While a securities class action lawsuit concerning a Canadian mining company paid out millions in the United States, its counterpart in Ontario could not get off the ground.
|Lawyer Peter Roy says Ontario Court of Appeal decision 'really kills any kind of real initiative in this kind of securities litigation.'|
The Ontario Court of Appeal has dismissed the appeal of plaintiffs challenging the ruling of the motion judge, Justice Edward Belobaba, who refused to certify their proposed class action against Silvercorp Metals Inc.
The court upheld $500,000 in costs against the plaintiffs and added a further $75,000 — a penalty lawyers say could deter others from taking on similar cases in the future.
“This decision really kills any kind of real initiative in this kind of securities litigation,” says Peter Roy, a senior litigation counsel at Roy O’Connor LLP who has represented both plaintiffs and defence in class action proceedings.
“The cost consequences to a plaintiff side firm that generally takes this kind of stuff on spec is crushing.”
Roy says that the risk of the cost consequences for plaintiff lawyers in such suits will make it unlikely that firms will take on anything other than the most obvious cases in the future.
“You’ve got to be pretty brave to put your toe in that water,” he says.
The lead plaintiff on the claim, John Mask, alleged Silvercorp had misrepresented the quality of its mineral resources at a mine in China and that this had inflated the company’s share price. The plaintiffs, who were shareholders, then lost money when the price fell after “corrective disclosures” issued by an anonymous Internet poster in 2011, the decision said.
Belobaba, however, ruled that evidence Silvercorp submitted undermined that of the plaintiffs, whose claim was “so weak or has been so successfully rebutted by the defendants that it has no reasonable possibility of success.”
In their appeal, the plaintiffs argued that Belobaba had misapplied the test to grant leave for the action by “weighing the evidence on a balance of probabilities, turning the leave application into a mini-trial.”
They argued that Belobaba’s approach was inconsistent with the purpose and spirit of the Securities Act to screen out only plainly unmeritorious claims.
In the Court of Appeal decision, Chief Justice George Strathy said that scrutiny of the evidence on such a leave application should not be so limited.
“In my view, the ‘reasonable possibility’ requirement of the leave test requires scrutiny of the merits of the action based on all the evidence proffered by the parties,” he wrote.
“Far from undermining the objective of the legislation, such scrutiny of the entire body of evidence is necessary to give effect to the purpose of the screening mechanism.”
Matthew Fleming, of Dentons Canada LLP, says the decision continues a trend in secondary market securities class action claims where defendants are filing extensive evidence in response at the leave stage.
“In particular, they are rebutting what I might characterize as more speculative evidence that is being advanced by plaintiffs,” he says. “And in doing so, they’re making it far more difficult for plaintiffs to succeed at the leave stage.”
Fleming says the decision also confirms that motion judges are entitled to weigh that evidence.
“It’s not simply sufficient for a plaintiff to offer up some credible evidence in support of a claim, particularly where the defendants take on and rebut that evidence directly.”
Garth Myers, a class action lawyer with Koskie Minsky LLP, says it has been increasingly common for defendants to file a significant amount of evidence in these types of motions in order to dispute the claims advanced by the plaintiffs.
“As a result of the court’s increasing scrutiny of these claims at this stage, I think the defendants are encouraged to do so, but the downside of that is simply that it increases the cost and the complexity of these motions,” he says.
The settlement in the U.S. paid out US$14 million to investors who bought Silvercorp shares on the New York Stock Exchange between May 20, 2009 and Sept. 13, 2011.
Myers says it is easier in some ways and harder in others to push similar actions forward in the U.S. One difference is that there is a very different preliminary burden in Canada than in the U.S.
“In Canada, it’s evidentiary. You have to prove that there is a reasonable possibility of success and you do that using evidence,” he says.
“In the [United] States, the preliminary motion is typically a motion to strike. That’s just a pleadings motion and they look at whether the claim is capable of satisfying the pleadings requirements in the States, and that’s done without evidence and then subsequently they’re permitted to get discovery.”
