My last entry having been about the things you can do without a lawyer, it seemed prudent to talk about some things that you really should get a lawyer for, though you might feel like you can do it yourself.
The Supreme Court just refused leave to appeal a decision from the Alberta Court of Appeal. Briefly, Mr. Rejzek was busted by a police officer posing as a prostitute. He represented himself at trial and was convicted. He then appealed on the basis that the trial never advised him of his right to be represented at trial.
This would be a rarity. Let me explain a few things about self-reps.
Self-reps are a nuisance to the Court. They don't understand the process, the rules, the appropriate and usual ways that things are done in Court. And most of them have watched way too much TV. They'll lead large amounts of evidence completely unrelated to the matters at issue, because they don't have the legal training to understand the importance of legal principles like 'relevance'. (Of course, I'm speaking in generalities here.)
Worst of all, they sometimes take unreasonable and untenable positions, and waste everyone's time and everyone else's money. I've done a number of cases against self-reps; the cases are usually relatively easy, and I seldom have to worry about them making sophisticated legal arguments, but they're situations where my client shouldn't have to pay for me to go to Court, because the 'right' and 'wrong' of the cases, legally speaking, is quite straightforward. Lawyers only need the Court's assistance when the right answer isn't reasonably clear to both of them. Self-reps think that everybody should get his day in Court, and then wonder why they end up with costs awards made against them.
But on top of that, they can be unpredictable. In one case, I served a Notice of Application on a person, and the supporting affidavits. She didn't serve a Notice of Appearance (which is technically necessary to have a right to respond at all to an Application) or any other supporting materials...but showed up on the Court date wanting to argue her case, and bringing a sheaf of documents with her (which were not relevant to the case...but anyways). I wasn't surprised by this, of course. I could have taken the position that she should not even be allowed to address the Court...but the problem is that the Court will bend over backwards for self-reps, knowing how inaccessible and arcane the procedural requirements are. So had I argued for her complete exclusion, I would have just looked like an overly aggressive lawyer. So instead I took a position that was quite reasonable, and easy for the Court to agree with: "She hasn't filed a Notice of Appearance or any supporting materials. It isn't surprising that she would want to make submissions, but I would object to her attempting to lead any evidence." The judge allowed her to make submissions, and while she did attempt to raise new issues, I flagged in my response that those matters weren't in evidence (though I did state my client's positions on the issues), and the judge appears not to have considered them in his final decision. Then, after I made my costs submissions, the judge asked her if she had any submissions on the point, and appeared a little frustrated by her roundabout answers. (Not surprising, of course, that she wouldn't understand the points to argue when discussing costs.)
Anyways, the point is that, especially in complicated matters, the Court wants the assistance of competent counsel on all sides, and doesn't want to have to babysit a self-rep who doesn't understand the process. So normally, especially in a criminal matter, the judge will try hard to convince the accused to retain counsel.
Digression ended.
The Court of Queen's Bench overturned the conviction and entered an acquittal. The Alberta Court of Appeal restored the conviction. Basically, the finding is that the trial was fair nonetheless. Self-representation isn't grounds for appeal.
But I think most of us know that, when fighting criminal charges, hiring a lawyer is a good idea.
A couple days ago I blogged about civil remedies that you might pursue yourself - not necessarily because a lawyer wouldn't help, but because the lawyer's help is more expensive than what it's worth. It's easy to see the value of a lawyer in adversarial proceedings, but what about when everyone's getting along?
When to seek proactive legal advice is challenging to determine for even the most sophisticated laypeople. Employers can get themselves into pretty deep trouble pretty easily, acting without good legal advice. I took a call from an employer who had an employee in charge of a remote operation simultaneously put in her notice of resignation (of several weeks!) and make an accusation of human rights offences. How does an employer respond to that? Well, I can list off about 50 potential wrong answers. Don't fire the employee. Don't breach any of the employee's contractual entitlements. (She was contractually entitled to a performance evaluation a couple weeks out, with a raise depending on certain factors, which under the circumstances would have weighed in favour of a raise. I recommended offering to carry through with the performance evaluation and providing a raise.) Don't fail to discipline for any bona fide performance concerns, but do so carefully, and bear in mind that you may have to justify your actions to an adjudicator. If you must waive her notice, make sure to pay her through the whole thing. Etc.
The 'right' answer is "very carefully". I helped the employer craft his response to the employee. It isn't cheap; I ended up charging a fee in the high 3 digits for my time. But it reduces the probability of facing a Human Rights Application at the end of the day (the defence of which would run in the 4 to 5 digit range), and significantly reduces the probability of having a successful Human Rights Application made against them (the liability for which could easily run well into the 5 digit range). Many employers working without legal advice in that situation could have easily made some very expensive missteps. Even assuming that there hadn't been any inappropriate conduct to date (and of course in my client's situation there hadn't been...no, seriously, I've worked with some questionable fact patterns, but I believe that this client was pretty clean), it's still really easy to run awry of the Human Rights Code by taking actions that might be seen as reprisal for her standing on her rights.
So was my service expensive? Yes, absolutely. Especially considering that it primarily consisted of a few phone conversations and emails going back and forth. But that client certainly got good value for that money.
Contracts. Another time when getting proactive legal advice can be important. As a general rule, the question is: "What's the worst that could happen?" You can have a binding contract written on a napkin, or based in a handshake, or less, but if it's not written by a lawyer, there's a real risk that you won't get what you think you're contracting for. The question you have to ask is whether or not that's a risk you're willing to bear.
If the contract is a repayment plan on a $500 loan to your cousin, then your worst case scenario is that you're out $500. Paying a lawyer for a few hours' work to (a) meet with you about it, (b) draft and/or review the contract, and (c) advise you on the terms and possible amendments...well, it's a no brainer: It ain't worth it. But if you're making a $500,000 loan to your cousin, which you want to be secured by a mortgage...then paying a grand or two to a lawyer to help you protect your investment is a no-brainer.
Parties to a commercial lease should generally get legal advice. Parties to a matrimonial agreement or separation agreement should (and often must) get legal advice.
What about employment contracts? For the employer, yes, absolutely, in all cases. An employer need not consult a lawyer before making any hiring decision, but the contract template should be drafted or at least reviewed by a lawyer, and an employment lawyer should explain to you how to make the terms enforceable.
Let's say you're gainfully employed and have been working for your employer for 10 years, but you're looking for greener pastures...you apply for an opening that I'm offering, I bring you in for an interview, and it seems like a good fit. I call you to offer you a job, you put in your two weeks notice, then you report for work. With all the orientation materials, I also put in front of you your employment contract. It says that you're on a 3-month probationary period, limits your entitlements on termination, and has a non-competition clause. There's a real risk that none of these clauses will be enforceable. The key problem is this: You already have the job. You're not getting anything else out of the contract but what you already have, and therefore the contract may not be binding.
There are a lot of ways of challenging the terms of an employment contract upon termination, and the only way to really protect against that and reduce the risk of litigation upon termination (which, again, is really expensive) is to get good legal advice at the inception of the employment relationship.
What about an employee? Should an employee get legal advice on an employment contract? Well, employees looking to be hired seldom have much bargaining power. If you're in a position to really negotiate your substantive terms, then maybe. If you're not in a position to negotiate, then the only real question for you will be whether or not a term is legal. But if it's not legal, then it isn't usually going to be enforceable, so you can leave that question until later.
When dealing with severance packages at the end of employment, both sides should always get legal advice. An employer needs to know its obligations to a dismissed employee up front. An employee shouldn't sign off on the package until they know their rights, too.
Here's the rub: If an employee hasn't had an opportunity to get legal advice on the package, it may not be enforceable. Or it may be. So an employee wants legal advice because the agreement might hold up either way; an employer wants the employee to get legal advice because of the risk that it won't hold up otherwise. It's common practice for an employer to offer a contribution to the cost of obtaining legal advice, as part of the package.
Bottom line: Proactive advice is often worth the expense. A stitch in time saves nine.
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
Thursday, April 29, 2010
Tuesday, April 27, 2010
Legal DIY
I find that I'm ending almost every entry with "consult a lawyer". It's not designed to be shameless self-promotion. I mean, I'll freely admit that marketing is one objective of this blog, but the primary purpose is to inform, not to sell. To prove it, this entry is about the things for which you shouldn't necessarily consult a lawyer.
