Legal Feeds Blog
The Ontario Court of Justice has acquitted 75-year-old real estate lawyer Kenneth James of all charges he faced following an international drug and fraud investigation the RCMP launched in 2010.
Through his counsel Scott Bergman, of Cooper Sandler Shime & Bergman LLP, James said he feels “greatly comforted,” but he will also still have to wait out the Crown’s 30-day appeal period before he can feel completely vindicated.
Crown counsel could not be reached by posting time.
“Despite an extraordinarily difficult four years where all aspects of Mr. James’ life were torn to pieces, he never lost faith in the criminal justice system,” says Bergman.
“Having now been acquitted of all charges, Mr. James is greatly comforted by justice having been done. He is eager to move on with his life.”
James faced charges of property obtained by crime, specifically about $3 million; defrauding the Government of Canada over $5,000; unlawful export of a controlled substance [ephedrine]; and conspiracy to export a controlled substance in allegations spanning early 2009 to June 2012.
According to an agreed statement of facts, the charges arose from his alleged dealings with Afshin Dastani, who owned and operated an online nutrition supplement business that the RCMP alleged also sold and unlawfully exported ephedrine to the United States.
The RCMP alleged Dastani provided James with a number of bank drafts that were deposited into various bank accounts held by or associated to the long-time real estate lawyer. Police alleged he then distributed funds, in cash, to Dastani or to third parties by cheque at Dastani’s direction.
Dastani was arrested and charged with a number of related offences in May 2011 and ultimately pleaded guilty. He received a two-years-less-a-day sentence and two years of supervised probation.
According to the agreed statement of facts, following his 2011 arrest, Dastani provided statements to the police that implicated James in the activities, leading to the investigation and ultimate arrest of James in 2012. RCMP raided his offices in Concord, Ont. and an suburban Toronto home where about $750,000 in cash was found.
James, in a Law Society of Upper Canada hearing in July 2012, agreed to a suspension of his licence to practise law while the criminal proceedings were being resolved.
In his reasons for judgement, Ontario Court Justice David Rose found Dastani, a key Crown witness, to be inconsistent in his testimony and that James would not have been knowledgeable of the illicit business activities. In his decision, Rose wrote:
“There is ample evidence that Mr. James was paying suppliers on behalf of Mr. Dastani, namely Nutrition Club or Canada Post. Mr. Dastani’s evidence was that Mr. James paid the Canada Post bills but was not knowledgeable about where Canada Post was shipping to.
“I have rejected Mr. Dastani’s testimony as not credible, and since he is the principal source of evidence that Mr. James knew that the ephedrine received was for exportation I have a reasonable doubt on this charge [conspiracy to export ephedrine].”
Rose wrote that he accepted Dastani’s testimony “to the extent that he himself designed and operated a scheme which started with unlawful exportation of ephedrine and developed to include money laundering and tax evasion.
“There is a plethora of evidence which confirms just that. Beyond that, I completely reject Mr. Dastani as a credible witness. His evidence has too many internal inconsistencies, and his history of significant lies to so many people renders him unworthy of belief,” he wrote.
During the investigation against him, several of James’ personal and business accounts became subject to restraint orders on the basis the monies there were offence-related or proceeds of crime. Bergman says he and James will be seeking to have those restraints released Jan. 20.
“With the possibility of an appeal and the outstanding application for the return of his property still before the court, it would be improper to comment any further on the extraordinary hurdles these allegations have posed for Mr. James,” Bergman says.
“He will have more to say after the Crown’s 30-day appeal period has come and gone.”
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- Multi-national firm scoops Gowlings star to head first Canadian office
As the incentive grows for American companies to access cheaper labour in Canada, (now worth 70 cents on the U.S. dollar) an international labour and employment firm has opened up shop in Toronto with the promise of helping them do it.
|Hugh Christie says the whole process started with a chat about how conflicts were impeding cross-border growth for labour firms.|
Hugh Christie, former chairman of the national employment and labour practice group at Gowlings, has been named managing partner of Ogletree’s Toronto office. He’ll be joined by former Gowlings partner Ed Majewski and associate Michael Comartin.
Christie says the opportunity came about after an initial meeting with Ogletree’s managing shareholder Kim Ebert. The two got to talking about how conflicts were impeding cross-border growth for labour firms.
“We’d been talking over some time about the obvious changing structure of the legal profession and the growing problem for people in labour and employment practice areas in big full-service firms . . . and it kind of more morphed over time. And a few months ago . . . we started to think of the idea that has now culminated in this announcement.”