Once again, Trinity Western University has received a firm “no” from the courts in its bid to have its proposed law school accredited by the Law Society of Upper Canada.
|Trinity Western University will seek leave to appeal to the Supreme Court of Canada.|
To be granted admission to the school, every TWU student must sign the covenant, which requires that among other things, members refrain from “sexual intimacy that violates the sacredness of marriage between a man and a woman.”
“My conclusion is a simple one: the part of TWU’s Community Covenant in issue in this appeal is deeply discriminatory to the LGBTQ community, and it hurts,” said appeal court Justice James MacPherson, who wrote on the court’s behalf.
The case, which started with the law society’s 28-21 vote to reject the law school’s accreditation in 2014, pitted religious freedom against equality rights. Today, the Court of Appeal found the LSUC’s decision not to accredit the law school was a breach of religious freedoms, but a justifiable one because the law society exercised a balancing act to reach its decision.
“Taking account of the extent of the impact on TWU’s freedom of religion and LSUC’s mandate to act in the public interest, the decision to not accredit TWU represents a reasonable balance between TWU’s 2(a) right under the Charter and the LSUC’s statutory objectives,” wrote MacPherson.
“While TWU may find it more difficult to operate its law school absent accreditation by LSUC, the LSUC’s decision does not prevent it from doing so,” the judge added. “Instead, the decision denies a public benefit, which the LSUC has been entrusted with bestowing, based on concerns that are entirely in line with the LSUC’s pursuit of its statutory objective.”
In a press release, Trinity Western University said it plans to take its appeal to the Supreme Court of Canada.
“The court correctly found an infringement of TWU’s rights,” said Earl Phillips, the executive director of TWU’s proposed school of law. “However, we are most disappointed that the court found the infringement to be justifiable. That finding is a serious limitation to freedom of conscience and religion under the Charter of Rights and Freedoms.”
TWU spokeswoman Amy Robertson called the decision “a loss for all Canadians.”
“Freedom of conscience and religion is the first of the fundamental freedoms mentioned in the Charter,” said Robertson. “It is deeply compromised by this decision, and everyone in Canada, religious or not, should be concerned.”
The LSUC said in a statement: “We are pleased that the court recognized the law society’s role in preventing and removing discriminatory barriers to access to the legal profession and, as the court put it, 'the desirable goal of promoting a diverse profession.'
"As the court said, 'one of the LSUC statutory objectives is to ensure the quality of those who practice law in Ontario.' Quality is based on merit, and merit excludes discriminatory classifications,” said the LSUC.
Paul Jonathan Saguil, counsel for Out on Bay Street and OUTLaws, interverners in the case, argued in favour of rejecting the appeal.
“We’re obviously delighted with the decision,” he says.
The appeal court released its decision unusually fast, just a few weeks after the case was heard on June 6-7. Saguil says there’s reason to suspect the timing was intentionally aligned with Pride celebrations in Toronto and elsewhere.
“We’re surprised to be honest that [the ruling] came so quickly but I guess the court had it in their mind that something is going on this month and they wanted to be part of the action,” Saguil says with a laugh.
“Obviously on the heels of what happened in Orlando, the community can use good news like this,” he adds.
At the Divisional Court, TWU argued the law society “ignored a binding precedent” in the Supreme Court’s 2001 decision in Trinity Western University v. British Columbia College of Teachers.
That ruling reversed the college of teachers’ decision not to accredit the university due to its covenant’s requirement that students refrain from gay sex. But in its ruling, the Divisional Court said the law society, unlike the teachers’ college, has a wider mandate involving “a much broader spectrum of considerations with respect to the public interest.”
Six other law societies — Alberta, Saskatchewan, Manitoba, New Brunswick, Prince Edward Island, and Newfoundland and Labrador — have granted accreditation to Trinity Western’s law school. Meanwhile, appeal court decisions are pending in Nova Scotia and B.C.
Update 2:45 pm: Comments added from LSUC.
