Taxpayers should be “reassured” by a Federal Court of Appeal decision that prevented the Canada Revenue Agency from forcing insurance companies to turn over the names of customers who bought a product it wanted to crack down on, according to an Alberta tax lawyer.

A Federal Court judge initially granted the minister of national revenue authorization to get the details of people who bought controversial “10-8” plans. But the authorization was granted on an ex parte basis, and when the insurers later objected, another judge cancelled them, finding the minister failed to disclose a significant amount of information on the ex parte applications.

In a decision dated Feb. 21, Federal Court of Appeal Justice David Stratas, upheld the cancellation.

“Taxpayers should take comfort that the court won’t allow the CRA to get orders like this for undisclosed purposes,” says Carman McNary, a tax partner in the Edmonton office of Fraser Milner Casgrain LLP.

According to the decision, when it applied for its authorizations, the Ministry of National Revenue failed to let the judge know the CRA had decided to “send a message to the industry” and chill the 10-8 business by going on an “audit blitz” of policyholders. This was despite the fact a CRA internal review had found the 10-8 plans likely complied with the letter of the law, if not the spirit. It also neglected to disclose its failed attempts to get the Ministry of Finance to close the legislative loopholes that allowed the plans to lawfully exist.

The judge who cancelled the authorizations found the minister’s audit purpose was “extraneous to her primary goal, which was to chill” insurers’ 10-8 businesses.

“They went on kind of on a fishing expedition. They had an idea of what they were looking for, but not really exactly what, or who,” says McNary. “The key message out of this is if you’re going to go in front of a judge on an ex parte basis, you have the highest obligation to make sure you provide the judge with all the information they might need, even if it’s detrimental to your own case. . . . If they’d made those disclosures, I don’t think they would ever have got the authorizations in the first place.”

On appeal, the minister argued the cancelling judge overstepped his jurisdiction in reviewing the original decision to grant the authorizations. But writing for a unanimous three-judge panel, Stratas disagreed.

“The Federal Courts have a power, independent of statute, to redress abuses of process, such as the failure to make full and frank disclosure of relevant information on an ex parte application,” he wrote. “The Federal Courts’ power to control the integrity of its own processes is part of its core function, essential for the due administration of justice, the preservation of the rule of law and the maintenance of a proper balance of power among the legislative, executive and judicial branches of government. Without that power, any court – even a court under section 101 of the Constitution Act, 1867 – is emasculated, and is not really a court at all.”

The Canadian Bar Association’s British Columbia branch has hit out at the provincial government for its failure to increase financial support for the province’s legal aid system in yesterday’s budget.

CBA-BC president Kerry Simmons says access to justice in B.C. is so bad it’s ‘embarrassing.’

“After years of acknowledging a crisis in access to the justice system in this province, the government continues to respond with a budget that denies additional financial assistance to those who need it most,” said CBA-BC President Kerry Simmons in a statement. “Access to justice in B.C. has deteriorated to the point that our province is an embarrassing 10th out of 13 provinces and territories on legal aid funding spending per capita.”

According to budget documents, the Ministry of Justice will get a $28-million boost in spending, or a 2.5-per-cent increase in its overall budget. However, most of the new money goes towards funding policing and security programs, while court services and legal services will see a small cut.

The CBA-BC has been on a recent push to put justice issues at the heart of the province’s spring election, scheduled for May 14. Earlier this month, it launched its own platform, aimed at increasing “the effectiveness of B.C.’s justice system,” and improving the province’s laws.

Among other things, the 25-page report, entitled “An Agenda for Justice,” recommends an $18-million increase to the budget of the Legal Services Society over the next election cycle to bring per-capita legal aid spending in B.C. in line with the Canadian average. In the longer term, it says it will take $50 million to get legal aid spending in the province back up to pre-2002 levels, after accounting for inflation and population growth.

“What needs to happen is that the province must invest in the services that deliver justice to British Columbians,” said Simmons. “The Canadian Bar Association B.C. Branch will continue to advocate for restoration of funding for justice on behalf of families, communities and business in British Columbia.”