In a released statement, Ebert said the Canadian market was an important one for Ogletree, given the number of U.S. clients with operations in Canada and a need for representation on cross-border matters. Ebert also indicated the firm’s intention to quickly grow the Toronto office with more high-profile hires.
“The opportunities for us to grow in Canada are substantial, and we expect others to join us in Toronto soon,” said Ebert.
As discussions progressed, those opportunities became clear to Christie.
“The largest trading relationship in the world is the one that exists between Canada and the United States,” he says, “and that has clear implications for labour and employment lawyers and their clients who have operations on both sides of the border.
“When you sit back and look at it, it’s an obvious business decision.”
Last August, another international name in labour and employment law entered the Canadian market when Littler absorbed well-known Toronto boutique Kuretzky Vassos. Littler is the largest global labour and employment firm, with more than 1,000 lawyers in 60-plus offices worldwide.
In the near term, Christie and Majewski will serve the clients who’ve followed them to Ogletree, and the firm expects a bump in activity as referrals begin to trickle in from the firm’s U.S. practitioners.
“Initially, they will be getting the word out to clients whom they currently act for in the U.S.,” says Christie, “and letting them know that they now have capabilities in Canada through the Toronto office. . . . I would expect a bit of a ramp-up in the reaction of Ogletree clients to the announcement.”
Over the longer term, however, Christie says he’ll be looking to grow the office with some more big names. He’s already in talks with a number of colleagues.
Asked whether we can expect some news in the short term, Christie says, “I sure hope so.”
- U.S.-based giant has no plans to expand beyond Toronto at this time
After 10 years building up its in-house on-demand alternative services firm, Cognition LLP has announced it has sold a portion of its business to U.S.-based Axiom.
|The Axiom deal represents a ‘natural evolution’ for 10-year-old Cognition, says co-founder Joe Milstone.|
Cognition LLP co-founder Joe Milstone says the deal represents a “natural evolution” of the company.
Axiom and Cognition have worked together over a number of years referring clients and exchanging leads across different markets. Milstone says Cognition had grown two lines of business that were “increasingly independent of each other.”
“We thought in order to do them both justice we should separate them more formally and this was the best way to scale the shake up we had already started,” he says.
“For the general counsel market, to be able to partner with Axiom and get their scale and investment and brand and reputation in the larger corporate counsel community was a vast accelerator in terms of our goals on the GC side.”
Axiom Cogniton will be Axiom’s sixth international office and 16th overall.
“Expanding our model to Canada has been on the list of no-brainers. It was a matter of when, not if for us,” says Will McKinnon, Axiom’s senior vice president of new market development.
McKinnon cited Toronto’s large financial services hub, technology, and life sciences companies as well as a strong industrial base as sectors that have embraced Axiom’s model elsewhere.
“They have a lot of legal work and there is a focus on finding ways to get that legal work done,” he says. “When you add those two things together it was a clear gap on our map of the cities we are in in the world.”
Milstone said the 50 lawyers currently working with Cognition will have the choice of working for the new Axiom Cognition combination or Caravel Law. Caravel will be a law firm serving small and medium-sized enterprises without internal legal departments. Most of the lawyers already work for clients in both streams of the business.
“We were incredibly pleased with how clients reacted to the potential change and many of them were well aware of Axiom and how it can add the scale and investment in technology that you only get on a global scale,” he says.
While Cognition announced in April 2014 it was opening an office in Calgary, it has not expanded beyond since then. McKinnon said there is no immediate plan to change Cognition’s footprint right now.
“We want to be very focused on Toronto because it’s the economic hub of Canada and get to know the market very well,” he says. “As we get comfortable with where the next opportunities are we will begin to take on the question of a third or fourth office.”
There will, however, be a big push to grow the lawyer roster at Axiom Cognition as its client base grows.
“There are a lot of Axiom clients who are not yet Cognition clients who handle their legal work here through traditional firms. We think there will be an immediate opportunity to support those companies, which will create demand,” says McKinnon.
Axiom also provides transaction support for mergers and acquisitions and divestitures, which tends to revolve around re-negotiating contracts associated with a deal.
“That’s been one of our fastest growing businesses globally,” he says.
Lakehead University has appointed the first indigenous dean of a Canadian law school. The Bora Laskin Faculty of Law, which sees engagement with aboriginal communities as a key priority, says Angelique EagleWoman will begin as dean this May.