A lot of the calls I take are from people who just...need help. Advice, guidance, not necessarily legal expertise. I like to help people; at the same time, there's something a little distasteful about billing my hourly rate to do something that doesn't utilize my significant education, license, or even professional insurance. Sometimes it's common sense. Sometimes the answers to questions are easily found in a fairly brief Google search. Sometimes it's a matter of just picking up the phone to call whatever institution the person is dealing with, and navigating their bureaucratic phone system.
Lawyers serve a purpose. A very important purpose, in fact. But we don't work magic. I absolutely understand the frustration of having to maneouver a company's bureaucracy to get a straight answer, but a lawyer is unlikely to do it with much more ease than the client. (In fact, the representational problem is one more hurdle. Many institutions resist dealing with anybody other than the named individual, or might legitimately need information not immediately available to the lawyer. This makes the interaction even more difficult.) So, rather than sitting on hold with various call centre reps for three hours yourself, your lawyer will do it and charge you several hundred dollars for the privilege.
I once took a call from a person who had successfully navigated the Small Claims Court system up to the point of obtaining a judgment, and had taken several steps to try to enforce the judgment, but found that she wasn't having any success. She wondered if it would be worthwhile to retain me. My answer was simply No. Not a chance. Even assuming that I was ultimately able to help her collect on the judgment, I'd be charging her a lot more money than was at stake in that matter in order to do so. Moreover, it sounded to me like she was handling the system pretty competently herself. So I told her that there's nothing magic that we lawyers can do.
There is a great deal that lay people can do on their own without legal assistance in many circumstances.
(1) Early Stage Conflict Resolution
Talk to the other side. If you feel that you have been wronged, then talk to the responsible party yourself first. Be reasonable, be calm, don't threaten, don't bluster, and don't make any concessions you're not prepared to be held to. (In some circumstances you can argue that such concessions shouldn't be used against you later, but not always.) The limitation here is that, if you're operating without legal advice, you may not know what your rights and remedies are. But in many cases, it doesn't take a legal expert to know what needs to be fixed.
Often, folks will call me just to engage in the negotiation stage on basic disputes like a bill being too high, etc. They want me to do it because they think a letter from a lawyer will have more impact. People expect others to be intimidated by lawyers. Sometimes this is true. I don't consider myself to be necessarily intimidating. As a matter of style, I think I'm more effective in resolving conflict by trying to get the other side to be reasonable than trying to get them to be afraid. The only really intimidating thing about being contacted by a lawyer is that it shows how seriously the client is taking the problem, in that they're prepared to pay the lawyer a whole lot of money to handle it.
Sometimes it may help. In my estimation, it's rare that the resolution achieved that way is so much better as to make the legal help worthwhile.
Of course, when dealing with more complicated legal questions, like "What's a dismissed employee entitled to?" or "What are the scale of damages on this breach of contract?", that's a different matter. Maybe you need a lawyer to put together a demand letter...but that's because the lawyer knows better than you what to ask for, as opposed to knowing how to ask.
(2) Google is Your Friend
Not that Google is the only search engine, but this is Blogspot, and Google is my usual first line of searching. Many times, where there's a problem to be solved, the answer is on the internet. Even quasi-legal questions have abundant resources on the internet. A question about your statutory employment rights? Look at the Ministry of Labour web site. (A caution: That only deals with statutory rights; sometimes, an employee will have additional rights, and can actually lose those rights in some cases by going to the Ministry.) A question about crossing the border? Check out the CBSA web site.
When I was in high school, I took a job in which I wasn't getting paid for "training" or various other activities. Training was on-the-job, being shown how to do the job and being supervised while you did it. Well, not even that, sometimes. On one occasion, when I was still an unpaid trainee, I ended up closing my section of the store myself; everyone else had gone home.
Ridiculous. I knew that this was wrong. I knew that I had entitlements that weren't being met. Trouble is that I didn't know what the recourse was, what could be done about them. This was in the early days of the internet, when there wasn't a great deal of information online. Now, it's easy for any tech-savvy lay person to find abundant information on how to respond to this sort of thing. Don't spend money on a lawyer when you can do it yourself.
(3) User-Friendly Venues
Part of my job is to help people navigate elaborate legal processes. The Rules of Civil Procedure are not exactly accessible to your average lay person, and it usually takes experience to turn the contents of that rather lengthy document into the real tangible steps of a legal proceeding.
But not everything needs to go to the Superior Court. The Small Claims Court in Ontario now has a monetary jurisdiction of up to $25,000, and it is designed to be accessed by self-represented litigants. Again, lots of resources online to help with this. That's not to say that it's an easy process, and you're still limited in that you don't have a lawyer to help you understand and address the strengths and weaknesses of your case, but if you have a claim worth a few thousand dollars, you're still usually going to be better off going to Small Claims yourself than to pay a lawyer to do it.
Likewise, you don't necessarily need a lawyer to make a complaint to the Ministry of Labour. The paperwork for making an Application to the Human Rights Tribunal of Ontario is fairly straightforward, and all their jurisprudence is published online for free. (Though free legal assistance is available to Applicants in that kind of process.)
(4) Paralegals
Less expensive, sometimes even more experienced in some venues. As noted earlier, make sure they're licensed.
(5) Letting it slide
Sometimes, the cost of fixing a problem simply isn't worth getting it fixed. When you have a car worth $500 that needs $1500 worth of work put into it...you get rid of the car, right? Same thing with law. If you have a claim worth $1000, why on earth would you pay a lawyer $10,000 to make it for you? If you can't pursue it yourself, it isn't likely to be worth pursuing at all.
As a professional I aim to deliver value for money. If my services are more expensive than they're worth, then not only will you not be happy at the end of the day, but neither will I.
My job isn't to intimidate, nor to put on a show. My job is to provide expert advice and representation on legal issues. And this is important. If you want an assessment of whether or not you have a case, you need a lawyer. If you need an opinion as to what kind of damages you might be able to seek, talk to a lawyer. If the case is worth the cost of having it presented in an expert fashion, retain a lawyer. But when deciding to consult a lawyer, you need to understand the limitations of the role of a lawyer, the purpose of a lawyer, and the cost of a lawyer.
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
A lot of the calls I take are from people who just...need help. Advice, guidance, not necessarily legal expertise. I like to help people; at the same time, there's something a little distasteful about billing my hourly rate to do something that doesn't utilize my significant education, license, or even professional insurance. Sometimes it's common sense. Sometimes the answers to questions are easily found in a fairly brief Google search. Sometimes it's a matter of just picking up the phone to call whatever institution the person is dealing with, and navigating their bureaucratic phone system.
Lawyers serve a purpose. A very important purpose, in fact. But we don't work magic. I absolutely understand the frustration of having to maneouver a company's bureaucracy to get a straight answer, but a lawyer is unlikely to do it with much more ease than the client. (In fact, the representational problem is one more hurdle. Many institutions resist dealing with anybody other than the named individual, or might legitimately need information not immediately available to the lawyer. This makes the interaction even more difficult.) So, rather than sitting on hold with various call centre reps for three hours yourself, your lawyer will do it and charge you several hundred dollars for the privilege.
I once took a call from a person who had successfully navigated the Small Claims Court system up to the point of obtaining a judgment, and had taken several steps to try to enforce the judgment, but found that she wasn't having any success. She wondered if it would be worthwhile to retain me. My answer was simply No. Not a chance. Even assuming that I was ultimately able to help her collect on the judgment, I'd be charging her a lot more money than was at stake in that matter in order to do so. Moreover, it sounded to me like she was handling the system pretty competently herself. So I told her that there's nothing magic that we lawyers can do.
There is a great deal that lay people can do on their own without legal assistance in many circumstances.
(1) Early Stage Conflict Resolution
Talk to the other side. If you feel that you have been wronged, then talk to the responsible party yourself first. Be reasonable, be calm, don't threaten, don't bluster, and don't make any concessions you're not prepared to be held to. (In some circumstances you can argue that such concessions shouldn't be used against you later, but not always.) The limitation here is that, if you're operating without legal advice, you may not know what your rights and remedies are. But in many cases, it doesn't take a legal expert to know what needs to be fixed.