A Nova Scotia Supreme Court judge has declared the pay scheme for the province’s justices of the peace unconstitutional.

A complicated formula links the JPs’ salaries to that of provincial court judges, which are in turn set by the government based on the recommendations of an independent tribunal. But in his Feb. 1 judgment, Nova Scotia Supreme Court Justice Gerald Moir concluded that was too much distance to guarantee judicial independence for the JPs.

“The Provincial Court Judges’ Remuneration Tribunal has no authority to, and does not, make recommendations on justices’ remuneration. Their process may be independent, objective, and effective as regards the judges. However, it is not ‘representative’ as regards the justices because they are not involved, it does not ‘objectively consider . . . submissions’ about the justices’ remuneration because it has no authority to do so, and its work is not ‘effective’ as regards the justices’ remuneration because there is no consultative report on that subject,” wrote Moir. “In short, the lynchpin is missing. Consequently, the independence of the justices is not assured. Therefore, the regulation setting remuneration for Nova Scotia’s presiding justices of the peace is unconstitutional.”

All of Nova Scotia’s presiding JPs work on a part-time basis, and make around $50 per hour when presiding in person, as well as approximately $16 per hour for time spent on call. The hourly rates are linked to 50 per cent of a provincial court judge’s annual salary by a complex calculation that Moir said he “cannot understand.” Provincial court judges are currently paid $157,000 annually.

The provincial government attempted to block the application by arguing judges are unable to sue the government, since justices of the peace act on behalf of the Crown when they exercise judicial functions.

“The Crown cannot sue itself. The present proceeding is an attempt to do just that,” said justice department lawyer Alex Cameron during arguments.

But Moir disagreed, noting that “none of the authorities say that a judge is precluded from suing the government.”

The province also challenged the standing of the Nova Scotia Presiding Justices of the Peace Association to bring the application on behalf of its members, but Moir agreed to grant the group public interest standing to bring the application.

The judge has suspended his declaration of unconstitutionality for 12 months to give the government a chance to decide about its next steps.

A Kelowna, B.C. criminal law practice faces a tax bill of $200,00 after failing in its latest attempt to have GST on criminal defence legal services declared unconstitutional.

The Tax Court says charging GST for criminal law services does not impede a person’s right to counsel. (Photo: Shutterstock)

Stanley J. Tessmer Law Corp. argued the imposition of the GST infringes s. 10 (b) of the Charter, by impeding an arrested or detained person’s right to counsel.

“The appellant maintains that, by its nature, a tax on criminal defence legal fees will, at some level, be prohibitive or at the very least act as an impediment to or will interfere with the right to counsel since the additional cost of the tax to an accused will interfere with the financial resources available to mount a defence to the charges brought against him or her,” wrote Tax Court of Canada Justice Brent Paris, summing up the firm’s case.

However, Paris was not convinced, going on to find in his Jan. 28 judgment that on the facts of the case, a breach was not made.

Between 1999 and 2006, the firm’s principal, Stanley Tessmer, and two other lawyers, did not collect GST on bills for some of its arrested clients, who were either charged with a criminal offence or who had criminal charges pending.

After being slapped with an assessment for $228,000 in GST, plus interest and penalties, the firm appealed to the Tax Court of Canada. The law firm won an early minor victory when the court found it did have standing to raise the alleged Charter breaches, before Paris’ decision dismantled the case. It isn’t the first time the firm has challenged a GST assessment — a previous appeal to the Tax Court by the firm claiming a Charter breach was dismissed in 1999.

This time around, Tessmer claimed the purpose of the GST legislation was unconstitutional because of the inconsistency between the government’s dual roles as prosecutor and tax collector on the services required to defend that prosecution.

But Paris concluded the legislation was too broad, encompassing as it does an “infinite variety of transactions,” to find its purpose invalid.

In addition to the purpose of the legislation, Tessmer argued its effect was also unconstitutional. The firm had not conducted any assessments on the ability of its clients to pay its fees and the GST on them, but argued it should be allowed to rely on hypothetical situations to show the general effect of the tax was unconstitutional. But Paris again sided against the firm.

