Legal Feeds Blog
An Alberta judge has described the interest charged to an Edmonton woman by a moneylender as “shockingly high,” but said it’s not criminal.
In Settlement Lenders Inc. v. Blicharz, Lucyna Blicharz had filed an application with the Court of Appeal of Alberta to extend time to appeal and extend time to file appeal record.
The legal action related to a default judgment in December 2013 that ordered Blicharz to pay $38,881.50 to Settlement Lenders. The company advertises itself as “Canada’s original settlement lenders for auto accident, personal injury, malpractice, and estate claim,” and lends money to people pursuing legal actions.
Blicharz was advanced $10,625 in 2007 and 2008, after she executed three promissory notes. As part of her legal action against the company, Blicharz said the amount of interest on the loan was greater than 60 per cent, making it illegal under s. 347 of the Criminal Code.
She also said she’d only received $8,000. Blicharz had legal counsel when she executed the notes.
“In general, [Blicharz] alleged that she did not understand the significance of the amount of interest to which she had agreed. She alleged that she interpreted the promissory notes such that nothing would be due until she received all the settlement proceeds from her injury claims. The chambers judge concluded that these were not arguable defences, as she had counsel at the time she executed the promissory notes. Her subjective interpretation of the promissory notes was of no consequence as it was clear they were payable on demand,” said Justice Patricia Rowbotham in the ruling.
Rowbotham ruled against an appeal; stating that while there was “no application to restore the appeal . . . it seems to be me that I can consider her current applications as encompassing an application to restore the appeal.”
But the judge had some pointed words about the amount of interest Blicharz was charged.
“After reviewing this material, the chambers judge found that the monthly interest fee was not a criminal rate. The interest is not compounded. Had it been, it would have been greater than 60 per cent. There is no doubt that the interest of 48 per cent is shockingly high and a marked departure from conventional lending rates but this was the effective interest contemplated in the promissory notes,” said the ruling.
Rowbotham also noted Alberta’s Unconscionable Transactions Act, RSA 2000, c U-2 “was not raised in the proceedings below. It applies when ‘in respect of money lent, the court finds that having regard to the risk and all the circumstances, the cost of the loan is excessive and that the transaction is harsh and unconscionable.’
“The Act was applied in a case involving a lender with a similar business model to that of the respondent; a purported ‘advance’ against personal injury litigation proceeds. The judge held that ‘having regard to the risk and all the circumstances . . . the cost of the 2005 loan is excessive and the transaction is harsh and unconscionable and a marked departure from community standards of commercial morality.’”
Rowbotham said in Blicharz’s case, the fact she obtained legal advice was an important factor. She pointed to the 2005 case Cain v. Clarica Life Insurance Co.
“Given that Ms. Blicharz had legal advice before she proceeded with the loan and its onerous terms, Cain would be a complete answer. That said, these lending practices, which appear to prey on already vulnerable personal injury victims who are unable to use conventional lenders or contingency-based personal injury lawyers, are, in the words of Judge Ingram, ‘a marked departure from community standards of commercial morality,’” said Rowbotham.
Jennifer Babe, a partner at Miller Thomson LLP, says “it is clear that the borrower signed demand promissory notes, with interest at 48 per cent per annum, with the advice of counsel.”
“These were not payday loans, which are regulated in some provinces with capped rates per annum. And with interest at less than the 60 per cent per annum rate specified in the Criminal Code, these loans were not unenforceable by reason of illegality,” says Babe.
“There are many lenders in Canada working in the higher risk loan area, lending to Canadians who do not have good credit scores or have not collateral or like credit risk.”
Man found stabbed to death in Richmond Hill home, Canadian Press
A former Toronto city councillor, lawyer and immigration adjudicator who served seven months in jail for breach of trust and agreeing to accept benefit has been granted permission to surrender his licence to practise law and ordered to pay $5,000 in costs for the investigation against him.
In reasons released this week, Steve Graham Ellis, 56, was granted permission by the Law Society of Upper Canada’s disciplinary tribunal to surrender the licence rather than revocation due to the mitigating factor of his bipolar II disorder.
