Long Arm Of The Law – Foreign Litigation Can Reach You In Canada

Kingfisher
If one is sued in a foreign country, it is not really a good idea to ignore that foreign litigation.  If you do, there is a chance that foreign default judgment could be awarded against you.  Worse, that foreign default judgment may be enforced right here in Canada.

In Amtim Capital Inc. v. Appliance Recycling Centers of America, an Ontario corporation was sued in Minnesota. It immediately began proceedings in Ontario. The Ontario Corporation did not respond to the action, and a default judgment was issued against it. The question arose as to whether Minnesota or Ontario was the most convenient forum for the action. The Court of Appeal held in favour of the Ontario Corporation and said that Ontario was the most convenient forum. However, the court left open the issue of whether the Minnesota judgment raised the doctrine of res judicata (ie the action has already been determined). By ignoring the Minnesota action, the Ontario Corporation may well have forfeited any rights to carry on the Ontario action.

Similarly, in Sincies Chiementin S.p.A. v. King an Italian court found that an Ontario lawyer was liable for his professional conduct as a lawyer in a failed joint venture. The Ontario lawyer did not attorn to the jurisdiction of the Italian court. The plaintiff sought to enforce the judgment in Ontario. The Court of Appeal granted the request and dismissed the lawyer’s appeal against summary judgment.

If sued in a foreign jurisdiction, one has to think carefully on how to respond. Just remember that any judgment will probably be enforceable in Canada. If dealing with foreign business, it may make sense to have these matters governed by a contract between the parties. One solution is to provide for arbitration of any disputes. Arbitration can reduce potential legal costs and bring certainty on what to do in the event of a dispute.

Transferring Your Rights In A Lawsuit – Is it legal?

The funding of litigation is a very difficult subject. Litigants who do not have deep pockets, seek to fund litigation in many ways. Thus you have contingency fee agreements with lawyers. There are also corporations who will fund litigation in the an appropriate case. Parties may not realize that many such schemes are, in fact, illegal. They offend the rule against maintenance and champerty.

In civil litigation, maintenance and champerty are ancient words which describe, in crude terms, pursuing a legal action for reasons other than compensation for a genuine loss. Maintenance refers to intermeddling in a lawsuit. It is hard to define but basically refers to giving assistance or encouraging litigation by someone who is disinterested in the actual lawsuit and who has no lawful justification to do so. Champerty is a subset of maintenance and occurs when a party to the lawsuit agrees to give a share of the proceeds of the action to the maintainer.

The law has always been hostile to both maintenance and champerty. This is more than just a rule against ambulance chasing. In fact, it is one of the reasons why lawyers could not take matters based on contingency fees (the contingency can be seen as champertous as it encourages litigation and the lawyer get a part of the final proceeds of the litigation). So hostile was the law to these actions, that maintenance and champerty were made into criminal actions. In the 14th century, England had a law that said:

“champertors be they that move pleas or suits or cause to be moved either by their own procurement or by others and sue them at their proper costs for to have part of the land in variance or part of the gains”.

In Ontario, this law was adopted in 1897, with the additional provision that “all champertous agreements are forbidden, and invalid.”

However, this strict application of the law was seen as archaic. As originally stated, maintenance and champerty may have been necessary in different times, but in today’s world it can cause injustice. Genuine attempts to right a wrong will be lost if this ancient law is applied strictly. In one sense, this law can be seen as discriminating against the poor. Schemes such as legal aid would probably be caught under strict application of these rules. Contingency fee agreements were once illegal under these principles.

The courts have been slowly buckling to the pressure of modernizing the law and has been lowering the bar on what constitutes maintenance and champerty. The legislature has basically been doing the same as well. For example, contingency fees are now legal under the Solicitors Act of Ontario. One should note though, that the law is still hostile to maintenance and champerty, and agreements will still be made invalid in an appropriate case. For instance, contingency fees are not allowed in criminal matters not family law matters. Indeed, the courts sometimes are not sure whether a particular case savours of maintenance. Now, though, the Court of Appeal has lowered the bar even lower while seeking to clarify the rules.