“From my review of the Supreme Court decisions on point, it appears that a party may only rely on hypotheticals to establish a factual foundation for a Charter challenge where actual facts are not available to that party. . . . Since the appellant does not take the position that evidence of the effect of the GST on the ability of its clients who were detained or arrested to afford its services is unavailable, I find that this case does not fall within the exception,” Paris wrote.

Without evidence that any of Tessmer’s clients “were unable to retain counsel as a result of the GST payable on legal services,” Paris said the facts of the case did not support the infringement claim.

A man convicted for his involvement in a marijuana grow-op has had his sentence cut by a third on appeal after Ontario’s top court found the judge made a “negative and stereotypical” comment, amongst other errors, in his decision. 

Ontario Court Justice Gregory Pockele sentenced Nhu Van Nguyen to 15 months in jail, less two months credit for pre-trial custody, back in March 2011.

According to the Ontario Court of Appeal decision, Nguyen was the “gardener” in a $1.2-million grow-op scheme involving more than 1,200 marijuana plants at a large residential home in London, Ont. He had pleaded guilty to theft of hydro, possession of marijuana for the purpose of trafficking, and production of marijuana.

In a decision dated Jan. 28, the Court of Appeal for Ontario chopped five months from the sentence to 10 months less two months for pretrial custody.

Nguyen’s lawyers wanted a conditional sentence, arguing Pockele’s decision demonstrated a reasonable apprehension of bias by referring to his personal experience with grow-ops near his home and for discussing general deterrence in the context of a specific ethnic group.

The three-judge appeal court panel was fine with Pockele’s incorporation of his personal observations on grow-ops but it was less comfortable with his comments on ethnicity.“We agree that, against the backdrop of no evidence in the record, the trial judge should not have said that ‘[t]o a certain extent, there is an ethnic element in that certain groups of new Canadians, or Canadian citizens sharing cultural and ethnic heritage, appear before the court in unusual numbers charged with marijuana production.’ There is no place in the Canadian criminal justice system for this type of negative and stereotypical comment,” the appeal court stated.

However, the appeal court said a conditional sentence would be inappropriate since “only in rare cases involving large-scale commercial marijuana grow operations” should a non-custodial sentence result.

According to the decision, Pockele also made a mathematical error when calculating Nguyen’s sentence. After concluding that 18 months was an appropriate sentence, Pockele said anyone entering an early guilty plea should get a 20- to 30-per-cent discount. But even using the smaller 20-per-cent discount, the sentence should have fallen below the 15 months he ultimately imposed.

“The midpoint of the trial judge’s reduction for a guilty plea, 25 per cent, would generate a starting point of 13.5 months. In these circumstances, we regard an appropriate sentence as 10 months imprisonment,” the appeal court stated.

The Canadian Bar Association will urge the Supreme Court of Canada to water down its bright line rule on conflicts during Thursday’s hearing of Canadian National Railway v. McKercher LLP.

Malcolm Mercer says the bright line rule should only apply where there is a substantial risk of prejudice to the lawyer’s former client.

The rule came about as a result of the top court’s landmark 2002 decision in R v. Neil, when former justice Ian Binnie wrote that in general “a lawyer may not represent one client whose interests are directly adverse to the immediate interests of another current client” even if the two mandates are unrelated, unless both clients consent after receiving full disclosure.

But counsel for the the CBA, Malcolm Mercer, says the rule should only apply where there is a substantial risk of prejudice to the lawyer’s former client.

“The issue is whether or not that rule is a presumptive,” says Mercer, a partner in McCarthy Tétrault LLP’s Toronto office, and a former member of the CBA’s task force on conflicts of interest. The bar association’s position is that clients shouldn’t be deprived of their choice of counsel without a reason. “And where there is no substantial risk of prejudice to anyone, there is no reason.”

The case has its roots in a proposed Saskatchewan class action by farmers against CN, alleging the rail giant overcharged them for grain transportation during the previous 25 years.

Saskatchewan law firm McKercher LLP had been acting for CN on various matters for almost a decade, when in 2008, representative plaintiff Gordon Wallace approached the firm to commence the multi-billion-dollar class action.