“We find, based on the medical evidence, that Mr. Ellis’ choices were affected by his bipolar II disorder,” wrote the tribunal panel, chaired by David Wright with Eva Krangle and Sandra Nishikawa rounding out the trio. “Given this, and how contrary his actions were to the core values of the legal profession, reassurance to the public requires that Mr. Ellis no longer practise law.
“His illness’ impact on his inhibitions and feeling of grandiosity are not sufficient to overcome the lack of integrity in the choices he made,” the tribunal wrote. “On the other hand, we find the circumstances sufficiently exceptional to justify granting Mr. Ellis permission to surrender his licence.”
“This is a recognition of the effects of his illness on his actions.”
In a high-profile matter that came to light in 2006, Ellis had been caught on videotape attempting to pressure a 25-year-old South Korean refugee claimant into having a sexual relationship with him in return for a favourable ruling through his role as an adjudicator in her case.
In a 2010 trial on the matter, the prosecution sought a three-year jail term but the trial judge found Ellis’ diagnosed psychiatric and medical condition to be a mitigating factor and handed him an 18-month sentence. He was ultimately released on early parole after serving seven months in 2014.
Ellis and his defence counsel, James Camp, argued the lawyer, who served on Toronto city council first in 1991 for Ward 9 and won re-election in 1994 before losing in 1997, was a man who was “spinning out of control” at the time due to his intense work schedule, inability to sleep and overall drive to succeed while suffering from a bipolar disorder and chaotic bouts of hypomania.
The government first appointed him to the refugee protection division in 2000 and reappointed him every two years until his removal in 2006 following the criminal charges.
Although Camp and Ellis declined to comment prior to posting time, during the disciplinary hearing, Ellis told the panel that in the time leading up to his offences, he was only getting a few hours of sleep each night. He was suffering from nightmares as he tried to lay the groundwork for a political career he hoped would lead to the mayor’s seat in Toronto and worked to be the most effective and productive refugee claim adjudicator in the country, he said. Two separate investigations of each refugee file Ellis had worked on found no other wrongdoing or breaches of his position.
“Looking back, I can see I was ill for a long time,” he said during his hearing, adding he was having an affair that was taking an emotional toll on him and was generally acting in a very impulsive way.
“I felt I had to be the number-one producer in Canada. I thought I could help people and make a difference in their lives. But I was constantly revved up. I was constantly in a whirlwind.”
The LSUC was asking for costs of $7,000, but in recognition of the financial difficulties he has faced since his release from prison, his cooperation during the investigation and the fact he would not be returning to practise, the tribunal set $5,000, payable over four years, as the cost award.
The LSUC, through its communications advisor Susan Tonkin says, “The decision of the hearing panel speaks for itself.”
Inquest to be held in death of inmate at Kingston Penitentiary, Canadian Press
- Global Legal Innovation Challenge will call on contestants to solve one Big Law problem
As corporations increasingly demand efficiency and tech savvy from their law firms, one such firm has teamed up with a legal technology incubator to launch an innovation contest for developers in the space.
Carla Swansburg says her team had been looking for collaborative opportunities with tech incubators.
The Global Legal Innovation Challenge — the brainchild of Blake Cassels & Graydon LLP and LegalX — will call on a broad range of tech companies to solve a specific problem facing Big Law in Canada.
Blakes announced the initiative yesterday as part of its sponsorship of LegalX, which oversees a cluster of startups working out of the MaRS Discovery District.
Carla Swansburg, director of knowledge and pricing services at Blakes, says her team had been looking for collaborative opportunities with tech incubators just as LegalX began soliciting for law firm sponsorships.
The key selling point — and what ultimately nudged Blakes toward a one-year sponsorship — was the incubator’s focus on near-term commercialization. “They’re not looking for two guys and an idea,” she says. “They’re looking for better-developed, more mature ideas that are really right for commercialization, or that will really lend themselves to the near view. So they don’t just take any startup. They really do a vetting process.”
Already, LegalX has helped develop such legal tech standouts as Beagle (which helps to automate contract analysis) and Closing Folders (which helps M&A lawyers close deals).
More than just a credential to serve up to clients, however, Swansburg says the partnership will give Blakes a chance to hone its systems and really “walk the talk” when it comes to providing a sophisticated approach to client services.