A recent Court of Appeal decision clarifies the law around how the courts handle self-defence cases, say lawyers.
The Ontario Court of Appeal has ordered a new trial for Valter Cunha, who was convicted for shooting another man twice, but claimed he was acting in self-defence.
In R. v. Cunha, Justice Peter Lauwers said the court found that the trial judge’s analysis was deeply flawed as it “paid little regard to the overall evidence, but focused excessively on whether Mr. Cunha was a credible witness.”
Cunha made a split-second decision to shoot the man after an altercation in his building, according to the decision. The man had his back to Cunha, who had told the man to freeze. The man began to turn around and Cunha shot him.
The trial judge dismissed Cunha’s testimony where witnesses could not verify his account, but Lauwers said this analysis was unreasonable. In the appeal decision, he stated:
The court must be alive to the fact that people in stressful and dangerous situations do not have time for subtle reflection.”
Lauwers said the trial judge “artificially separated out the sequence of events.”
Cunha’s defence lawyer, Michael Dineen says the way the trial judge scrutinized Cunha’s statements and analyzed the events was unfair.
“That’s just the wrong way to look at this,” says Dineen.
“People in that sort of life-and-death situation have to be given some leeway before we’re going to impose criminal liability on them for split second decisions.”
Dan Stein, a criminal defence lawyer says it is important for trial judges and juries to put themselves in the shoes of the accused.
“It reaffirms that people who are in a position where they feel they have to defend themselves aren’t required to take absolutely every step in a very measured way,” Stein says of the decision.
“There’s some understanding that in the heat of the moment, people will do what’s necessary to defend themselves, which in retrospect might not be reasonable simply because at the time they were afraid for their lives.”
Lauwers found the trial judge also made inconsistent findings with respect to Cunha’s state of mind.
Cunha had said he did not know whether the man was armed, but feared he was. The trial judge said he was left with a reasonable doubt about whether Cunha felt afraid that the man was armed, but then later said that Cunha did not believe the man was using or threatening force against him.
Lauwers said that overall the trial judge failed to take into account the situation from Cunha’s perspective and that he artificially separated related events.
“This case reaffirms the principle that life has to be analyzed as a flowing narrative that can’t be reduced to a freeze-frame analysis,” says criminal trial lawyer Sam Goldsmith.
An Ottawa man who battled two of his former law firms in court is celebrating the decision by the Ontario Court of Appeal to have his fee agreements with the firms reassessed.
The ruling in Clatney v. Quinn Thiele Mineault Grodzki LLP stemmed from the settlement of a personal injury claim that Mark Clatney of Ottawa had reached in July 2013 for $800,000.
Clatney had been seriously injured in a crash in March 2008, and pursued a personal injury claim with Bertschi Orth Solicitors and Barristers, before switching to Quinn Thiele Moneault Grodzki LLP.
Justice Gloria Epstein said:
At the heart of the appeal lies the importance of public confidence in the administration of justice and, in that context, the court’s supervisory role over the appropriate compensation for legal services.”
Bertschi Orth handed Clatney a bill of more than $117,000 for its work on the claim, and Quinn Thiele initially told Clatney it was owed more than $305,000.
According to the ruling, Clatney asked for a release of $50,000 from his settlement, but ran into problems after trying to get $50,000 released, and ended up paying Quinn Thiele $210,000 and Bertschi Orth $100,000.
“He noted that his acceptance came in the light of Quinn Thiele’s confirmation that the $50,000 could not be released as a result of the Charging Order and that a failure to accept the $210,000 offer would lead to an assessment hearing with consequent costs and delay,” said the ruling.
Epstein said Clatney was “vulnerable” when he entered into the fee agreements with the firms, and outlined other issues Clatney was facing.