In an interesting case, Ma v Ma, 2012 ONCA 408 the Court of Appeal had to deal with a situation where a litigator did not have the means to pursue litigation. A minority shareholder of a corporation sued the corporation alleging that the corporation was acting oppressively towards him as a minority shareholder. He lives in Shanghai and is elderly and found it difficult to pursue the litigation. He made an absolute assignment of his shares in writing to the appellant of his shares. The appellant was a former employee of the company and was also the sister of the majority shareholder. The assignment also included his interest in the litigation.

The lower court held that the assignment was invalid. This decision was upheld on appeal to the Divisional Court. The reason for the dismissals was that the action was now being pursued by a shareholder who was not a shareholder at the time actions complained of had taken place.

The Court of Appeal overturned this decision. The court followed the British Columbia Court of Appeal case of Fredrickson v. Insurance Corporation of British Columbia which held that an “assignment of a cause of action for non-personal tort is generally valid if the assignee has a sufficient pre-existing interest in the litigation to negate any taint of champerty or maintenance.” The Court also adopted the House of Lord’s decision in Trendtex Trading Corporation and Another v. Credit Suisse, [1980] Q.B. 629 where it was held that the court should look at the totality of the transaction. In the assignment is of a right or a proprietary interest and the cause of action is ancillary to that right or proprietary interest, then the assignment should be upheld.

Ultimately, the question is whether the transaction “savours of maintenance”.

In this present case, where there was an assignment of the all the plaintiff’s interest in the company along with his interest in the cause of action, there assignment was valid. The cause of action was ancillary to the actual assignment of the shares. Since the transfer was only for $1, if the action is successful, it may look as if the assignee obtained a windfall. But the shares may actually be worthless since the shares will not be worth more than $1 if legal action is not taken. Also, the assignee is accepting the risks of litigation. It is not for the court to look into whether the bargain was appropriate.

So, can you transfer your cause of action to another person? Each case has to be looked at individually. However, if there is some other proprietary interest or right that is being transferred, then you may be able to do so. It is likely though, that the assignment is simply to allow litigation, it may well savour of maintenance and be invalid.

What to do if you wish to assign your interests in litigation? The best that can be said is that if what is being transferred is simply a cause of action, it may very well be illegal. However, if there is some legitimate reason for the transfer, other than the cause of action, then the transfer may be upheld under scrutiny.

Ontario’s Limitation Acts – Very Complicated

A limitation period is the time within which you are allowed to sue for a cause of action. After the limitation period has passed, you can no longer sue, notwithstanding the merits of the cause of action.

The imposition of limitation periods for civil suits can be explained as a balancing act. Those rules ensure that there is a reasonable balance between the interests of a defendant, the interests of a plaintiff, and the interests of the judicial system. The limitation period protects the defendant from the possibility of a legal action for an ancient claim. For the plaintiff, it allows for a reasonable time to initiate a legal proceeding and, finally, it ensures that there is no unmerited delay between the time a cause of action occurs and when the legal action is initiated. Simply put, a world without a limitation period plaintiffs would be permitted to bring an action at any time. A defendant would possibly be prejudiced because evidence over time is lost. Documents get destroyed, witnesses die or their memories fade. Without a limitation period, people would live in fear simply because of a possibility that a claim could be brought against them at any time during their lifetimes and anytime after death.

Ontario’s legislation on limitation periods has been and arguably still is somewhat of a source of many legal problems in Ontario’s judicial arena. Prior to 2004 (when a new 2002 Act came into force) there was a myriad of limitations for various different types of causes of action. In the last decade, Ontario has witnessed significant changes to its limitation periods. The point of these changes were to reduce the number of limitation periods and to simplify this area of law. Unfortunately, the issue of limitation periods continue to be a key issue in a vast majority of civil litigation matters. The reason for this can be explained by the fact that the traditional Limitation Act (before 2002) and all of its concepts may still find application in the post-2003 era . Consequently Ontario lawyers still need to be familiar with a wide range of limitation periods, traditional and modern concepts found in the legislation in order to serve their clients’ best interest.