“We’re going to have co-branded presentations and training sessions. We’re going to get the guys from LegalX and maybe from MaRS to do some training and to meet with some of our partners and staff, and make sure that we know what's going on in the space, know what's happening with the practice of law, and understand at an early stage what direction those technologies are going in.”
Blakes isn’t the only firm to sponsor LegalX — one other notable includes McCarthy Tétrault LLP — but it does lay sole claim to the Global Innovation Challenge. “We’re essentially making it up from scratch with LegalX,” she says.
The prize is yet to be determined, but LegalX and Blakes have already begun brainstorming sessions, and they hope to have defined the challenge within two months.
“It could be anything — from the way we update and deliver legislative changes to the way that we streamline our relationship with management to the way that we organize dashboards internally for people to manage their matters. It’s kind of open season and we’ll have to pick one, but these are the kinds of ideas that people tossed out in our very early initial discussions.”
And what’s to become of any valuable breakthroughs that emerge from the contest?
“The world is our oyster,” says Swansburg. “It could be that we acquire and develop. It could be that we license. It could be that we beta-test it and are just one of many potential customers. These are all works in process and options for us to look at it.”
The Ontario Court of Appeal has ordered a Corruna, Ont., lawyer to pay $200,000 in damages after finding he was negligent and breached his fiduciary duty when he represented both parties in a sale of shares transaction. The lawyer had mistakenly perceived the transaction as a gift rather than a sale.
|Brian Radnoff, lawyer with Lerners LLP, says the court of appeal drew a very different factual conclusion from the evidence compared to the trial judge.|
“Having perceived no potential conflict, he did not undertake the most basic obligations of a lawyer to his client: to raise the problem of acting for both sides, to explain the potential conflict, to obtain consent to act for both sides or to recommend independent legal advice,” said appeal court Justice Kathryn Feldman, who wrote on the court’s behalf.
Brian Radnoff, commercial litigator and appellate lawyer at Lerners LLP, says the court of appeal in this did something it’s normally reluctant to do.
“It drew very different factual conclusions or inferences from the evidence compared to the trial judge and took very different views of the agreement at issue,” Radnoff says.
The seller, Harold Roth, entered into a share-purchase agreement with the Juschkas in 1992 with respect to shares of a grocery store they jointly owned. The agreement ensured Roth and his wife would continue to receive a stream of income and it included a promissory note that said the Juschkas would pay $408,000 to the Roths in 40 years for the value of the transferred shares. The Roths maintained the right to demand the payment earlier should the store close or Cynthia’s share go down to 50 per cent. If the Roths died before the 40-year deadline, Brock told the court the understanding was that the Juschka’s debt would be forgiven in the Roths’ wills, although this agreement wasn’t documented.
Brock had argued, and the Superior Court agreed, that the agreement the lawyer helped arranged in this case was akin to a gift, and any other lawyer would have advised the Juschkas to sign it. The appeal court, however, read the agreement quite differently.
“In my view, it is clear that following the share purchase transaction, the Juschkas were not in a financially better position than before and certainly had not received a gift,” said Feldman, who stated Brock failed to understand and explain the implications of the promissory note to the Juschkas.
She added: “The purpose of the transaction, as conceived by Harold Roth, was to transfer his shares to the Juschkas in a tax-efficient manner while retaining a significant income stream for himself and his wife during their lifetimes.
“Although he expressed to the respondent that his wish was to benefit the Juschkas by allowing them to become full owners of the grocery business without interference from other family members, the ultimate transaction was in no way a gift of shares.”
The litigation in question ensued after Roth’s wife demanded payment of the promissory note following her husband’s death because the Juschkas sold the business to Sobeys.
James Virtue, counsel for Brock, did not respond to a request for comment by time of posting this story.
“You can see how a lawyer in this situation might think this is appropriate to do this,” says Radnoff, but he adds most lawyers in a similar position would either tell one party to get independent advice, and if they decline to do so, include a note in the agreement that says the parties were advised to obtain independent legal advise and that they have waived that right.
Police in St. John’s were investigating a bomb threat at Atlantic Place Tuesday morning, a building that houses provincial court, shops and offices.