“He was permanently impaired by the brain injury he suffered in the car accident. He was under intense financial pressure. The appellant did not have independent legal advice when such was clearly called for. He expressed his dissatisfaction with the legal services rendered by both firms,” said the ruling. “He terminated his retainer with Bertschi Orth and, when it came to resolving the firms’ fees and disbursements, the appellant expressed his frustration with Quinn Thiele. Finally, at the time the Fee Agreements were entered into, detailed accounts had not been rendered by Quinn Thiele.”
Epstein also noted Quinn Thiele “misled the appellant by providing erroneous legal advice” and “exerted pressure on the appellant to settle.”
“In these circumstances . . . the protection of the appellant’s interests and the public’s confidence in the administration of justice demand that the Fee Agreements be reopened and an assessment be ordered,” said the ruling.
Paul Auerbach, a partner with McNally Gervan LLP who acted for Clatney in the Court of Appeal process, told Legal Feeds he is “pleased” with the ruling.
“The decision reflects a very thorough analysis of the circumstances leading up to the consent order,” he said. “The decision is a clear reaffirmation of the role of the assessment process in maintaining public confidence in lawyers and the legal profession.
“It also makes clear that agreements between lawyers and their clients will be reviewed by the courts where the circumstances require it.”
The appeal court directed that all costs, fees, charges, and disbursements relating to the case be assessed and ordered $10,000 be paid to Clatney for costs of the initial application and $15,000 for the appeal.
Clatney — a corporate account executive who lost in job in 2010 — said “for the past eight years I have faced one of the most difficult experiences of my life.”
“We are gratified by the Court of Appeal’s decision and the assessment process can now get underway. This is all I ever wanted,” he said, in a news release.
Darryl Singer, a litigator with Singer Barristers, who was not involved in the case, said: “It appears that the Thiel firm used the client’s financial desperation to extract a settlement for itself, and the appeal court appears to have felt that it needed to step in and ensure that the client was not deprived of his right to an assessment just because he was in dire need of the money.”
William Hunter, who represented Quinn Thiele, did not have any comment.
The court of appeal has ruled evidence collected against an accused should be excluded if the police breached their Charter rights — regardless of whether the breach occurred before or after the evidence was collected.
|The ruling in Pino makes a subtle but important point in Charter litigation, says Howard Krongold.|
Howard Krongold, a partner at Abergel Goldstein & Partners LLP in Ottawa and counsel for Eneida Pino in the case, says the May 24 ruling is a further step towards a broad liberal approach to s. 24(2) of the Charter that the courts have traditionally taken.
“It’s been the law for a long time — that you don’t need to have a causal connection between a Charter breach and evidence — but it’s been at the very least uncertain whether you could have a case where the evidence comes first and the breach only materializes later,” says Krongold.
Michael Lacy sees the ruling as resolving “in a very final way” the debate in the cases, and among academics, about what the phrase “obtained in a manner” means in relation to s. 24(2).
“Essentially, you don’t need a straight-line connection between the breach and obtaining exclusion,” says Lacy, a criminal lawyer at Brauti Thorning Zibarras LLP in Toronto,.
While he feels the ruling will give “significant guidance to future courts,” Lacy says he won’t be surprised if the Crown seeks leave to appeal.
Beyond reaffirming Charter breaches should make it easier to get exclusion even when breaches occur after evidence is obtained, Krongold and Lacy both say Pino is breaking new ground by stating exclusion should also apply when police are found to be dishonest about their misconduct.
“While the accused bears the burden, there’s an evidentiary shift onto the Crown to deal with matters like good faith or the police mitigating explanation for their Charter breach,” says Krongold.
Pino reaffirms a principle originally set out by the Supreme Court of Canada in R. v. Bartle, where the court ruled the prosecution is required to provide evidence to explain Charter breaches.
“That’s an important principle as well because the way the trial decision came down in this case, it really put an accused in an impossible situation,” says Krongold.
In Pino, the accused convinced the judge the police were lying about their version of events, but had no way to explain why they lied. The trial judge had assumed the reason for the dishonesty — an explanation was never given by the Crown. The Court of Appeal ultimately found the trial judge’s assumed reason was speculation and reaffirmed the accused isn’t required to explain the Charter breaches by the police.