Confusing State of Limitation Act Prior to 2004

Under the old limitation regime, six years was the general period that a plaintiff had to initiate legal proceedings. Other limitation periods included two years, ten years, twenty years and in specific circumstances, no limitation period at all. Interestingly enough, under the old act, the limitation periods depended heavily on the nature of the cause of action. The common principle surrounding the different limitation periods was highlighted by the 1969 Ontario Law Reform Commission which stated that the different periods could be appropriate to the different causes of action because what was a suitable period to govern personal injury actions may not have been practical in regards to an action for a breach of contract.

However, this classification of the cause of action was arguably one of the most contentious issues surrounding the previous Limitations Act. The problem was that unlike the new Act, the traditional one was not a “catch-all” statute meaning that if the cause of action fell on the outside of the law’s ambit, no limitation period would apply. For example, legal malpractice claims against lawyers was a clear claim for negligence and breach of contract thus governed by a.45(1)(g), thus requiring that the action be brought within six years from the date of discovery of the cause of action. A claim for a breach of a fiduciary duty however, was not governed by Part III of the traditional regime. Therefore, many tried to plead their claims as a fiduciary duty to avoid the six year period because article 45(1)(g) did not apply to fiduciary duties.

Even matters regarding within contract law itself did not seem to be spared by the confusing nature of the traditional Limitations Act. Article 45(1)(b) and (g) sought out two very different limitation periods for two different categories of contracts. For simple contracts or debt grounded upon any lending or contract without specialty”, the standard six year rule would apply. However, for “other specialty” a 20-year period would apply.

Distinguishing between the two has been tedious for Ontario courts. Generally, contracts under seal have been recognized as a specialty. However, courts have held that not every contract under seal is a specialty because those types of contracts must also secure a debt obligation and parties must have had the intention to create an instrument under seal. So basically, until a court says so, you cannot really say whether a particular contract under seal is really a specialty for the purposes of the old Limitations Act.

Major Changes in New Act

One of the most significant changes developed by the new Limitation Act, 2002Act has been to remedy the classification requirement and the lengthy limitation period that were set out in the traditional Act. As mentioned earlier, under the old legislation, the limitation period depended heavily on the cause of action. The new Act establishes a completely different regiment as it sets out three different limitation periods: (i) a two-year basic limitation period which starts from the day on which the claim is discovered or the date it would have been discoverable to a reasonable person, (ii) a 15 year “ultimate” limitation period that starts from the date the act or omission underlying the cause of action took place regardless of discoverability; (iii) no limitation period is prescribed for certain claims.

Complementing the refurbished limitation periods, the new Act also seeks to prohibit parties from excluding or altering the limitation periods prescribed by the Act. Article 22(1) states that the new Act applies despite any agreement to vary or exclude it. Under the traditional regime, it was very possible and a very common practice for parties to a contract to exclude or apply a lengthier limitation period to initiate a legal proceeding. This new approach illustrates the legislator’s intent on establishing a uniform set of rules for litigants that will help guide both the individual and the lawyer.

Another peculiarity with the new Act is that it seems that Ontario legislature has taken it upon itself to codify the existing common law discoverability principle into statute. This principle basically said that the limitation period starts to run when it is discovered, not when it is actually was incurred. To illustrate the importance of discoverability, take the classisc example is when a home owner who makes a contract with a home builder to construct his home. The builder acts negligently and the home is not constructed properly. However, the defect in construction is not discovered by the home owner until some 20 years later when the house caves in due to the negligent act. In these circumstances, the cause of action arouse twenty years prior to the damage being incurred. Without discoverability, the home owner would not be able to successful sue the home builder, since the limitation period has passed.

Note that the issue of discoverability is still not settled. Indeed, the legislation provides for a presumption that a person with a claim knew of it on the day the act or omission on which the claim is based took place. To rebut this presumption, the burden rests on the plaintiff and must show that the claim was not discovered until some other date.

In the event that a plaintiff has failed to comply with the limitation periods, the dismissal of the action could likely be the end result. However, the new Act establishes a few exceptions to prevent a limitation defence. Some examples include assaults and sexual assaults. The limitation period will be suspended “during any time in which the person with the claim is incapable of commencing the proceeding because of physical, mental or psychological condition”. Similarly, the Act also provides minors, who must not be represented by a litigation guardian in relation to the claim, with a suspension in the limitation period.