When the class action was launched, four of those files remained open. Over the next few months, the firm unilaterally withdrew from three files and attempted to continue work on another, but were denied by CN.

Although Saskatchewan Appeal Court Justice Justice Ralph Ottenbreit allowed McKercher to continue acting for Wallace, overturning a lower court ruling, the judge found “McKercher did breach its duty of loyalty” for “dumping” CN the way it did.

But without a transfer of material confidential information during their retainer that could prejudice CN in the class action, the court decided the circumstances did not justify disqualification, noting there were other remedies open to CN, such as suing for damages related to the transfer of files or a complaint to the Law Society of Saskatchewan.

“Disqualification should not be used as punishment of counsel or as an example to deter lawyer conduct as such,” Ottenbreit wrote in his decision on behalf of a unanimous three-judge panel.

Counsel for CN and McKercher are also expected to clash over the “professional litigant exception” to the bright line rule, where consent to act adverse in interest may be inferred from entities such as banks, governments, or large corporations. The appeal court in Saskatchewan bolstered that exception, finding it was reasonable for McKercher to infer CN’s consent, despite the fact the company objected when it found out.

“Once it is concluded that implied consent is reasonable, subsequent express non-consent cannot vitiate the implied consent: otherwise the professional litigant exception would be meaningless,” wrote Ottenbreit.

The barristers’ lounge at Vancouver’s 222 Main St. provincial courthouse is a lonely place these days.

“It’s been empty ever since it happened,” says defence lawyer Chris Johnson of Johnson Doricic Doyle Sugarman.

The event he’s referring to was the discovery last week of a bedbug infestation in the lawyers’ lounge at one of the court’s Downtown Eastside area locations.

“You don’t want to hang your coat up, or put your briefcase down in there. I think it will take a few more days at least, and probably more, before people go back. It’s pretty disgusting,” Johnson tells Legal Feeds.

And it’s not just in the lounge where habits have changed. Lawyers and their clients are even more eager than usual to get out of the busy 307 courtroom, one of three where remediation treatments were carried out, according to a provincial government official.

“Nobody wants to sit down or linger in there. I just hang on to my briefcase,” says Johnson.

The lawyer has spent more than a decade on a cleanliness committee at the courthouse, where suspicions about bedbugs have been repeatedly raised, but never confirmed, until now.

“Given where the court is and the type of people who come there, it’s not a big surprise. Bedbugs are a big problems in hotels on the Downtown Eastside, but the extent of it was a surprise,” he says.

Now he hopes the bedbug shock will spur investment from the province in preventative measures.

“We’re hoping this will draw some action out of them. It took us two years to get hand cleaners in the building,” says Johnson.

Kevin Jardine, the assistant deputy minister for court services in the Ministry of Justice, says inspectors were sent into the Main Street location after bedbugs were discovered in December at the nearby Downtown Community Courthouse. The barristers’ lounge and other affected areas underwent treatment, with .

Jardine says no scheduled hearings have been affected, but he understands users’ discomfort with the situation.

“Discussion of bedbugs tends to elicit scratching whether or not they’re actually present. We’re moving aggressively to treat and eliminate them from the entire facility,” he says. “It’s obviously very unpleasant, but we’re comforted by the fact that they aren’t a public health hazard, and they don’t transmit diseases.”

Jardine says furniture and carpets will also be removed from the courthouses in an effort to stop future infestations, and information sessions will be put on for court users.

The first is tomorrow lunchtime at the Main Street courthouse, when a pest control expert will deliver a talk on “everything you did (and didn’t) want to know about bedbugs.”

“Topics discussed will include identification, what and where to look for signs, preventing their spread, treatment, etc,” says a notice sent to people who work at the two affected buildings.

A Law Society of Upper Canada panel has ruled that aboriginal sentencing circles can have a role to play in the society’s discipline process, despite rejecting a lawyer’s request for one in his case.

In a decision released last month, Bencher Carol Hartman rejected submissions from law society lawyers who argued the circles had no place outside the criminal justice sphere.

“Given that Convocation’s primary objective is to protect the public and to maintain public confidence in the legal profession, the holding of a circle would engage the public in the penalty process and could play an important role in maintaining public confidence in the profession,” Hartman wrote on behalf of the three-member panel.