EagleWoman has built her reputation as a law professor and legal scholar at the University of
|Angelique EagleWoman will begin as dean this May at the Bora Laskin Faculty of Law.|
EagleWoman said the position at Lakehead is "a dream come true." As someone who grew up in a small community, she says she relates to the law school's commitment to rural and small town practice and admires its particular focus on natural resources and environmental law.
"And of course there's the required curriculum in aboriginal and indigenous law," EagleWoman says. "This is the first law school in the world that has that requirement. To have a law school that has integrated this into its curriculum and has mandated that every law student who graduates knows the legal history is phenomenal and that really excited me."
All law students at Lakehead are required to take a course in indigenous legal traditions in their first year and an aboriginal law course in second year.
EagleWoman replaces founding dean Lee Stuesser, who resigned in June.
The legal community is applauding EagleWoman’s appointment. Lorne Sossin, dean of Osgoode Hall Law School, says EagleWoman’s appointment is a sign of promise.
“I hope this is the trend in law schools across the country, both in advancing new voices and new perspectives, and in clearly taking to heart the mandate all law schools should have,” Sossin says, adding it’s important to “look for people who can bring that first-person perspective from the areas we care about most, including the engagement of the indigenous community.”
Other members of the legal community took to Twitter yesterday to celebrate EagleWoman’s appointment. Lawyer and academic Kyle Kirkup said was “an exciting day for legal education” and Janet Minor, treasurer of the Law Society of Upper Canada, tweeted EagleWoman is “an exceptional choice.”
“Angelique was at the top of our list and we are thrilled she’s coming to Lakehead,” said Moira McPherson, Lakehead’s provost and academic vice-president. “Her diverse experience and knowledge will be of great benefit to our students in the faculty of law and to Ontario when those students begin practicing law.”
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The widow of geologist Michael J. Fitzgerald believes the collection proceedings currently wrapping up in the Supreme Court of British Columbia will hopefully be the end of a 16-year legal battle involving court cases brought by Vancouver-based mining exploration company Mountainstar Gold Inc. against her late husband and his estate.
Over the course of 16 years, courts have cleared Fitzgerald of accusations that he acted improperly in staking mining claims that eventually resulted in the discovery of the Barrick’s Goldstrike property in Nevada — one of the world’s richest gold deposits.
“There is no doubt whatsoever that Mike has been cleared of any improper actions,” said Marissa Fitzgerald in a news release issued today.
Judges have repeatedly rejected Mountainstar’s allegations and ruled in favour of Fitzgerald.
She adds Mountainstar made several announcements touting the financial gains they expected from the lawsuits.
“They failed in those and they have also failed to pay what the courts ordered against them for costs.”
The current action against Mountainstar in the B.C. Supreme Court has been brought by the Fitzgerald Trust. It is seeking to enforce U.S. court-ordered judgments for legal costs.
U.S. courts held that the continuing legal actions brought by Brent Johnson, as president of Mountainstar Gold Inc., were vexatious and brought in bad faith.
According to court documents, a claim by Mountain-West Resources in the B.C. Supreme Court in 1999 was based on events that occurred nearly 25 years ago in 1975 when Fitzgerald was president of Cobre Exploration Ltd. Cobre later changed its name to Mountain-West Resources Inc., and is now known as Mountainstar Gold Inc.
Cobre was a Vancouver Stock Exchange-listed exploration company that had run out of money and was essentially dormant. The company could not pay Fitzgerald and he was forced to look for other opportunities to earn a living.
In July 1975, Fitzgerald became part of a syndicate to prospect for precious metals in Nevada. He eventually staked a number of claims for the syndicate, subject to a net carried interest that was part of the compensation for his services. The syndicate was formed and financed separately from Mountainstar.
In the late 1980s, further work on the property resulted in it being developed into a mine. The net carried interest that Mike Fitzgerald had earned became valuable as a result.
In 1999, when Fitzgerald retired from Mountainstar, the company’s new management, headed by Johnson, sued Fitzgerald alleging he had breached fiduciary duties by working with the Nevada syndicate on his own behalf.
Mountainstar pursued and instigated claims in courts in British Columbia, Nevada, Arizona, Wyoming, and Washington State. In every case, including appeals to higher courts, the claims were rejected.
In 2005, the B.C. Court of Appeal found that Mountainstar’s claims suffered from a “fatal weakness” — there was “no evidence” to support them. Yet Mountainstar went on to sue after that directly and indirectly, in the U.S. where courts ruled the company had made “meritless” claims first against Fitzgerald and later against his estate. At one point, Mountainstar alleged the claims made in the U.S. courts were worth $1.65 billion. The U.S. courts held that actions brought by Johnson, on behalf of Mountainstar, were vexatious and brought in bad faith.