Fifteen Year Limitation

As mentioned earlier, the concept of an “ultimate” limitation period was introduced by the new 2002 Act. It states that no proceeding shall be commenced in respect of any claim more than 15 years after the day on which the act or omission on which the claim is based took place. It should be noted that legislation has established exceptions to the ultimate limitation period. For example, this limitation period does not run during the incapacity of the claimant, nor during a person’s minority, nor at any time in which the person against whom the claim is made willfully concealed essential facts or misled the person with the claim.

A Defendant Can Still Be Caught Under Old Act

To this day, the new Act continues to be subject to some of the effects of the old law. The new Act is not immune to the old Limitations Act because it contains certain transitional provisions, which makes it possible for the traditional limitation periods to find application in the post-2003 era. The traditional limitation period will find application when specific criteria are met. For example, if the traditional limitation period did not yet expire by January 1, 2004 and the limitation period under the new Act would apply if the claim was based on an act or omission that took place after the effective date and if the claim was discovered before the effective date, then the traditional limitation period would apply.

Thus, a creditor who discovered his claim prior to 2004 will have the traditional Act apply to him if his claim falls within one of the established categories within the traditional Act. If such a case were to arise then the traditional concepts, interpretations, and case law used in the application of the traditional Act emerge yet again to find its application in a post 2003 era.

The Reciprocal Enforcement of Judgments

We live in world where globalization is in full force and borders have become virtually obsolete. This reality is highlighted even more so in the business world. Private companies look to expand beyond their respective countries to profit from a world market. However, while globalization has opened the door to new possibilities and a world market, it has also led to an increase in the number of cross border litigations.

The term “foreign judgment” means a judgment obtained outside of Ontario – whether in another Canadian province or territory, in the United States or elsewhere. In Ontario, the Reciprocal Enforcement of Judgment Act[1] allows for the registration of all judgments from all the provinces and territories (with the exception of Quebec). Subject to certain formalities found in the Rules of Civil Procedure and provisions of the Act, judgments from these jurisdictions in Canada can be enforced in Ontario. Some of the requirements for enforcements are that reasonable notice of the application be given to the judgment debtor in situations where the judgment debtor was not personally served with process in the original action, did not appear or defend or otherwise submit to the jurisdiction of the original court.
Once registered, the foreign judgment will receive full effect in Ontario. As stated in article 4 of the Act, when an extra-provincial judgment is registered, the judgment is, as from the date of the registration, of the same force and effect and proceedings may be taken thereon as if it had been a judgment originally obtained or entered up in the registering court on the date of the registration. Furthermore, the registering court has the same control and jurisdiction over the judgment as it has over judgments given by itself.

The Act, however, also imposes prior conditions which must be met before a judgment creditor may register his judgment. For instance, no judgment shall be ordered to be registered under this Act if it is shown to the registering court that,

(a) the original court acted without jurisdiction; or

(b) the judgment debtor, being a person who was neither carrying on business nor ordinarily

resident within the jurisdiction of the original court, did not voluntarily appear or otherwise

submit during the proceedings to the jurisdiction of that court; or

(c) the judgment debtor, being the defendant in the proceedings, was not duly served with the

process of the original court and did not appear, despite the fact that the judgment debtor

was ordinarily resident or was carrying on business within the jurisdiction of that court or

agreed to submit to the jurisdiction of that court; or

(d) the judgment was obtained by fraud; or

(e) an appeal is pending, or the judgment debtor is entitled and intends to appeal against the

judgment; or

(f) the judgment was in respect of a cause of action which for reasons of public policy or for some

other similar reason would not have been entertained by the registering court; or

(g) the judgment debtor would have a good defence if an action were brought on the original

judgment.

Article 3 of the Act has been the cause of some remarkable legal issues that were resolved by Canadian case law. It is important to note that one of the main preconditions for the Ontario courts to recognize and enforce a foreign judgment is to recognize the foreign court’s jurisdiction over the subject matter. Jurisdiction is either established by any of the following three situations:

1. At the time of commencement of the foreign proceeding, the defendant was residing or was present in the foreign state in question and if the defendant is a corporation, the jurisdiction is established from the conduct of the business.