“It’s a subtle point but a really important one in Charter litigation,” explains Krongold.
“Frequently you have a conflict between what the accused says happened and what the police say happened. If the accused is able to show the police are being dishonest it’s very helpful to gain exclusion when you don’t have to also explain why they’re being dishonest.”
He’s not aware of any steps taken with respect to the officers involved in spite of the fact there was a “very clear finding by the judge that one of them in particular was less than truthful in his testimony in court under oath.”
On May 13, a similar appeal ruling came out in R. v. McGuffie, another Ottawa case that again saw evidence excluded following the police’s violation of an accused’s Charter rights and the trial judge “making mistakes,” says Krongold.
For Lacy, the appeal decisions in McGuffie and Pino are “a reminder that Charter jurisprudence is alive and well.”
“The Charter is going to be given a robust interpretation by the court as a check against improper state conduct.”
It is now more difficult for prosecutors in police disciplinary hearings to prove police officers have engaged in professional misconduct, thanks to a recent decision from the Ontario Court of Appeal.
|An Ontario appeal ruling confirms it’s more difficult for prosecutors in to prove police officers have engaged in professional misconduct. (Photo: Shutterstock)|
In a decision some lawyers are calling “troubling,” the court said the issue has already been decided by the Supreme Court of Canada, and overturned a Divisional Court ruling that declined to give police a special standard of proof in hearings at the Ontario Civilian Police Commission.
“The decision only serves to further inoculate police from appropriate scrutiny,” says Ottawa criminal lawyer Michael Spratt.
While the standard of proof in criminal law is to establish facts beyond reasonable doubt, civil courts, including administrative tribunals, rely on proving claims on balance of probabilities. But Jacobs confirms there is a third, higher standard of proof for police that requires prosecutors to prove their case on “clear and convincing evidence.”
The appeal court said it is relying on a Supreme Court of Canada decision that already acknowledged this third standard of proof for police disciplinary hearings. The Divisional Court erred in not following the SCC’s precedent in Penner v. Niagara (Regional Police Services Board), says the appeal ruling.
The respondents took the position that “clear and convincing evidence” only refers to the quality of evidence generally required to meet the balance of probabilities standard in professional discipline matters. They also argued the top court’s statements in Penner were obiter dicta, or incidental expression of opinion. The appeal court rejected those arguments.
“In my view, we are bound by the Supreme Court’s statement in Penner that the standard of proof in PSA hearings is a higher standard of clear and convincing evidence and not a balance of probabilities,” wrote Justice C. William Hourigan for the panel.
“I would grant the appeal and set aside the order of the Divisional Court dismissing the appellant’s application for judicial review to quash the decision of the Commission. The matter is remitted to the Commission for further consideration in accordance with these reasons,” he added.
According to Spratt, one of the arguments for creating this special standard of proof for police officers is they are hugely affected by negative disciplinary findings against them, and police officers have important work to do.
But “that seems to me to be a reason to more carefully examine police officers’ conduct and not a reason to insulate police from the normal standards that would apply for normal individuals,” Spratt says.
Personal-injury lawyers who advise their clients to settle for amounts that are alleged to be improvidently low could face malpractice claims many years after the settlement.
|Bryan Rumble says it comes down to what a lay person, not a lawyer, could be reasonably expected to know.|
“When is it reasonable for a lay person to know that she should sue her lawyer?”
The case stems from a car accident in 2002, in which Melody Lauesen was injured. Lauesen then retained the legal services of Fern Silverman, of Goldman Sloan Nash and Haber LLP, to commence an action. In 2005, Silverman advised her client to accept a settlement of $26,169.36.
Lauesen was unhappy with the low amount but chalked it up to a faulty legal system. In 2008, she requested Silverman’s help in getting statutory benefits for her injuries. In 2009, Silverman requested a $500 retainer, which Lauesen says she couldn’t afford. At that point, the solicitor-client relationship ended.