The panel invited submissions on the issue during the penalty phase in the case of Sarnia, Ont. lawyer Terence John Robinson.

Robinson, a member of the Wikwemikong Unceded Indian Reserve, pleaded guilty to aggravated assault in 2009, and subsequently admitted conduct unbecoming a licencee of the LSUC related to his conviction. He has agreed to stop practising while the case unfolds, but wants to return to his criminal law practice representing aboriginal clients.

In written submissions, Robinson’s lawyer Jonathan Rudin claimed the case was perfect for an unprecedented LSUC sentencing circle.

“The respondent believes that the holding of a sentencing circle will allow the hearing panel to obtain a deeper understanding of the Aboriginal community’s response to the finding of conduct unbecoming a licencee,” wrote Rudin.

But law society discipline counsel Deborah McPhadden countered, urging the panel to ignore the idea because circles have no place in professional discipline.

“Not only should a sentencing circle not be held in this particular case, generally speaking sentencing circles have no place in law society discipline matters. The Law Society Act requires the hearing panel to make determination of penalty,” wrote McPhadden. “The opinion of anyone besides the hearing panel as to appropriate penalty is irrelevant.”

But Hartman said the panel would not be “abdicating its obligation to set a penalty” by holding a circle.

“Under the Law Society Act, the power and duty to impose a fit penalty is vested exclusively in the Hearing Panel. The panel is at liberty to ignore the recommendations of a circle,” Hartman said.

Despite the ruling, the panel found Robinson’s case was not suited to a sentencing circle, due to the limited evidence of Robinson’s enthusiasm for the idea, of his roots in the Wikwemikong First Nation community, or of the band’s willingness to participate.

Crown lawyers in New Brunswick will vote on a new collective agreement in January, almost two years after their last one expired.

The provincial government announced this week that it had reached tentative agreements with the New Brunswick Crown Prosecutors’ Association and New Brunswick Crown Counsel Association, which include 109 employees working in legal, legislative. and prosecution services at the office of the attorney general.

“I am pleased that we have arrived at the second tentative agreement with public sector groups this month,” said Human Resources Minister Troy Lifford in a statement. “As part of the negotiating process, both our government and the union will withhold details of the agreement until a ratification vote can be held.”

The process has not always run smoothly. The groups’ first collective agreements since they were certified in 2010 provided for wage freezes, but expired in March 2011. Renewal negotiations picked up in September 2011,but were suspended by the government in January this year.

After negotiations resumed, both Crown groups spoke out in May about what they saw as unfair bargaining practices after seeing offers rebuffed by the government. Sticking points were the proposed elimination of retirement benefits for new hires and the way management administers movement on the pay grid.

“Things were going reasonably well until the government suspended bargaining again in January because they were trying to work on their budget. Since then they have basically refused to consider any of our ideas. Their tactics are tantamount to bargaining in bad faith,” NBCPA President Chris Titus said in May.

“Just because the province is trying to tighten up finances by running the public service like a business doesn’t mean that, as an employer, government should be allowed to treat its employees unfairly”, added Eric Boucher, president of the NBCCA.

Boucher declined to comment on the agreement while the ratification vote is outstanding, while Titus could not be reached. But André Lortie, a negotiator with the Professional Institute of the Public Service of Canada who has been working with the Crown groups during the bargaining tells Legal Feeds it’s a relief to finally get a tentative agreement in front of the associations’ members.

“After a certain number of months, it’s always good to reach a deal,” says Lortie.

Former Supreme Court Justice Ian Binnie is fighting back after New Zealand’s minister of justice slammed his report into compensation for a man cleared in one of the country’s highest-profile murder cases.

Justice Ian Binnie’s legal ‘reasoning’ has been called into question by New Zealand’s justice minister.

Binnie was hired in 2011 by then-justice minister Simon Power to assess the compensation claim of David Bain, who was acquitted in 2009 at his second trial for the 1994 murders of his parents and three siblings. By that time, Bain had spent 13 years in prison following his conviction at the original trial in 1995.