According to Canadian Press, the Royal Newfoundland Constabulary’s canine team and explosive disposal unit were at the building around 10 a.m. local time and it was evacuated for about 90 minutes.
Earlier, a tweet from police read: “We are currently at Atlantic Place investigating a threat of an explosive device in the building. Evacuations are underway. Updates to follow.”
Melissa Royale, a lawyer at Benson Buffett PLC Inc. said she and others at the law firm, which has offices in Atlantic Place on Water Street, saw the activity unfolding on Twitter before being alerted to leave the building.
“They evacuated the court first,” she says. “As the provincial court is in the building this kind of thing has happened before.”
Royale said coffee shops around Atlantic Place were full with office workers while police conducted a search but everyone was able to return to work without incident.
The Law Society of British Columbia task force struck to provide recommendations for regulating law firms will begin touring the province for feedback from lawyers starting Feb. 15.
|Law firm regulation task force chairman Herman Van Ommen says there tour will begin Feb. 15 seeking feedback from profession.|
Task force chairman Herman Van Ommen says that while the Feb. 15 date has been confirmed, final venues and dates are still being finalized with the task force expecting to kick off its tour in Nanaimo.
Other planned venues, during the two-week tour include Prince George, Abbotsford, Castlegar, Cranbrook, Kelowna, New Westminster, Surrey, Victoria and Vancouver.The tour is being led by Van Ommen and LSBC staff members who will liaison with task force members located in points outside the Lower Mainland including Jan Christiansen, Martin Finch, Peter Lloyd, Lori Mathison, Sharon Mathews, Angela Westmacott, and Henry Wood.
Van Ommen says there was a need to obtain more feedback from members than could be provided online after the task force released its October 2015 consultation paper regarding law firm regulation. “Generally, there is concern that there may be duplication of regulation,” he says. The other concern raised is that the LSBC is wandering into areas where it has no business. One area, which has yielded the none-of-your-business response, is succession planning.
"We feel that law firms should have a plan in place to protect their clients," says Van Ommen, adding that larger firms are often better prepared, with a plan in place, rather than smaller or sole practitioner. He said the LSBC has a whole department in place that currently handles custodial duties for firms that have not had contingency plans for events that may impact a lawyer's ability to practice.
Van Ommen said the consultation paper has yielded feedback from lawyers but not at the depth he would like to see and meetings where a back and forth dialogue can occur would help clarify the resistance that is being encountered. “I’m looking for a deeper dive to these questions,” he says, but he also wants to hear new views on the different aspects of law firm management that will be impacted. He says the intent of the regulations is not to set out a new group of rules that law firms must adhere to, but to provide regulations and then let the management group within law firms devise their own in-house systems and strategies to comply with those regulations.
The firm's managers or partners would be responsible for setting in place those strategies, however, in the small sole practitioner firms, the lawyer would be responsible. Van Ommen wants to ensure that B.C.'s new regulations are in stride with what is happening in the rest of Canada as other jurisdictions bring forward entity regulation so that national firms can better manage their branches across Canada.
The LSBC has broken its concerns into 10 areas: conflict of interest, accounting, lawyer and firm succession plans, marketing, mentoring, training and supervision, client service complaints and client relations, file management, privacy and confidentiality, safe workplace and interpersonal relations, crisis and personal assistance, conduct and competence issues.
Van Ommen says most other provinces have only seven main categories relating to aspects of firm management. “But, you can fit the 10 areas we are concerned about into these seven quite easily,” he says.Good policies in-house will also stop problems from reaching the LSBC, such as in the event of a client being unhappy with a lawyer's work or a lawyer having personal problems and not performing for clients as he should.
Once the discussion sessions have yielded feedback and members gain a better understanding of why the LSBC needs to regulate firms, Van Ommen says the eight-person task force (which includes four benchers) will place its findings and recommendations before the benchers. The benchers as a whole will assess the findings and if satisfied approve the recommendations. The LSBC staff will then be charged with putting those recommendations into regulations, he says.
Van Ommen said he was unsure how the enforcement would be carried as yet but noted that Australia, which has a regulatory system in place, has a self-auditing system and firms annually go over the areas at risk and ensure policies are in place to eliminate any problems.
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