2. The defendant submitted to the jurisdiction of the foreign court by express agreement or by appearing before the foreign court

3. A real and substantial connection existed between the foreign jurisdiction and the action or damages suffered.

The Supreme Court of Canada case, The Morguard, has substantially altered how courts deal with foreign judgments on two different levels. Justice La Forest, who wrote the unanimous decision, noted that the old common law rules, based on territoriality, sovereignty, independence and attornment, were outdated and that a much modern approach based on the principle of comity and reciprocity were needed as a basis of recognizing foreign judgments. The infringement on the nation’s sovereignty would be justified in the presence of mutual convenience between states. The earlier views of distrusting the justice system of other countries, he argued, was outdated and emphasized that the business community operated on a world economy and so the law had to accommodate “the flow of wealth, skills and people across state lines”. Even Canada’s federal system was indicative of the fact that comity should be even stronger between provinces, simply because they share a much deeper bond than nations given the fact they share citizenship and a common market.

Thus, the Morguard case revolutionized Canadian international private law by establishing the principle of “full-faith and credit” which required judicial decisions and provincial legislations be recognized and enforced in the courts of all other Canadian provinces and territories

Another aspect of the Morguard case was created with the intention of creating a legal test for courts. The “real and substantial” test was developed which required courts to analyze the connection that must exist between the action or the parties and the court hearing the dispute. This test is a requirement that courts must respect prior to recognizing and enforcing the foreign judgments.

In Beals v. Saldanha, Canada’s Supreme Court took the opportunity to broaden the scope of the “real and substantial” test to apply to international foreign judgments. Justice La Forest stated that the reasoning and principles that make up the “real and substantial” test and which apply to provincial recognition of judgments should equally apply to the recognition and enforcement of judgments made by courts in other countries.

Judgments From the United Kingdom

While Ontario courts recognize and enforce judgments from other Canadian provinces, the U.K., and France via statutes and treaties, Ontario’s common law also allows the recognition and enforcement of judgments from non-treaty foreign states.

The historical relationship between England and Canada, also promoted and facilitated the recognition and enforcement of judicial decisions from the United Kingdom. This is evidenced by the Reciprocal Enforcement of Judgments (U.K.) Act which creates a law out of a convention with the United Kingdom. In Article three, the Act states that,

“Where a judgment has been given by a court of one Contracting State, the judgment creditor may apply in accordance with Article VI to a court of the other Contracting State at any time within a period of six years after the date of the judgment … to have the judgment registered, and on any such application the registering court shall, subject to such simple and rapid procedures as each Contracting State may prescribe and to the other provisions of this Convention, order the judgment to be registered.”

Like the Reciprocal Enforcement of Judgment Act in Ontario, the enforcement of UK judgments also has conditions that must be met in order for the judgment to be recognized and enforced. The registration of an U.K. judgment will be refused or set aside if,

“(a) the judgment has been satisfied;

(b) the judgment is not enforceable in the territory of origin;

(c) the original court is not regarded by the registering court as having

jurisdiction;

(d) the judgment was obtained by fraud;

(e) enforcement of the judgment would be contrary to public policy in the

territory of the registering court;

(f) the judgment is a judgment of a country or territory other than the territory of

origin which has been registered in the original court or has become

enforceable in the territory of origin in the same manner as a judgment of that

court; or

(g) in the view of the registering court the judgment debtor either is entitled to

immunity from the jurisdiction of that court or was entitled to immunity in the

original court and did not submit to its jurisdiction.”

Finally, recognition in Ontario of a judgment arising from the U.K. will need to follow the procedures set out in article 73 of the Rules of Civil Procedure. This requires a notice of an application and must be supported by an affidavit that confirms the statements contained in the notice and must be accompanied by the judgment itself and the original proof of service of the originating process of the United Kingdom court.

Quebec

The situation with Quebec is quite interesting. Ontarians must be wary when involved in a litigation involving parties from Quebec. The problem with recognizing a Quebec judgment includes various matters such as the prescribed limitation period as was highlighted by the Commission de la Construction du Québec v Access Rigging Services Inc case. In that case, the applicant had initiated legal action in Quebec for amounts paid under an employment plan. After being awarded a default judgment in November 2005, the applicant brought an application before the Ontario Superior Court of Justice in 2010 to enforce the judgment in Ontario. The respondent in that case argued that the applicant’s enforcement proceeding was barred due to the basic two-year limitations period in the Limitations Act, 2002.