Often, folks will call me just to engage in the negotiation stage on basic disputes like a bill being too high, etc. They want me to do it because they think a letter from a lawyer will have more impact. People expect others to be intimidated by lawyers. Sometimes this is true. I don't consider myself to be necessarily intimidating. As a matter of style, I think I'm more effective in resolving conflict by trying to get the other side to be reasonable than trying to get them to be afraid. The only really intimidating thing about being contacted by a lawyer is that it shows how seriously the client is taking the problem, in that they're prepared to pay the lawyer a whole lot of money to handle it.
Sometimes it may help. In my estimation, it's rare that the resolution achieved that way is so much better as to make the legal help worthwhile.
Of course, when dealing with more complicated legal questions, like "What's a dismissed employee entitled to?" or "What are the scale of damages on this breach of contract?", that's a different matter. Maybe you need a lawyer to put together a demand letter...but that's because the lawyer knows better than you what to ask for, as opposed to knowing how to ask.
(2) Google is Your Friend
Not that Google is the only search engine, but this is Blogspot, and Google is my usual first line of searching. Many times, where there's a problem to be solved, the answer is on the internet. Even quasi-legal questions have abundant resources on the internet. A question about your statutory employment rights? Look at the Ministry of Labour web site. (A caution: That only deals with statutory rights; sometimes, an employee will have additional rights, and can actually lose those rights in some cases by going to the Ministry.) A question about crossing the border? Check out the CBSA web site.
When I was in high school, I took a job in which I wasn't getting paid for "training" or various other activities. Training was on-the-job, being shown how to do the job and being supervised while you did it. Well, not even that, sometimes. On one occasion, when I was still an unpaid trainee, I ended up closing my section of the store myself; everyone else had gone home.
Ridiculous. I knew that this was wrong. I knew that I had entitlements that weren't being met. Trouble is that I didn't know what the recourse was, what could be done about them. This was in the early days of the internet, when there wasn't a great deal of information online. Now, it's easy for any tech-savvy lay person to find abundant information on how to respond to this sort of thing. Don't spend money on a lawyer when you can do it yourself.
(3) User-Friendly Venues
Part of my job is to help people navigate elaborate legal processes. The Rules of Civil Procedure are not exactly accessible to your average lay person, and it usually takes experience to turn the contents of that rather lengthy document into the real tangible steps of a legal proceeding.
But not everything needs to go to the Superior Court. The Small Claims Court in Ontario now has a monetary jurisdiction of up to $25,000, and it is designed to be accessed by self-represented litigants. Again, lots of resources online to help with this. That's not to say that it's an easy process, and you're still limited in that you don't have a lawyer to help you understand and address the strengths and weaknesses of your case, but if you have a claim worth a few thousand dollars, you're still usually going to be better off going to Small Claims yourself than to pay a lawyer to do it.
Likewise, you don't necessarily need a lawyer to make a complaint to the Ministry of Labour. The paperwork for making an Application to the Human Rights Tribunal of Ontario is fairly straightforward, and all their jurisprudence is published online for free. (Though free legal assistance is available to Applicants in that kind of process.)
(4) Paralegals
Less expensive, sometimes even more experienced in some venues. As noted earlier, make sure they're licensed.
(5) Letting it slide
Sometimes, the cost of fixing a problem simply isn't worth getting it fixed. When you have a car worth $500 that needs $1500 worth of work put into it...you get rid of the car, right? Same thing with law. If you have a claim worth $1000, why on earth would you pay a lawyer $10,000 to make it for you? If you can't pursue it yourself, it isn't likely to be worth pursuing at all.
As a professional I aim to deliver value for money. If my services are more expensive than they're worth, then not only will you not be happy at the end of the day, but neither will I.
My job isn't to intimidate, nor to put on a show. My job is to provide expert advice and representation on legal issues. And this is important. If you want an assessment of whether or not you have a case, you need a lawyer. If you need an opinion as to what kind of damages you might be able to seek, talk to a lawyer. If the case is worth the cost of having it presented in an expert fashion, retain a lawyer. But when deciding to consult a lawyer, you need to understand the limitations of the role of a lawyer, the purpose of a lawyer, and the cost of a lawyer.
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
Monday, April 26, 2010
Dismissed Employee Receives Millions in Wrongful Dismissal Action
Under most circumstances, an employer's liability to a wrongfully dismissed employee will be limited to what the employer would have paid the employee (or to the employee's benefit) for a period of time. Sometimes there will be a bit on top of that for moral damages. But every so often you get a circumstance where an employer's liability will increase immensely on the basis of what a third party would have provided based on continuation of employment through the notice period.
Some pension plans have threshold dates for benefits; if you wrongfully fire someone without notice, and their notice period would have crossed a pension threshold, then the employer could be liable to top up the pension indefinitely.
Likewise, if an employer prematurely terminates an employee's long-term disability benefits, and the employee becomes disabled during the notice period, the employer could be liable for payment of what the LTD benefits provider would have paid, until the employee is healthy again. If ever.
A recent case decided by Justice Parayeski is a slightly different breed, but puts damages on a whole different level.
Mr. Taylor worked as an engineer for Research in Motion. You know, the Waterloo tech company that developed the Blackberry, which has since become a staple for most business folks throughout the world? Yeah, that's right, the company owned by Jim Balsillie, who has been trying to get another hockey team into this part of the Province... (Hey Jim, just so you know, I'm behind you on that one. My team hasn't won during my lifetime, and if you were to bring an NHL team to K-W, or even Hamilton...or how about Simcoe?...I'd cheer them on.)
Part of Mr. Taylor's remuneration included stock options which were to vest as of March 3, 2005. The option granted the right to purchase up to 40,000 shares at a share price of $5.78. That's right, $5.78 for RIM shares. As of March 3, 2005, the market value of a RIM share was $68.20. 40,000 of those. I'll let you do the math.
Trouble is that Mr. Taylor was fired in November 2004.
Let's set up a cast of characters here: At trial, Mr. Taylor was represented by Howard Levitt, whom I think it fair to say is Canada's foremost employment law expert. RIM was represented by Glenn Christie, of Hicks Morley, which is one of the more significant management-side labour/employment law firms in the Province, especially outside of Toronto. The Judge was Justice Parayeski, a fairly new judge. I had the pleasure of appearing before Justice Parayeski a few weeks ago; he seemed very reasonable. (And he ruled in favour of my client, so he must be a good judge, no?)
By the time trial came around (the decision indicates a trial date of October 2010...but I have a sneaking suspicion - don't ask me why - that this is an error, and should be October 2009), RIM was not taking the position that the termination had been for cause (the way this is phrased in the decision suggests that RIM had originally alleged cause). Everyone agreed that the notice period would have gone past the stock option vesting date. Everyone also agreed that Mr. Taylor would have exercised the stock option. (...I can't imagine why...)
There didn't appear to be any fight over what kind of damages might be payable in lieu of reasonable notice, or whether or not the employer should have to pay out for breaches of its duty of good faith and fair dealing (as used to happen quite often when an employer initially alleged cause but dropped the argument during litigation)...I suspect that any disagreement on such entitlements were so miniscule by contrast to the rest of the case that it wasn't worth fighting over.
The only issue was this: How are Mr. Taylor's damages quantified? The value of the stock options as of March 3, 2005? Or what the stock would be worth today? After accounting for a "gross-up" to reflect the differential tax treatment of pay in lieu of notice rather than the exercise of stock options, his damages as of March 3, 2005 would have been approximately $4.4 million. Calculated on the basis of the share value today (or rather, on October 2010 [sic]), the damages would have been approximately $11.6 million.
Justice Parayeski looked at the financial planning advice Mr. Taylor had received, and Mr. Taylor's motivations, and concluded that he would have cashed out $2.1 million immediately but held on to whatever was left. (He left the arithmetic to the lawyers to work out.)
Points to Consider
RIM would have had to have paid a significant amount in Mr. Taylor's exercise of the stock options in any event, but ended up having to pay an additional 46% for the gross-up. With these amounts, that is a vast amount of money by most standards.
