Surrounding circumstances" has been interpreted to mean evidence consisting of the character and occupation of the testator, the amount, extent and condition of the testator’s property and the number, identity and general relationship of immediate family.

Altering a Will

In Ontario, a will, "your last will and testament," must be in writing and signed by the testator (the person making the will). The testator's signature must be placed at the end of the will and the testator's act of signing must be done in the presence of two witnesses who, in turn, must also sign the will in the presence of the testator and in the presence of each other. The requirement that the will be in writing simply means that it is typed-up and then signed and witnessed. Since 1978, it has been possible to make a valid holograph will in Ontario. A holograph will is one that is wholly in the testator's handwriting, that is, in long hand not typed, and signed by the testator.

Issues have arisen in the courts when there is a formal, typewritten will, but the testator makes handwritten changes to the will. A recent Ontario case addressed this issue. The estate involved a large sum of money. The handwritten changes deleted certain beneficiaries and add new ones at the stroke of a pen. The court described the hand written changes: "The alterations were made in handwriting using at least three different types of ink. There was no consistency in the manner in which the changes had been made. Some words were crossed out, other words added above and beside various portions of the will. Some of these added words and phrases were initialled, some portions were crossed out and not initialled, some portions were crossed out with words added above or beside the crossed out portions, wording was added without being initialled, the word "yes" was written beside certain crossed out portions, not initialled, newly inserted wording that appeared to refer to different bequests, uninitialled and an X placed beside a bequest with writing such as "No", "Yes", "O.K." with no initials. Different coloured ink was used suggesting that the changes had been made at different times."

Did the handwritten changes to the typed will change the content of the will? No, they did not. The legislation governing wills renders invalid handwritten alterations made after the will is executed, unless the alterations are made in accordance with the formal requirements which govern the validity of a will. An alteration made to a formal will, once it has been executed, is valid only if the alteration is signed by the testator and attested and signed by two witnesses.

A Lost Last Will and Testament

Suppose you know that your father had a last will and testament before he passed away. You know that he went to a lawyer who prepared the will with the formalities required by the legislation, the Succession Law Reform Act. You know that you were the named beneficiary in the will inheriting his estate. Your father dies but you cannot find his executed will which the lawyer gave him. However, the lawyer has an unexecuted copy of the will. In these circumstances, you should apply to the court to prove a lost will. Any person claiming to have a financial interest in an estate may make an application to have a testamentary instrument put forward as the last will and testament of the deceased.

The law is well settled and difficult to meet. There are two main issues. Firstly, you must prove that the will was lost and not destroyed. If an original, executed will was in the possession of the testator (your father) and cannot be located following the testator's death, a rebuttable presumption arises that the testator destroyed the will with the intention of revoking it. The courts have held that the burden on the person who is attempting to rebut this presumption is a heavy burden. There must be a very strong case to be made out that the will was lost and not destroyed.

Secondly, you must prove that the copy of the unexecuted will is a true copy of the lost executed will. This issue involves proving the proper execution of the lost will and proving that the contents of the unexecuted copy is a true copy of the lost will and not simply a draft of the will found in the lawyer's file. A will is properly executed when the testator signs it in front of two witnesses. The proper execution of the will may be proven by the testimony of the lawyer who prepared the will because he or she is usually one of the witnesses to the testator’s execution of the will. In order to prove the contents of the lost will, you must have cogent evidence that establishes beyond a reasonable doubt the contents of the lost will. Factors that a court may look at to accept the copy of the unexecuted will as reflective of the contents of the lost will include the nature of the content of the unexecuted will itself and the testator’s relationship to the beneficiary. If you find yourself attempting to prove a lost will and have no copy of the unexecuted will to prove its contents, other evidence has been accepted by the courts such as, solicitor's interview notes with the testator or oral testimony from close family members.

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Last Updated 09/06/10

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