On Nov. 10, 2015, the Fitzgerald Trust filed a complaint with the British Columbia Securities Commission calling for an investigation into the litigation, Mountainstar and Johnson’s involvement in it.
Canadian securities lawyers were busy during the holiday season responding to the federal government’s draft regulations for the co-operative capital markets regulatory system, which was released in late August with a 120-day comment period.
|More than 25 of the country’s top securities lawyers had input into the CBA/CCCA response to a draft on co-operative capital markets regulation. (Photo: Mark Blinch/Reuters)|
“There is a lot of interest in this across Canada,” noted Hendrickson, founder of BAX Securities Law in Toronto.
She said at this stage, “in my view, it’s mostly a clean up and harmonization. There were things in here that people were looking to change for a while.”
The co-operative capital markets regulatory system is the federal government’s politically sensitive move to create a national securities regime, following the Supreme Court of Canada’s ruling in Reference re Securities Act, 2011.
That case held the federal government’s then-proposed law — the Canadian Securities Act — didn’t pass muster under the Constitution’s federal trade and commerce provision because it infringed on provincial powers.
The Supreme Court, however, left the door open, suggesting that a “cooperative approach that permits a scheme recognizing the essentially provincial nature of securities regulation while allowing Parliament to deal with genuinely national concerns remains available and is supported by Canadian constitutional principles and by the practice adopted by the federal and provincial governments in other fields of activities.”
Now, B.C., New Brunswick, Ontario, Prince Edward Island, Saskatchewan, and the Yukon have entered into a memorandum of understanding to create a uniform “capital markets act” and operate a single independent “capital markets regulatory authority.” A proposed “capital markets stability act” is also in the works, though it wasn’t included as part of the August comment package.
Noticeably absent from the initiative are Alberta and Quebec, both of which opposed the federal government’s initial effort. Quebec is again resorting to a court challenge of the proposed new regime.
As is the case with securities law reforms, the CBA response was very technical and specific in nature, responding to a wide range of questions posed by the CRMA. It touched on everything from the definitions section of the act to disclosure, proxies and derivatives.
That’s no surprise as the CRMA is essentially crunching six securities acts into one and creating accompanying policies and regulations.
One area of concern raised by the CBA involved discretion of the regulator to issue a receipt for a prospectus. “We generally support consolidation of such sections,” the CBA report noted, however “we urge caution with the discretion provided the chief regulator.”
The lawyers also welcomed importing an Ontario rule restricting use of prospectus exemptions involving restricted shares without approval of minority shareholders. However, the CBA noted that “because this will be a substantive change for unlisted reporting issuers in CMR jurisdictions other than Ontario, we suggest that fact be stated explicitly in a future CCMR publication.”
The group is also calling for more clarity on what constitutes an “indirect distribution” of a security, noting that proposed CMRA policy 71-601 “presents a departure from the current Ontario practice for non-reporting issuers. The scope of the concept of ‘indirect distribution’ is broad. It could potentially include almost any initial issuance and subsequent resale of a security that may end up being traded in Ontario. In our view it would be useful to provide more guidance on the concept of ‘indirect distribution’ through commentary and examples.”
The CBA report also cautioned the CMRA about access to derivative markets. “While at this stage we support the approach under the CMA to adopt the provincial securities derivatives regime, securities regulators should continue to work closely with foreign regulators to adopt harmonized rules to provide Canadian market participants with continued access to international markets.”
Hendrickson said Canada has been talking about creating a national securities regime since the 1960s and this is simply a step towards that. “Any harmonization is good.”
However, she said the real challenge lies ahead in figuring out how the pieces of the puzzle fit together between CCMRS jurisdictions and non-CCMRS jurisdictions. “How is this going to work with provinces that are not participating?” she asks.
That’s the next round. The CMRA notes in its August proposal that neither its draft act nor its regulations “establish an interface with non-participating jurisdictions. We expect that an interface will be agreed upon with non-participating jurisdictions.”
As well, participating jurisdictions will be issuing for comment a “harmonized set of prospectus exemptions that strike an appropriate balance between access to capital and investor protections.”
Hendrickson says the big question is “how far are they going to extend their reach? That impacts how they are going to interact.”
“They are going to come out with something on that this year. All we can do is wait. There is no use speculating.”
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