The applicant argued that no limitation period should have applied to enforce the Quebec judgment because of its general terminology. Thus, by analogy, the fact that the Limitations Act, 2002 provided for an unlimited period for the enforcement of judgments made by Ontario courts, it necessarily applied to the enforcement of foreign judgments, including Quebec.

The court ruled otherwise and decided that proceedings to enforce foreign judgments are subject to the basic two-year statutory limitations period. Justice McLean stated that the legislative objective of the Limitations Act, 2002 was to “to simplify an otherwise complex scheme of limitations,” as opposed to altering the way foreign judgments are handled. Justice McLean stated that after reading the Limitations Act, 2002 on its whole, there was no reason to believe that an unlimited prescription period should apply for foreign judgments.

The Quebec situation should not be confused with the situation that exists with the other provinces because Quebec is the only province that does not have a reciprocating legislation. As noted by some authors, The Reciprocal Enforcement of Judgments Act sets out a system where judgments rendered in reciprocating provinces and territories can be enforced in Ontario through a simple registration system. In those types of situations, the judgments can be registered in Ontario within six years of the date the judgment was given.

Competing With A Former Employer

This is an interesting case that shows the types of problems that can occur when a valuable employee competes against his former employer.

Doug McCullough incorporated ADM a successful instrumentation business for oilfield companies around 1987. The hallmark of this company is that success was based on a word-of-mouth reputation, leaving no exclusivity contracts with any customer. He hired a field worker, Young, through the worker’s corporation. McCullough was looking for a general manager who could grow and then ultimately buy ADM. Considering this he decided to hire Mr. Young through Young’s bullet company to help manage his business at a flat fee of $6500.00 per month. In essence, he hired an independent contractor. Young provided his own equipment and tools through his business.

The relationship eventually deteriorated. Young and a business partner formed a competing new company, Bullet Energy Inc. ADM business declined while Bullet saw success. ADM eventually sued Bullet, Young and his business partner for unjust enrichment and unfairly interfering with ADM’s contractual relations with its customers and employees.

The court dismissed the claim. In reaching its decision, the court considered a number of issues. There was apparently no evidence of any contract prohibiting Young for opening a competing business. Further, Young was not a fiduciary of ADM. The court also found no post-obligation which left Young legally able to provide service to any customer of ADM. The court also found that ADM’s revenue was not shrinking because Bullet Energy was stealing work from ADM.

You can read more the Legal Post website.

CBSA Continues Crackdown On the Most Wanted

CBSA are continuing their crackdown on the most violent non-citizens. I wrote about the crackdown here.

Now the Toronto Police have captured two foreign nationals who are among the top 24 most wanted fugitives. There inadmissible for crimes ranging from convictions for robbery and drug trafficking to assault causing bodily harm. The Minister of Public Safety said the Most Wanted list who are hiding will be found and deported.

The two were located after police received calls from the public about their whereabouts. CBSA maintains a toll free service for this purpose – Border Watch -1-888-502-9060.

If you are a convicted criminal in Canada, it is best to simply try to rehabilitate yourself if you wish to live here long term. It makes no sense to live in hiding. If you are willing to be rehabilitated, then you may well have a second chance of returning to Canada. It may take a long time, but it is better in the long run.

You can read more on Canoe.ca

Their Deportation, Your Money

Leon Mugesera, a suspected Rwandan war criminal, was deported from Canada earlier this year. He is currently sitting in a Rwandan jail facing charges linked to the 1994 Rwandan genocide. However, the question arises “who pays for his deportation and how much does it actually cost?”

Well, we all know that the Canadian taxpayer pays for his deportation. Most deportees would not have the funds to pay for the costs of deportation. However, the costs are very high. The actual costs may depend on the individuals facing deportation. For Mugesera, his deportation cost was a staggering $184,671 CAD. This includes the cost of a chartered plane from Montreal, a nurse and three security guards on board.

Another deportee, Tunisian imam Said Jaziri, was removed from Canada for lying at the Canadian border about a criminal record in France. The cost of his deportation bill was $93,583. He was also flown out in a private flight with four border guards on board.