That an action for this amount of money could be dealt with in a two-day trial, focusing only on the one truly contentious issue, is an indicator of the experience and reasonableness of counsel on both sides. I know lawyers who, if given the opportunity to represent RIM in such a matter, would have made none of the concessions that Mr. Christie made. Even faced with certain defeat, some lawyers may have still made the pitch for "just cause". (Sometimes, the logic is as much to disparage the plaintiff as for any real possibility of success; even if the threshold isn't met, you get to rip into the other side to try to get the judge's sympathy. It's pretty dirty, really drags out the proceedings with peripheral and relatively unimportant factual issues, increases everybody's legal costs significantly, and I would doubt its effectiveness.) Likewise, such lawyers would have made the alternative argument that the notice period would not have encompassed the vesting date, and that alternatively Mr. Taylor would not have exercised the stock option. Because really, who wants that much money, right? Making arguments with no chance of success don't serve anyone's interest, and reduce counsel's credibility even when making arguments that may have merit. So by making reasonable concessions, Mr. Christie did a real service to his client. (Of course, I'm assuming that Mr. Christie was correct in assessing those arguments as having a low chance of success, but I would not be in any position to second-guess that judgment.)
RIM has its own in-house legal department, but I would expect most of them to practice Intellectual Property law. Still, you have to wonder what events transpired that left a company like RIM ending up in a position like this, having to pay a 7-digit gross-up, with a Court saying that it "now concedes that the dismissal was without just cause".
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
Some pension plans have threshold dates for benefits; if you wrongfully fire someone without notice, and their notice period would have crossed a pension threshold, then the employer could be liable to top up the pension indefinitely.
Likewise, if an employer prematurely terminates an employee's long-term disability benefits, and the employee becomes disabled during the notice period, the employer could be liable for payment of what the LTD benefits provider would have paid, until the employee is healthy again. If ever.
A recent case decided by Justice Parayeski is a slightly different breed, but puts damages on a whole different level.
Mr. Taylor worked as an engineer for Research in Motion. You know, the Waterloo tech company that developed the Blackberry, which has since become a staple for most business folks throughout the world? Yeah, that's right, the company owned by Jim Balsillie, who has been trying to get another hockey team into this part of the Province... (Hey Jim, just so you know, I'm behind you on that one. My team hasn't won during my lifetime, and if you were to bring an NHL team to K-W, or even Hamilton...or how about Simcoe?...I'd cheer them on.)
Part of Mr. Taylor's remuneration included stock options which were to vest as of March 3, 2005. The option granted the right to purchase up to 40,000 shares at a share price of $5.78. That's right, $5.78 for RIM shares. As of March 3, 2005, the market value of a RIM share was $68.20. 40,000 of those. I'll let you do the math.
Trouble is that Mr. Taylor was fired in November 2004.
Let's set up a cast of characters here: At trial, Mr. Taylor was represented by Howard Levitt, whom I think it fair to say is Canada's foremost employment law expert. RIM was represented by Glenn Christie, of Hicks Morley, which is one of the more significant management-side labour/employment law firms in the Province, especially outside of Toronto. The Judge was Justice Parayeski, a fairly new judge. I had the pleasure of appearing before Justice Parayeski a few weeks ago; he seemed very reasonable. (And he ruled in favour of my client, so he must be a good judge, no?)
By the time trial came around (the decision indicates a trial date of October 2010...but I have a sneaking suspicion - don't ask me why - that this is an error, and should be October 2009), RIM was not taking the position that the termination had been for cause (the way this is phrased in the decision suggests that RIM had originally alleged cause). Everyone agreed that the notice period would have gone past the stock option vesting date. Everyone also agreed that Mr. Taylor would have exercised the stock option. (...I can't imagine why...)
There didn't appear to be any fight over what kind of damages might be payable in lieu of reasonable notice, or whether or not the employer should have to pay out for breaches of its duty of good faith and fair dealing (as used to happen quite often when an employer initially alleged cause but dropped the argument during litigation)...I suspect that any disagreement on such entitlements were so miniscule by contrast to the rest of the case that it wasn't worth fighting over.
The only issue was this: How are Mr. Taylor's damages quantified? The value of the stock options as of March 3, 2005? Or what the stock would be worth today? After accounting for a "gross-up" to reflect the differential tax treatment of pay in lieu of notice rather than the exercise of stock options, his damages as of March 3, 2005 would have been approximately $4.4 million. Calculated on the basis of the share value today (or rather, on October 2010 [sic]), the damages would have been approximately $11.6 million.
Justice Parayeski looked at the financial planning advice Mr. Taylor had received, and Mr. Taylor's motivations, and concluded that he would have cashed out $2.1 million immediately but held on to whatever was left. (He left the arithmetic to the lawyers to work out.)
Points to Consider
RIM would have had to have paid a significant amount in Mr. Taylor's exercise of the stock options in any event, but ended up having to pay an additional 46% for the gross-up. With these amounts, that is a vast amount of money by most standards.
That an action for this amount of money could be dealt with in a two-day trial, focusing only on the one truly contentious issue, is an indicator of the experience and reasonableness of counsel on both sides. I know lawyers who, if given the opportunity to represent RIM in such a matter, would have made none of the concessions that Mr. Christie made. Even faced with certain defeat, some lawyers may have still made the pitch for "just cause". (Sometimes, the logic is as much to disparage the plaintiff as for any real possibility of success; even if the threshold isn't met, you get to rip into the other side to try to get the judge's sympathy. It's pretty dirty, really drags out the proceedings with peripheral and relatively unimportant factual issues, increases everybody's legal costs significantly, and I would doubt its effectiveness.) Likewise, such lawyers would have made the alternative argument that the notice period would not have encompassed the vesting date, and that alternatively Mr. Taylor would not have exercised the stock option. Because really, who wants that much money, right? Making arguments with no chance of success don't serve anyone's interest, and reduce counsel's credibility even when making arguments that may have merit. So by making reasonable concessions, Mr. Christie did a real service to his client. (Of course, I'm assuming that Mr. Christie was correct in assessing those arguments as having a low chance of success, but I would not be in any position to second-guess that judgment.)
RIM has its own in-house legal department, but I would expect most of them to practice Intellectual Property law. Still, you have to wonder what events transpired that left a company like RIM ending up in a position like this, having to pay a 7-digit gross-up, with a Court saying that it "now concedes that the dismissal was without just cause".
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
Sunday, April 25, 2010
Human Rights Tribunal awards over $65,000 to a disabled employee
Recently, the HRTO heard a case arising from an Admissions Representative's termination of employment at a college.
Mr. Vetricek was hired in December 2007 for a one-year contract. In Spring 2008 he suffered a shoulder injury while boxing. In May 2008, he asked his employer to provide a headset, which was denied because his phone had a hands-free mode already. (There's some disagreement as to whether or not he advised the employer that the reason he needed the headset was because his shoulder bothered him when using the phone.)
He wore a clavicle splint to work into the summer, and while he may have mentioned pain on occasion, it didn't interfere with his ability to do his job generally.
At the end of June 2008, he had a bad reaction to acupuncture, and suffered severe pain throughout much of his body. He was slated to go on vacation, but instead he stayed at home throughout his holidays. He was still in pain upon his return to work, which pain caused significant anxiety, and sought medical attention. He needed to take some time off. Eventually, on August 11, 2008, he received a medical note stating that he should work reduced hours until the end of September, but did not provide it to his employer right away.
In mid-August, the employer advised him that his position would be eliminated due to "restructuring". He produced the medical note, and the employer decided to offer him part-time employment until the end of September, but without benefits coverage (which had been on the initial contract), and no guarantee of continued employment past the end of September.
In October, they entered into another 1-year contract, again with benefits coverage. In the end of October, Mr. Vetricek still hadn't received his benefits card, and was concerned because he had physiotherapy bills that needed to be paid. He enquired of his employer about the card. (The employer's position is no card was required to make insurance claims, and that Mr. Vetricek knew where the insurance claims forms were.)
In late November, Mr. Vetricek received a CD-ROM with X-Rays his doctor had ordered. He showed these to his employer. On December 1, 2008, Mr. Vetricek showed up to work in the morning and found that his computer login didn't work, and when he asked his employer about was told that his employment was being terminated due to "restructuring".