One year later, Lauesen consulted with another lawyer, Joseph Falconeri, who suggested she get a second medical opinion.
After receiving a fresh opinion that her condition met the statutory definition of “catastrophic impairment,” Lauesen was advised by her new lawyers to launch an action against her former lawyers for breach of contract, negligence and breach of fiduciary duty.
At a preliminary motions hearing, the judge threw out the case, ruling that the limitation period of two years — from the point of the settlement in 2005 — had long expired.
The appeal court, however, disagreed. In a unanimous decision written by Justice Kathryn Feldman, the court found that a lay person like Lauesen could not be expected to know that she had a claim until she understood the extent of her injuries and spoke to another lawyer.
“[A] reasonable person with the appellant’s abilities and in her circumstances would not have realized that she had a claim against the respondents, when no one, including the respondent, indicated to her that an error might have been made with respect to the settlement,” writes Feldman.
“It was only with that information, and with the legal advice of her new lawyer, that the appellant first knew or had the ability to know that she had a claim against the respondents.”
Bryan Rumble, the lawyer at Falconeri Munro Tucci LLP who represented Lauesen before the appeal court, says it comes down to what a lay person could be reasonably expected to know — not what a lawyer might be expected to know.
“You have to look at what a reasonable person would do, but that ‘reasonable person’ has to be in the same situation as the person who is the subject of the claim,” he says. “So I guess if that person was a lawyer it would be a different situation.”
Rumble says, while this case doesn’t really develop the law around discoverability, it does prove that cases such as these — where allegedly improvident settlements lead to malpractice litigation — are viable, which could lead to more of them.
It also demonstrates the court’s general attitude around limitation-period defences for lawyers: “I think we can say that courts do not like to let lawyers use litigation periods to prevent claims against them. That seems to be a general trend.”
Update May 13: Clarification: A previous version of this article contained language that implied legal malpractice by Fern Silverman and Goldman Sloan Nash & Haber LLP. The Ontario Court of Appeal’s ruling deals only with the limitation period of the claim, and any other findings are yet to be determined at trial. The article was not meant to convey any finding of legal malpractice against Ms. Silverman or her firm. Legal Feeds apologizes for any misunderstanding.
This week, the Supreme Court of Canada will hear six appeals. The first three are criminal cases relating to search and seizure and reasonable grounds for arrest. The court is also hearing a case involving solicitor-client privilege in Quebec, as well as a curious tax case where the authority increased its own assessment after a taxpayer appeal.
March 21 – Ontario – Wu. v. R.
Charter of Rights: The appellant was charged with drug-related criminal activity. Charges were dropped after the trial judge found the detective investigating the case had no objectively reasonable grounds to request a search warrant. The appeal court set aside the decision and ordered a new trial. The SCC will determine, in an oral hearing, whether there were reasonable grounds to arrest and charge the appellant.
Read the Ontario Court of Appeal decision
Related news story:
Botched case highlights need for JPs to have legal training, Toronto Star
March 21 – Alberta – R. v. Villaroman
Criminal law: The respondent brought his computer into a repair shop, where a technician stumbled upon child pornography hidden in a music folder. The technician called the police, who got a search warrant to inspect the machine. The respondent argued at trial that his right to be protected from unreasonable search and seizure had been violated. The trial judge rejected that argument, but the appeal court quashed the conviction. The SCC will determine whether Charter protections are applicable in such circumstances.
Read the Alberta Court of Appeal decision
Related blog post:
Mere existence of illegal content on a portable device is insufficient to ground a conviction for possession, Canadian IT Law Association
Criminal law: The appellants were involved with the Hells Angels. They provided protection for a cocaine distribution business. At trial, the appellants successfully argued that their role did not involve the trafficking of cocaine. The appeal court substituted the acquittal for convictions in both cases. The SCC will review whether the appeal court erred in conflating the appellants’ activities with drug trafficking.