Lower-profile deportations, cost less money but are still very expensive. For instance, Chinese fugitive Lai Changxing’s deportation cost Canadian taxpayers $17,380 (I wrote about Mr. Changxing here). Mexican Paola Ortiz’s deportation costs were billed at $3,266. She is now back in Canada (legally).

The differences in the treatment and costs between “high profile” and “lower-profile” deportations was explained by the CBSA as:

“Private aircraft is used … to remove inadmissible individuals who are a security risk or face medical challenges… This is not a luxury by any means. It is a measure to ensure that inadmissible individuals, such as criminals and terrorists, leave Canada without further abusing the generosity of Canadians.”

So are we getting value for the money being spent? Is there a more cost effective way of ensuring that Canada is kept safe by removing criminals? What is the point of deporting people who will be back legally in 6 months?

Read more on Canoe.ca

It Is Now Easier For Foreigners To Be Sued In Canada

In a landmark decision, the Supreme Court of Canada provided clarification on the rules which govern whether a case can be brought in an Ontario court.

In Club Resorts Ltd v. Van Breda, a personal injury lawsuit was commenced in Ontario after the Plaintiff was injured at a resort while vacationing in Cuba. The lawsuit was filed against Club Resorts, the company who managed the hotel where the accident occurred. Club Resorts brought a motion to dismiss the motion. Club Resorts argued that case should be filed in Cuba. They argued that as the accident occurred in Cuba, the courts in Ontario lacked the jurisdiction to hear the case. The courts in Cuba should have jurisdiction. Club Resorts also argued that even if the Ontario courts had jurisdiction, the courts of Cuba were the most convenient forum for the action (forum non conveniens argument). The accident took place in Cuba and many of the eye witnesses were from Cuba.

If Club Resorts’ arguments were successful, the Plaintiff was likely to endure significantly difficulty as the Plaintiff would have to contend with the Cuban judicial system. However, the judge who heard the motion held that the courts in Ontario should assume jurisdiction to hear the personal injury dispute. The Ontario Court of Appeal agreed and upheld the decision.

The Supreme Court of Canada agreed with the decision of the lower courts and dismissed the appeal. The Supreme Court assessed and clarified the ‘real and substantial connection test’ which has been applied previously by the courts to determine where lawsuits should be filed. Writing for the Court, Justice LeBel held that “there must be order in the system, and it must permit the development of a just and fair approach to resolving conflicts.” He identified four presumptive connecting factors that will determine whether a court is entitled to assume jurisdiction in any given case:

1) the defendant lives in the province;
2) the defendant carries on a business in the province;
3) the tort was committed in the province; and
4) a contract connected with the dispute was made in the province.

If a connecting factor is established, the court will presume jurisdiction over the case unless the defendant can rebut the presumption.

The Supreme Court of Canada also recognized that this list of presumptive factors may be reviewed and over time new factors may be added to the list. When deciding whether to add new factors to the list, Justice LeBel provided guidance to future judges by stating that the following factors should be taken into consideration:

(a) the similarity of the new connecting factor with the recognized presumptive connecting factors;
(b) the treatment of the connecting factor in the previous case law;
(c) the treatment of the connecting factor in statute; and
(d) the treatment of the connecting factor in the private international law of other legal systems with a shared commitment to order, fairness and comity.

Turning to the facts of the case, the Court held that the fact that the contract was entered into in Ontario established the connecting factor and allowed the courts in Ontario to assume jurisdiction in the case. The Supreme Court also assessed the issues related to fairness including the difficulties the parties would face if a trial was held in Cuba.

The Court also dealt with the issue of forum shopping – that is where Plaintiffs seek the court which will give them the most favourable outcome. Club Resorts argued that Ontario was forum non conveniens (that is the Plaintiff was forum shopping and suing Ontario when Cuba was more ideal for hearing the case). The Court held that if the real and substantial connection test is met, the Court can still refuse to exercise jurisdiction if there is a more convenient forum for the case. If the Defendant argues forum non conveniens then the Defendant must show that the alternative forum is clearly more appropriate (emphasis addes). He must also show that it would be fairer and more efficient to choose an alternative forum and to deny the plaintiff the benefits of his or her decision to select a forum. This new law was immediately applied in Conrad Black’s defamation cases to allow those cases to proceed in Ontario rather than Illinois.