In a nutshell, the allegation was that Mr. Vetricek was terminated because his employer was concerned about possible absenteeism as a result of his disability.
Despite reasonable attempts to find replacement employment, Mr. Vetricek remained unemployed as of the date of the hearing - December 15, 2009.
The Tribunal found that the termination of Mr. Vetricek's employment had been at least partially motivated by his disability; this breached the Code. The employer attempted to rely on a clause in the contracts allowing for termination without cause at any time, but the Tribunal noted that "a respondent cannot 'contract out' of the Application of the Code".
Mr. Vetricek was awarded lost wages up to the date of the hearing, totaling $52,814.37, and $15,000 for "violation of his inherent right to be free from discrimination, and for injury to his dignity", plus interest.
In addition, the Tribunal ordered that the employer develop and distribute a Human Rights policy.
Points to Consider
Had Mr. Vetricek's employment simply been terminated without cause, but without prohibited intentions under the Code, he would have had little chance of recovering any lost wages beyond the contract end-date (October 2, 2009). Had he not been on a fixed-term contract in the first place, his potential for recovering damages could have been significantly lower still. The violation of his Human Rights causes the accumulation of damages to continue.
The date of the hearing is an arbitrary cut-off for the end of accumulation of damages. Had the hearing been adjourned another six months, and Mr. Vetricek remained unemployed as of that date, one has to wonder if his entitlement would have increased substantially.
The employer was represented by a lawyer. (So was Mr. Vetricek, though I suspect that he availed himself of the free services available through the Human Rights Legal Support Centre.) In addition to the significant liabilities incurred in this process, the employer also likely incurred substantial legal fees.
The employer may need to incur further professional fees in developing the Human Rights policy.
So is there a lesson to be learned here for employers? I would say so: When dealing adversely with an employee where there are Human Rights issues involved, tread carefully. If there's even the most distant prospect of any perception that adverse treatment was the result of a disability, pregnancy, race, gender, religion, or other Code grounds, or in response to the employee's assertion of rights under the Code, then you need to get good professional advice first. Proactive legal advice is almost always cheaper than reactive legal representation.
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
Mr. Vetricek was hired in December 2007 for a one-year contract. In Spring 2008 he suffered a shoulder injury while boxing. In May 2008, he asked his employer to provide a headset, which was denied because his phone had a hands-free mode already. (There's some disagreement as to whether or not he advised the employer that the reason he needed the headset was because his shoulder bothered him when using the phone.)
He wore a clavicle splint to work into the summer, and while he may have mentioned pain on occasion, it didn't interfere with his ability to do his job generally.
At the end of June 2008, he had a bad reaction to acupuncture, and suffered severe pain throughout much of his body. He was slated to go on vacation, but instead he stayed at home throughout his holidays. He was still in pain upon his return to work, which pain caused significant anxiety, and sought medical attention. He needed to take some time off. Eventually, on August 11, 2008, he received a medical note stating that he should work reduced hours until the end of September, but did not provide it to his employer right away.
In mid-August, the employer advised him that his position would be eliminated due to "restructuring". He produced the medical note, and the employer decided to offer him part-time employment until the end of September, but without benefits coverage (which had been on the initial contract), and no guarantee of continued employment past the end of September.
In October, they entered into another 1-year contract, again with benefits coverage. In the end of October, Mr. Vetricek still hadn't received his benefits card, and was concerned because he had physiotherapy bills that needed to be paid. He enquired of his employer about the card. (The employer's position is no card was required to make insurance claims, and that Mr. Vetricek knew where the insurance claims forms were.)
In late November, Mr. Vetricek received a CD-ROM with X-Rays his doctor had ordered. He showed these to his employer. On December 1, 2008, Mr. Vetricek showed up to work in the morning and found that his computer login didn't work, and when he asked his employer about was told that his employment was being terminated due to "restructuring".
In a nutshell, the allegation was that Mr. Vetricek was terminated because his employer was concerned about possible absenteeism as a result of his disability.
Despite reasonable attempts to find replacement employment, Mr. Vetricek remained unemployed as of the date of the hearing - December 15, 2009.
The Tribunal found that the termination of Mr. Vetricek's employment had been at least partially motivated by his disability; this breached the Code. The employer attempted to rely on a clause in the contracts allowing for termination without cause at any time, but the Tribunal noted that "a respondent cannot 'contract out' of the Application of the Code".
Mr. Vetricek was awarded lost wages up to the date of the hearing, totaling $52,814.37, and $15,000 for "violation of his inherent right to be free from discrimination, and for injury to his dignity", plus interest.
In addition, the Tribunal ordered that the employer develop and distribute a Human Rights policy.
Points to Consider
Had Mr. Vetricek's employment simply been terminated without cause, but without prohibited intentions under the Code, he would have had little chance of recovering any lost wages beyond the contract end-date (October 2, 2009). Had he not been on a fixed-term contract in the first place, his potential for recovering damages could have been significantly lower still. The violation of his Human Rights causes the accumulation of damages to continue.
The date of the hearing is an arbitrary cut-off for the end of accumulation of damages. Had the hearing been adjourned another six months, and Mr. Vetricek remained unemployed as of that date, one has to wonder if his entitlement would have increased substantially.
The employer was represented by a lawyer. (So was Mr. Vetricek, though I suspect that he availed himself of the free services available through the Human Rights Legal Support Centre.) In addition to the significant liabilities incurred in this process, the employer also likely incurred substantial legal fees.
The employer may need to incur further professional fees in developing the Human Rights policy.
So is there a lesson to be learned here for employers? I would say so: When dealing adversely with an employee where there are Human Rights issues involved, tread carefully. If there's even the most distant prospect of any perception that adverse treatment was the result of a disability, pregnancy, race, gender, religion, or other Code grounds, or in response to the employee's assertion of rights under the Code, then you need to get good professional advice first. Proactive legal advice is almost always cheaper than reactive legal representation.
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
Is Your Representative Licensed?
In 1985, former police officer Brian Lawrie was charged under the Law Society Act with unlawfully acting as a barrister and solicitor, because he offered a commercial service defending people charged with traffic violations. Lawrie defended the charge and won. The charge went to the Provincial Court in 1985, and Judge Kerr found that this activity was legal. In 1986, that decision was upheld by District Court Judge Moore.
Thus were paralegals in Ontario born.
Since then, until 2007, anyone could provide certain types of legal services in Ontario: Small Claims Court proceedings, Ontario Court of Justice proceedings under the Provincial Offences Act (i.e. traffic tickets, among others), summary conviction offences under the Criminal Code of Canada (generally speaking, less serious criminal matters), and matters before administrative tribunals - the Landlord Tenant Board (and its predecessors), the Human Rights Tribunal, the Ontario Labour Relations Board, and others.
Fairly wide scope of activities, actually. And because there was no licensing requirement at all, you could be rather hit-and-miss in terms of having good representatives. I once read the transcript of a meeting about the plan to regulate paralegals, and it included an anecdote by a Judge who had a very professional-looking paralegal appear before him, with his name engraved on his briefcase followed by the letters "HSD". Same on his letterhead. So at the end of the proceeding, the Judge asked the paralegal "So what does HSD stand for?" The paralegal replied "Almost nobody ever asks me that." The Judge didn't accept the evasion, and the paralegal grinned and answered "High School Dropout".
Effective 2007, the Law Society Act was changed so that paralegals now need to be licensed.
There's a grandfathering provision allowing the licensing of paralegals who had already been acting as paralegals (mind you, the date for grandfather-type applications is long past), but the process isn't without it's casualties. Some lawyers who had been disbarred had resorted to practice as paralegals. They have found it ...difficult... to get a paralegal license. Other paralegals with certain types of disreputable pasts have also had their challenges.
Some paralegals haven't been licensed, and have continued practice nonetheless. The creates risks to the people they represent. Even aside from the unreliability and unregulated nature of the services provided, there will be issues if and when the Forum they're appearing before realizes that they aren't entitled to be there. The client's case could well be prejudiced, and at a minimum significantly delayed.
Note that there remain a few exemptions to the need for a license. You can always represent yourself, as an individual. A friend or relative "not in the business of providing legal services" who does it for no fee can assist with matters that a paralegal would be able to help you with. Members of the HRPA can perform their necessary functions, subject to restrictions. And there are others.