Read the Alberta appeal court decision
March 23 – Alberta – Edmonton v. Capilano Shopping Centres
Administrative law: When the Capilano Shopping Centre was assessed, for property tax purposes, at $31.3 million, it appealed to the Assessment Review Board for the City of Edmonton. Beyond merely rejecting the appeal, the review board’s assessor used vague language in the Municipal Government Act to increase the assessment to $40.8 million. On appeal, the court found the review board could only consider the appeal before it, and could not “cross-appeal” its own assessment. The SCC will provide interpretive clarity to the act.
Read the Alberta appeal court decision
Related blog post:
The return of context in the standard of review analysis, University of Montreal
March 24 – Quebec – Chambre de l’assurance de dommages v. Aviva Insurance
Legislation: The appellant is a regulator in Quebec that was pursuing an ethics inquiry against a claims adjuster working for the respondent. As part of its investigation, the regulator demanded certain documents that were withheld by the claims adjuster due to solicitor-client privilege. On appeal, the court rejected the regulator’s assertion that solicitor-client privilege, which serves private interests, cannot be used to stifle an inquiry with public interests at stake. The SCC will determine whether the relevant provincial legislation affords solicitor-client privilege.
Read the Quebec Court of Appeal decision
Related blog post:
Litigation privilege given same protection as solicitor-client privilege, Law in Quebec
A daughter who alleges she was disinherited by her father for having a mixed-race child will seek leave to appeal from the Supreme Court of Canada, after the Ontario Court of Appeal earlier this week upheld testamentary freedom in supporting the man’s will.
|The appeal court says neither human rights codes nor the Charter are sufficient to override someone’s final, private, legal bequest. (Photo: Shutterstock)|
Verolin claimed in her affidavit that her relationship with her father was close, and only soured after she told him that she was having a child fathered by a white man. Eric was emphatic over the years that her “white bastard son” would never set foot in his house.
When Eric died in 2013, at age 71, he left a will that bequeathed his entire estate, worth $400,000, to his estranged daughter, Donna. The will was unambiguous: “I specifically bequeath nothing to my daughter, Verolin Spence, as she has had no communication with me for several years and has shown no interest in me as her father.”
Last year, Superior Court Justice Cory Gilmore set aside the will, finding that the “clear and uncontradicted” reason for disinheriting Verolin was based on a racist principle, and that the man’s will “offends not only human sensibilities but also public policy.”
That decision, however, was struck down Tuesday by the Ontario Court of Appeal, which found in Spence v. BMO Trust that testamentary freedoms were absolute — that neither the Human Rights Code, nor the Charter, nor public policy arguments are sufficient to override someone’s final, private, legal bequest.
“The court’s power to interfere with a testator’s testamentary freedom on public policy grounds does not justify intervention simply because the court may regard the testator’s testamentary choices as distasteful, offensive, vengeful or small-minded,” the decision states.
The decision also notes that, while third-party evidence points to an uncontradicted racist motive, the will itself contains no racist statement, and inferring one would open the floodgates to challenges by disappointed beneficiaries.
Estate lawyers will no doubt view the appeal court’s decision as a big win that protects the interests of their clients. Justin de Vries, counsel for the respondent, declined comment beyond saying that his client was content with the decision.
Plaintiff’s counsel Michael Deverett, meanwhile, is currently preparing leave material for submission to the SCC. He’s hoping that the high court will see things differently.
“The Court of Appeal gave its reasons, and they gave case law to support it, and they said were not going to allow the floodgates to open. I get that. It’s just a question of whether or not the Supreme Court of Canada will agree.”
While the appeal court suggests that legal and unambiguous bequests are sacrosanct, Deverett doesn’t believe an expressly racist will could survive a court challenge. And he says there are examples where human rights protections against racism have trumped private economic freedoms.
Deverett, for example, points to an article written by none other than Chief Justice Beverley McLachlin entitled “Racism and the Law: the Canadian Experience,” in which McLachlin cites the 1939 SCC decision Christie v. York.