Since compensation for prison time is normally reserved for those whose convictions were quashed or pardoned, Binnie was asked to decide whether Bain was entitled to claim compensation, and if so, how much. State broadcaster TVNZ reported Bain could be in line for a payout of up to NZ$2 million (C$1.65 million).

But after spending almost NZ$400,000 (CDN$330,000) on Binnie’s completed report, Power’s successor Judith Collins has called in local lawyer Robert Fisher to “peer review” the former judge’s work.

“My concerns are broadly that the report appeared to contain assumptions based on incorrect facts, and showed a misunderstanding of New Zealand law. It lacked a robustness of reasoning used to justify its conclusions,” Collins said in a press release announcing the move Dec. 11. “This was not a decision I made lightly, but one that was absolutely necessary. Put simply, it would not be acceptable to make a recommendation to Cabinet based on a report that would not withstand the considerable scrutiny it would attract.”

Collins goes on to say: “My concerns are broadly that the report appeared to contain assumptions based on incorrect facts, and showed a misunderstanding of New Zealand law. It lacked a robustness of reasoning used to justify its conclusions.”

In a statement e-mailed to Legal Feeds, Binnie, who is currently in Switzerland, said he had received no advance warning of Collins’ statement, which he called a “political document.”

“The press release refers to ‘robustness of reasoning’ which seems to be code for ‘reasoning’ that supports the Minister’s preferred disposition of the Bain claim,” Binnie wrote. “David Bain is seeking a discretionary payment from Cabinet and Cabinet is a political body that makes political decisions. However I expected the Minister to follow a fair and even handed process leading up to that political decision. She is, after all, the Minister of Justice.”

Binnie is not the first overseas judge to get involved with the Bain case. In 2007, Bain’s was one of the last New Zealand cases heard by the U.K. Privy Council before the New Zealand Supreme Court became the country’s final court of appeal. The five-judge panel ordered a retrial after finding there had been a miscarriage of justice.

“It is a curious feature of this case that all of the ‘external’ judges who have looked at the record of the case have rejected the arguments of the Solicitor General and the Crown Law Office regarding David Bain’s guilt. . . . People are free to disagree with my views (as they are free to disagree with the views of the Privy Council and the 2009 Christchurch jury), but it is no disrespect to the able Hon Robert Fisher QC to note that the Minister is keen to repatriate the Bain case to her home turf,” Binnie added.

Collins says she raised concerns about Binnie’s report when she met with the former judge in September, and told him it would be peer reviewed.

“I also advised Justice Binnie the report must remain confidential and it would be premature to release it until after Cabinet had made a decision on Mr Bain’s claim,” she wrote in her statement. “Since then, I have received from Justice Binnie, unsolicited, two further versions of his report.”

“The Minister seems to have a curiously one sided view of ‘confidentiality,’” retorted Binnie, who says he was simply responding to her concerns with minor changes to his report. “She feels free to criticize my Report while claiming in the same press release that the Report is covered by solicitor client privilege and, therefore, I am not to disclose the obvious responses to her criticisms by releasing the Report…Whatever else New Zealand law states, it is certainly well established that it is most improper for ‘a client’ — especially a legally trained client — to attack publicly a lawyer’s advice while simultaneously claiming privilege to protect from disclosure the advice that is being attacked. I would expect that the Minister, as a former Auckland tax lawyer, would be well aware of this principle.”

According to Collins, she’ll have Fisher’s peer review within days, which will then be forwarded to Binnie for his comments, before Collins finally makes a recommendation to cabinet. On Wednesday morning, there were reports in the New Zealand press that she was considering making both Binnie and Fisher’s reports public by the end of the week.

“Ultimately, this review will not have an impact on Mr. Bain’s claim, apart from causing an unfortunate delay to the decision Cabinet will make,” Collins said.

Update Dec. 13, 1:20 pm.
The minister of justice released both Binnie and Fisher's reports on Friday morning, New Zealand time. Below find links to the main documents:

Binnie's final report on the Bain case.

A summary of Fisher's key criticisms of Binnie's report.

Fisher's full report

Binnie's response to Fisher's report