If you're going to a lawyer or paralegal, it's worth taking a minute to check the Law Society's Lawyer and Paralegal Directory to make sure that they're listed there.
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
Thus were paralegals in Ontario born.
Since then, until 2007, anyone could provide certain types of legal services in Ontario: Small Claims Court proceedings, Ontario Court of Justice proceedings under the Provincial Offences Act (i.e. traffic tickets, among others), summary conviction offences under the Criminal Code of Canada (generally speaking, less serious criminal matters), and matters before administrative tribunals - the Landlord Tenant Board (and its predecessors), the Human Rights Tribunal, the Ontario Labour Relations Board, and others.
Fairly wide scope of activities, actually. And because there was no licensing requirement at all, you could be rather hit-and-miss in terms of having good representatives. I once read the transcript of a meeting about the plan to regulate paralegals, and it included an anecdote by a Judge who had a very professional-looking paralegal appear before him, with his name engraved on his briefcase followed by the letters "HSD". Same on his letterhead. So at the end of the proceeding, the Judge asked the paralegal "So what does HSD stand for?" The paralegal replied "Almost nobody ever asks me that." The Judge didn't accept the evasion, and the paralegal grinned and answered "High School Dropout".
Effective 2007, the Law Society Act was changed so that paralegals now need to be licensed.
There's a grandfathering provision allowing the licensing of paralegals who had already been acting as paralegals (mind you, the date for grandfather-type applications is long past), but the process isn't without it's casualties. Some lawyers who had been disbarred had resorted to practice as paralegals. They have found it ...difficult... to get a paralegal license. Other paralegals with certain types of disreputable pasts have also had their challenges.
Some paralegals haven't been licensed, and have continued practice nonetheless. The creates risks to the people they represent. Even aside from the unreliability and unregulated nature of the services provided, there will be issues if and when the Forum they're appearing before realizes that they aren't entitled to be there. The client's case could well be prejudiced, and at a minimum significantly delayed.
Note that there remain a few exemptions to the need for a license. You can always represent yourself, as an individual. A friend or relative "not in the business of providing legal services" who does it for no fee can assist with matters that a paralegal would be able to help you with. Members of the HRPA can perform their necessary functions, subject to restrictions. And there are others.
If you're going to a lawyer or paralegal, it's worth taking a minute to check the Law Society's Lawyer and Paralegal Directory to make sure that they're listed there.
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
Saturday, April 24, 2010
How Not to Save on Probate
On death, if you have to get probate for a will, you will pay probate fees - basically, a tax - on the value of the Estate. Normally, you're looking at half a percent on the first $50,000 and 1.5% on everything thereafter. So on any estate of any reasonable size, you're looking at thousands of dollars.
There are ways of reducing or eliminating that tax, but are to be approached with caution.
First of all, not all wills need to be probated. Some institutions will allow you to deal with assets of up to a certain value without the need for probate. (For example, each bank will have it's own cap, but for accounts under a specified amount, they will deal with the estate trustee on the basis of the will and an indemnity.) If you don't have any assets in your estate that require probate, then you don't need to probate the will and don't need to pay any probate tax.
However, if you have even one asset in a will that requires probate, all the assets to be distributed under the will are subject to probate tax.
One way of dealing with this is to create multiple wills: One for assets that won't require probate and one for assets that might. You need a lawyer for this: If framed improperly, you might end up with the second will actually revoking the first. Thus, the cost of actually making the multiple wills means that you have to really ask whether or not your savings on probate will be worthwhile; it depends on the value of the non-probate assets in the estate.
Next thing to consider in estate planning: Insurance plans with designated beneficiaries never become part of the estate. These are really helpful for the beneficiaries: The amounts aren't subject to probate, but furthermore they aren't subject to the claims of creditors.
Another common approach is to use jointly-held assets. An asset held by two people in what's called "joint tenancy" passes by right of survivorship to the surviving joint tenant, and never forms part of the estate. (As distinct from "tenancy in common', in which your interest in the property passes to your estate.) This is something you will frequently see with real property (i.e. your house) and with bank accounts. Spouses will frequently take significant advantage of this, but when you start planning succession to children or other heirs this way, it gets tricky.
Firstly: You can put a bank account jointly into your name and the name of your child, but without a declaration (in your will or otherwise) that you intend the full benefit of the assets in the account to pass by right of survivorship to your child, then your child may be deemed to hold the assets "in trust" for your estate.
Secondly: If you have multiple beneficiaries, it's difficult to ensure an equal distribution of your estate this way.
Thirdly: Putting your house into joint tenancy with your children can be a risky venture, and might not save you money in the long run. There are a lot of potential risks. One of them is that your children will actually have an ownership interest in the house. You can't go back afterwards and say "Well, it's still my house"; you own only a partial interest in it, and your children also have ownership rights, so if the relationship breaks down, you could end up in trouble.
Even if the relationship doesn't break down with your kids, though, their ownership interest might end up subject to creditor claims, spousal interests, etc. If your son (who has an ownership interest in your house) and his wife stay at your house even briefly, then it's possible that the wife may be able to assert a matrimonial claim against the house. If your daughter gets sued successfully, then her creditors will be able to enforce the judgment as against your house.
Major risks, among others. But the benefits are good, right? You might be saving up to 1.5% of the value of the house in probate...so if the house is worth $300,000, that's $4500 you're saving. Perhaps, but there are other considerations. Firstly, there are the transaction fees of changing the title, but that's small in comparison. But there may be a larger tax burden you end up having to deal with.
Capital gains tax. There's an exemption for your principal residence. But if the house is half-owned by your child, and your child doesn't live there, then the child's half is not subject to the exemption. So you put your house into a joint tenancy between yourself and your child when you're 68 years old, and you live another 20 years. Over those 20 years, your house appreciates in value, and your child's portion of that increase will be subject to capital gains (income) tax. The appreciation could easily be a six-digit increase over that period of time. So the capital gains tax on your child's share on that could very easily exceed your probate savings.
There are other options, as well, such as inter vivos trusts. Ultimately, there are a lot of ways to plan your estate so as to improve its value and save money for your heirs. But not every idea is a good one for everyone, and your particular needs will depend on your particular circumstances. Talk to a qualified financial advisor and/or lawyer to make the most out of your estate.
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
There are ways of reducing or eliminating that tax, but are to be approached with caution.
First of all, not all wills need to be probated. Some institutions will allow you to deal with assets of up to a certain value without the need for probate. (For example, each bank will have it's own cap, but for accounts under a specified amount, they will deal with the estate trustee on the basis of the will and an indemnity.) If you don't have any assets in your estate that require probate, then you don't need to probate the will and don't need to pay any probate tax.
However, if you have even one asset in a will that requires probate, all the assets to be distributed under the will are subject to probate tax.
One way of dealing with this is to create multiple wills: One for assets that won't require probate and one for assets that might. You need a lawyer for this: If framed improperly, you might end up with the second will actually revoking the first. Thus, the cost of actually making the multiple wills means that you have to really ask whether or not your savings on probate will be worthwhile; it depends on the value of the non-probate assets in the estate.
Next thing to consider in estate planning: Insurance plans with designated beneficiaries never become part of the estate. These are really helpful for the beneficiaries: The amounts aren't subject to probate, but furthermore they aren't subject to the claims of creditors.
Another common approach is to use jointly-held assets. An asset held by two people in what's called "joint tenancy" passes by right of survivorship to the surviving joint tenant, and never forms part of the estate. (As distinct from "tenancy in common', in which your interest in the property passes to your estate.) This is something you will frequently see with real property (i.e. your house) and with bank accounts. Spouses will frequently take significant advantage of this, but when you start planning succession to children or other heirs this way, it gets tricky.
Firstly: You can put a bank account jointly into your name and the name of your child, but without a declaration (in your will or otherwise) that you intend the full benefit of the assets in the account to pass by right of survivorship to your child, then your child may be deemed to hold the assets "in trust" for your estate.
Secondly: If you have multiple beneficiaries, it's difficult to ensure an equal distribution of your estate this way.