The case involved Fred Christie, a black man who was denied service at the York tavern after a Montreal Canadiens game. Christie’s lawyer argued that Quebec’s laws forbade such discrimination, but the Supreme Court at the time was of the view that private commercial freedoms were absolute.
The 1939 decision states: “ . . . the general principle of the law of Quebec is that of complete freedom of commerce. Any merchant is free to deal as he may choose with any individual member of the public. It is not a question of motives or reasons for deciding to deal or not to deal; he is free to do either.”
The point being, times have changed.
“If that were to happen today, there would be no question that that would not be sanctioned by the courts,” says Deverett. “I think that maybe it’s time for our view of testamentary freedom to be re-evaluated by the Supreme Court.”
Legislative intervention from Ontario’s Liberal government could also provide a useful avenue for reform in testamentary law:
“The thing is, we don’t have human rights legislation for wills,” says Deverett. “Legislation says you can do this, you can’t do this, you can do this, you can’t do this. And it’s very well set out with strict guidelines. . . . That’s an important point that the Court of Appeal was addressing, you know, that they’re not about to open a new avenue without direction from the legislature.”
One Toronto neighbourhood may be able to find some peace this holiday season after the Ontario Court of Appeal finally settled its property dispute — and along the way created some novel legal interpretation.
|The lane between homes on Brock Street and Cunningham Avenue. (Photo: Google Earth)|
The laneway, however, was being used by the owners of at least three homes sitting adjacent to the land on Brock Street. The Brock homes were situated near a rail overpass, so cars were unable to stop outside. Their only access to their homes was via the laneway.
This unfortunate example of poor city planning led to the nasty neighbour spat. In 2013, the Cunningham owners — having found no explicit right of way in their deed for at least 40 years (the statutory limit for title investigations) — decided that they were within their rights to block access. They erected a pole in the middle of the lane.
The Brock owners, left without access to their homes, applied for an injunction against the Cunningham owners. As it happened, the deeds for the Brock homes did refer to a right of way created prior to 1960, even though the stipulation had vanished from the Cunningham chain of title. The application was granted, leading eventually to last week’s showdown at the Court of Appeal.
On Friday, the homeowners on Brock Street secured their laneway, with the OCA ruling that historical right-of-way claims that had fallen off the registry were exempted from a 40-year expiration date, as long as the right way was being used and enjoyed continuously.
“Fairness suggests that a right of way that was once registered and continues to be openly enjoyed and used should be exempted from the operation of the 40-year rules set out in Part III [of the Registry Act],” wrote Justice Janet Simmons on behalf of the court. “This must have been what the Legislature intended — and is what a proper interpretation of [the act] requires.”
“In my view, however, to . . . qualify for the exception . . . a claimant must show open enjoyment and use continuously from the expiration of the 40-year expiry period . . . “
James Morton, who represented the appellant Cunningham owners, says the court’s pronouncement on historical, unregistered rights of way will have significant bearing on land disputes in urban centres in Ontario.
“It does suggest that land title is not as absolute and fixed as I would have thought,” says Morton, “and it certainly suggests that the 40-year search rule is not as fixed, which is problematic to some degree for lawyers because,” he sighs, “it means you cannot rely completely on the . . . search documents.
“It’s certainly going to pose a problem for land title insurers who are going to have to somehow recognize that there can be these unregistered and effectively unfindable interests in land.”
Asked whether the court has conflated the concept of a land “claim” (which until now had to be explicit) and a “right” (which is implicit), Morton acknowledges that it may very well have done so — although not without due consideration.
“I do think it’s fair to say that they conflated the two,” he says, “but they conflated them intentionally. To my thinking, it creates some uncertainty in the land title system, but the court is balancing uncertainty with fairness, and they came down with the view that fairness required a little bit of uncertainty.”
Subscribe to Legal Feeds
- Alex Robinson
- Patricia Cancilla
- Yamri Taddese
- Mallory Hendry
- Jennifer Brown
- Gabrielle Giroday
- David Dias
- Gail J. Cohen
- Karen Lorimer