This case clearly favours plaintiffs. It makes it easier to sue in Ontario courts. The four presumptive connecting factors are unlikely to be difficult to meet. Additionally, the list is likely to grow in the future to greater than four factors. However, this case does not change the law which is applicable to a case. Although the lawsuit is in Ontario, it is probable that the law which is applicable is the law of Cuba. It is also harder to make a forum non conveniens argument.

When making contracts, it would be wise to bear in mind the possibility of being sued in Canada. This can happen even if you are not from Canada, as long as the plaintiff can show that there is a real and substantial connection with Canada.

The Dangers of Engaging in Business Deals Without Proper Agreements

Besharah v. Saikaley is a clear illustration of what can go wrong during a business transaction.

The appellant and respondent were friends before they engaged in business together. The dispute arose over the profits made from the buying and selling of a property. The respondent purchased a property near the appellant’s cottage for $120 000. The purchase was conditional on obtaining financing. The appellant was informed by the respondent that the property was for sale for $200 000.

The respondent did not disclose that he had already negotiated a conditional agreement to purchase the property himself. As the appellant was interested in purchasing the property, the respondent placed an offer of $200 000 to vendor on behalf of the appellant. The respondent told the appellant that his offer had been accepted. This was not true. Soon after, the appellant changed his mind and wanted to end the transaction. The respondent sold the property to a third party and made a profit of $115 000. The appellant became aggrieved and sued.

At trial, the appellant claimed that an agreement to jointly develop and market the property was reached with the respondent thus he was entitled to 50 percent of the profits. However, the trial judge rejected the appellant’s argument. On Appeal, the appellant claimed that there was a breach of fiduciary duty and asked that the respondent be required to disgorge 100% of the profits.

The Ontario Court of Appeal held that since fiduciary duty had not been pleaded at trial, that argument could not succeed in appeal. It was “simply too late for [the Appellant] to alter the theory and nature of his claim at this state” said the Court. The Court of Appeal cannot make findings of fact, so the issue of a potential breach of fiduciary duty should have been pleaded to trial judge, especially since there were conflicting accounts of what actually occurred.

Furthermore, a fiduciary duty will arise only in prescribed circumstances. The Court of Appeal held that no such duty arose in this case, therefore the respondent did not owe any duty to the appellant as claimed. Interestingly, the Court noted that the respondent simply re-sold the property to the appellant thus there was no connection between the appellant’s agreement to purchase the property and the profits made.

Courts are loathe to find fiduciary duties in commercial arrangements when it is not expressly provided for by agreement. However, it would probably be best to make this absolutely clear if you intend to profit on a dead deal.

This case illustrates how easily a simple business deal can lead to a lawsuit.

You can read the case on the CanLii website. The trial court decision is here.

Get Legal Advice for Your Business Before Trouble Starts

Whether you are starting a new business, or have managing one for awhile, you are going to need legal advice. A generation ago, if you were starting a new business, you could probably get away with not having any lawyer at all. Today, you may need several different types of lawyers before you start that new venture. This is simply a reality of modern business life. There are simply too many issues that you have to consider. You should get legal advice before signing a lease, incorporating a business, signing an agreement and so on. If you do not seek prior legal advice, you are taking a huge and expensive gamble on you future and that of your family.

The best time to get legal advice is before you have trouble. However, many people prefer to wait until after the things have gone wrong and then try to seek a lawyer. At that point, it may be too late. At that point, you will be paying a whole lot more in fees with very little to show for it.
As a business person, you want to concentrate on making money. So it is better to simply get your advice now, then hopefully stay out of trouble. If you get into trouble, you could end up spending years in the legal system with nothing to show for it. Your energy, or some of it, will be used dealing with courts and lawyers rather than concentrating on what you do best.

Unfortunately, nobody can guarantee that you will stay out of trouble. Firms with hundreds of lawyers at their disposal still get into trouble. But at least, with a good lawyer, you should be able to stay clear of some of the more common dangers.

So seek a business lawyer before you start that business. I, of course, recommend Emil Gordon Law Office.