Thirdly: Putting your house into joint tenancy with your children can be a risky venture, and might not save you money in the long run. There are a lot of potential risks. One of them is that your children will actually have an ownership interest in the house. You can't go back afterwards and say "Well, it's still my house"; you own only a partial interest in it, and your children also have ownership rights, so if the relationship breaks down, you could end up in trouble.
Even if the relationship doesn't break down with your kids, though, their ownership interest might end up subject to creditor claims, spousal interests, etc. If your son (who has an ownership interest in your house) and his wife stay at your house even briefly, then it's possible that the wife may be able to assert a matrimonial claim against the house. If your daughter gets sued successfully, then her creditors will be able to enforce the judgment as against your house.
Major risks, among others. But the benefits are good, right? You might be saving up to 1.5% of the value of the house in probate...so if the house is worth $300,000, that's $4500 you're saving. Perhaps, but there are other considerations. Firstly, there are the transaction fees of changing the title, but that's small in comparison. But there may be a larger tax burden you end up having to deal with.
Capital gains tax. There's an exemption for your principal residence. But if the house is half-owned by your child, and your child doesn't live there, then the child's half is not subject to the exemption. So you put your house into a joint tenancy between yourself and your child when you're 68 years old, and you live another 20 years. Over those 20 years, your house appreciates in value, and your child's portion of that increase will be subject to capital gains (income) tax. The appreciation could easily be a six-digit increase over that period of time. So the capital gains tax on your child's share on that could very easily exceed your probate savings.
There are other options, as well, such as inter vivos trusts. Ultimately, there are a lot of ways to plan your estate so as to improve its value and save money for your heirs. But not every idea is a good one for everyone, and your particular needs will depend on your particular circumstances. Talk to a qualified financial advisor and/or lawyer to make the most out of your estate.
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
Friday, April 23, 2010
Withhold and Remit: Just Do It
"Under the table" pay arrangements. Notoriously common among smaller employers. And almost always illegal.
(There are a few exceptions carved out, including for employment of a casual nature other than for the purpose of the employer's trade or business. Pretty narrow, when it comes right down to it, and many employers try to rationalize themselves into it...and then end up with the Courts telling them otherwise.)
I cannot emphasize this enough: The freedom to contract is not absolute. In general, you cannot contract out of statutory requirements. So even if the employee agrees to be paid under the table, that doesn't provide you with any real protection whatsoever.
An employer is obligated to make deductions from an employer's pay and remit them to the CRA. The employer must also make its own contributions to CPP and EI. Costs money, yes, but not as much as it will cost you when, at the end of the day, the CRA comes after you for failing to do so.
And when the CRA comes after you, that'll be a big bill all at once, rather than spreading it out over time as you're supposed to.
Moreover, when other legal issues occur in "under-the-table" employment arrangements, employers lose a lot of credibility. An employer that does things by the books, does things legally, maintains appropriate records, etc., can walk into any legal proceeding with clean hands. Small business owners take heed: You shouldn't want to present yourself as an individual doing what you need to do to scrape by, thinking that your operations are beneath the notice of things like the law; rather, you should present yourself as a professional, a businessperson, somebody who owns a real company and operates it properly within the requirements of Canadian law. When there's a credibility issue, and an employer's dirty laundry is popping up in every fact in the litigation, the employer likely will not be believed.
And when it comes to penalty, too, when a reputable employer makes a mistake in good faith and misses an obligation, an adjudicator will not be nearly so hard on that employer than he or she would be on an employer who has shown reckless disregard for legal obligations in every aspect of the business' operations.
It's generally a lot more cost-effective to meet your legal obligations in the first place, rather than having to hire someone like me afterward to help you clean up your mess.
As a good starting point to understanding your specific payroll obligations, go to the CRA website.
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
(There are a few exceptions carved out, including for employment of a casual nature other than for the purpose of the employer's trade or business. Pretty narrow, when it comes right down to it, and many employers try to rationalize themselves into it...and then end up with the Courts telling them otherwise.)
I cannot emphasize this enough: The freedom to contract is not absolute. In general, you cannot contract out of statutory requirements. So even if the employee agrees to be paid under the table, that doesn't provide you with any real protection whatsoever.
An employer is obligated to make deductions from an employer's pay and remit them to the CRA. The employer must also make its own contributions to CPP and EI. Costs money, yes, but not as much as it will cost you when, at the end of the day, the CRA comes after you for failing to do so.
And when the CRA comes after you, that'll be a big bill all at once, rather than spreading it out over time as you're supposed to.
Moreover, when other legal issues occur in "under-the-table" employment arrangements, employers lose a lot of credibility. An employer that does things by the books, does things legally, maintains appropriate records, etc., can walk into any legal proceeding with clean hands. Small business owners take heed: You shouldn't want to present yourself as an individual doing what you need to do to scrape by, thinking that your operations are beneath the notice of things like the law; rather, you should present yourself as a professional, a businessperson, somebody who owns a real company and operates it properly within the requirements of Canadian law. When there's a credibility issue, and an employer's dirty laundry is popping up in every fact in the litigation, the employer likely will not be believed.
And when it comes to penalty, too, when a reputable employer makes a mistake in good faith and misses an obligation, an adjudicator will not be nearly so hard on that employer than he or she would be on an employer who has shown reckless disregard for legal obligations in every aspect of the business' operations.
It's generally a lot more cost-effective to meet your legal obligations in the first place, rather than having to hire someone like me afterward to help you clean up your mess.
As a good starting point to understanding your specific payroll obligations, go to the CRA website.
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
Thursday, April 22, 2010
Sex and Violence in the Workplace
Did the subject line get your attention? Yep, employment law is getting a whole lot more interesting. (I was at a conference last year where a speaker introduced the topic as "Violent sex in the workplace". Way to sensationalize.)
The following is going to be very important for employers to know, because there's a whole new list of obligations for them to fulfill. But as important as it is for an employer to know its obligations, it's equally important for employees to know their rights.
Effective June 15, 2010, Ontario's Occupational Health and Safety Act is being amended to include protection against harassment and violence in the workplace. So what's this about? Are employers now prohibited from using violence to get their employees in line?
It goes a step further than that, really. An employer is obligated, and has always been obligated, to provide a safe and healthy working environment for its employees. The amendment to the Act incorporates harassment and violence more explicitly, though, and creates new obligations for employers in ensuring such safety.
First, let's go through an overview of the law as it exists now, and up to June 15, 2010:
You have the Human Rights Code, which obliges employers to provide a working environment which is free from harassment or discrimination on the basis of Code grounds (race, gender, disability, and others). This doesn't expressly require employers to have discrimination/harassment policies under most circumstances, but it becomes practically necessary for larger employers to have such policies. Still, there's no prohibition against discrimination or harassment simpliciter; only a prohibition against discrimination and harassment on the grounds identified in the Code. So if, for example, someone harasses you because you shop at Metro instead of Sobeys, then that isn't generally going to cause any problems for which you would have recourse under the Human Rights Code.
You have the Occupational Health and Safety Act, which obliges employers to provide a safe and healthy working environment. This has, on rare occasion, been extended to cover matters relating to emotional health. For example, the TTC had a pretty harsh arbitral decision go against them in 2004, when a supervisor engaged in a campaign of harassment against an employee because of what ultimately boiled down to a personality conflict. The TTC didn't have any policies expressly prohibiting non-Code-related harassment, and the collective agreement with the union didn't require it. However, the arbitrator reached out to the OHSA in order to find a remedy for the employee, because the consequences to the employee's emotional health were so severe.
That sort of circumstance, however, was rare. And it looked really out-of-place in case summaries under the OHSA: You go down the page and see that a person was killed, a person lost a limb, a person lost several limbs, a person was rendered a quadriplegic, a person was severely and permanently mutilated...and then there's the TTC case which involved a worker who became depressed. Not to minimize the debilitating nature of depression in many cases, but the problem is that it is clear that the existing OHSA is simply not constructed to deal with that sort of case.
Likewise, it isn't unheard of for an employer to be held accountable under the OHSA for workplace violence. Take CAMH, for example, an organization directed to helping people with mental health issues. Invariably, CAMH will end up with some patients with violent tendencies. In 2007, a patient assaulted several nurses, and due to a problem with the security layout of the building, victims ended up being secured in the same room as the assailant, while security staff couldn't get in. CAMH was fined $70,000 under the OHSA.
There's another recent example of workplace violence which got some notoriety: At a hospital in Windsor, a doctor and a nurse had been involved in a romantic relationship. After she broke it off, the doctor stabbed her to death in the hospital, and later committed suicide. Tragic circumstances, and we can't help but think that it should have been preventable.
But if the OHSA already requires employers to protect employees from violence and harassment, what do the new amendments do?
Well, effective June 15, 2010, employers will be obligated to take positive preventative action to deal preemptively with violence and harassment. This means that employers are obligated to conduct an assessment of risks of workplace violence, and put in place policies and programs to prevent and address violence and harassment.
Yes, that's right, the new law actually requires employers to have policies. Before, it was just a really good idea. As of June 15, 2010, an employer who falls within the scope of the OHSA (which is almost any employer within Provincial jurisdiction) who doesn't have policies addressing violence and harassment is actually breaking the law.
For some employers, that will be reasonably easy. With an HR infrastructure, existing harassment/discrimination policies, etc., all you really need to do is make fairly minor amendments to your existing policies, conduct the violence assessment, and implement any changes necessary to reduce risks identified in the assessment.
But for smaller employers who don't have HR professionals on staff, and who have never created an employment policy, that's more difficult. Quite an onerous obligation, actually. My recommendation to employers is that they retain the services of a qualified Human Resources consultant or lawyer to guide them in drafting and implementing their policies.
Make sure it's done, because otherwise you could be in trouble. But what's more, make sure it's done right. Historically, whenever there was a workplace accident, the employer took the blame and had to pay out (and these fines are seldom smaller than $50,000, and can be substantially higher). Basically, the Ministry looks at all the contingencies that the employer should, in retrospect, have evaluated beforehand, and finds that they're liable because of the failure to do so. My expectation is that, moving forward, whenever any employee is injured in a violent incident, employers will be under a similar microscope. The question will be: Did you fail to identify a risk in the workplace and take proper steps to protect your employees?
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
The following is going to be very important for employers to know, because there's a whole new list of obligations for them to fulfill. But as important as it is for an employer to know its obligations, it's equally important for employees to know their rights.
Effective June 15, 2010, Ontario's Occupational Health and Safety Act is being amended to include protection against harassment and violence in the workplace. So what's this about? Are employers now prohibited from using violence to get their employees in line?
It goes a step further than that, really. An employer is obligated, and has always been obligated, to provide a safe and healthy working environment for its employees. The amendment to the Act incorporates harassment and violence more explicitly, though, and creates new obligations for employers in ensuring such safety.
First, let's go through an overview of the law as it exists now, and up to June 15, 2010:
You have the Human Rights Code, which obliges employers to provide a working environment which is free from harassment or discrimination on the basis of Code grounds (race, gender, disability, and others). This doesn't expressly require employers to have discrimination/harassment policies under most circumstances, but it becomes practically necessary for larger employers to have such policies. Still, there's no prohibition against discrimination or harassment simpliciter; only a prohibition against discrimination and harassment on the grounds identified in the Code. So if, for example, someone harasses you because you shop at Metro instead of Sobeys, then that isn't generally going to cause any problems for which you would have recourse under the Human Rights Code.
You have the Occupational Health and Safety Act, which obliges employers to provide a safe and healthy working environment. This has, on rare occasion, been extended to cover matters relating to emotional health. For example, the TTC had a pretty harsh arbitral decision go against them in 2004, when a supervisor engaged in a campaign of harassment against an employee because of what ultimately boiled down to a personality conflict. The TTC didn't have any policies expressly prohibiting non-Code-related harassment, and the collective agreement with the union didn't require it. However, the arbitrator reached out to the OHSA in order to find a remedy for the employee, because the consequences to the employee's emotional health were so severe.
That sort of circumstance, however, was rare. And it looked really out-of-place in case summaries under the OHSA: You go down the page and see that a person was killed, a person lost a limb, a person lost several limbs, a person was rendered a quadriplegic, a person was severely and permanently mutilated...and then there's the TTC case which involved a worker who became depressed. Not to minimize the debilitating nature of depression in many cases, but the problem is that it is clear that the existing OHSA is simply not constructed to deal with that sort of case.
Likewise, it isn't unheard of for an employer to be held accountable under the OHSA for workplace violence. Take CAMH, for example, an organization directed to helping people with mental health issues. Invariably, CAMH will end up with some patients with violent tendencies. In 2007, a patient assaulted several nurses, and due to a problem with the security layout of the building, victims ended up being secured in the same room as the assailant, while security staff couldn't get in. CAMH was fined $70,000 under the OHSA.
There's another recent example of workplace violence which got some notoriety: At a hospital in Windsor, a doctor and a nurse had been involved in a romantic relationship. After she broke it off, the doctor stabbed her to death in the hospital, and later committed suicide. Tragic circumstances, and we can't help but think that it should have been preventable.
But if the OHSA already requires employers to protect employees from violence and harassment, what do the new amendments do?
Well, effective June 15, 2010, employers will be obligated to take positive preventative action to deal preemptively with violence and harassment. This means that employers are obligated to conduct an assessment of risks of workplace violence, and put in place policies and programs to prevent and address violence and harassment.
Yes, that's right, the new law actually requires employers to have policies. Before, it was just a really good idea. As of June 15, 2010, an employer who falls within the scope of the OHSA (which is almost any employer within Provincial jurisdiction) who doesn't have policies addressing violence and harassment is actually breaking the law.
For some employers, that will be reasonably easy. With an HR infrastructure, existing harassment/discrimination policies, etc., all you really need to do is make fairly minor amendments to your existing policies, conduct the violence assessment, and implement any changes necessary to reduce risks identified in the assessment.
But for smaller employers who don't have HR professionals on staff, and who have never created an employment policy, that's more difficult. Quite an onerous obligation, actually. My recommendation to employers is that they retain the services of a qualified Human Resources consultant or lawyer to guide them in drafting and implementing their policies.
Make sure it's done, because otherwise you could be in trouble. But what's more, make sure it's done right. Historically, whenever there was a workplace accident, the employer took the blame and had to pay out (and these fines are seldom smaller than $50,000, and can be substantially higher). Basically, the Ministry looks at all the contingencies that the employer should, in retrospect, have evaluated beforehand, and finds that they're liable because of the failure to do so. My expectation is that, moving forward, whenever any employee is injured in a violent incident, employers will be under a similar microscope. The question will be: Did you fail to identify a risk in the workplace and take proper steps to protect your employees?
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
Wednesday, April 21, 2010
A word on driveways
Yesterday's Toronto Star posted a story about a shared driveway. Put briefly, this driveway has been used by both neighbours for...well, at least 33 years...but the new owner of one house did a survey and discovered that the driveway was entirely his property. So he has blocked his neighbour's use of it.
Not a good thing to do. For a few reasons.
The first is simply practical. Litigation is not a good way of getting to know the neighbourhood. Granted, there are times when one's legal rights are more important than 'playing nice' - hence why I have a job - but even if you have a legal entitlement, you need to carefully weigh the consequences of exercising it when you know it will create an adversarial situation with the neighbours.
Secondly, apparently the Toronto Star now covers arguments between neighbours.
But thirdly, and most substantively, is that the aforementioned legal entitlement doesn't necessarily exist.
If you read the comments on the story, you will see a great many remarks about "squatter's rights", "adverse possession", "prescriptive rights", and "Land Titles". Some of the remarks are correct; some not.
In rural Ontario, it is not the least bit uncommon to discover that your driveway is not, in fact, on your land. It's not something your lawyer will necessarily pick up on during the purchase of the property, either, unless a survey is done. The time and expense of surveys, and the improbability of them picking up serious title defects, means that they are seldom done for the purpose of a residential real estate sale.
So here you are, you've been living in your house with your nice yard and 100-meter driveway for a few years, then your neighbour gets a survey done and discovers that, in fact, your driveway is on his land. What happens next? It's his land, right? Which means he gets to say that you can't use it anymore; ain't that so?
Well, maybe not. In property law, there's this thing called an "easement". Put simply, it's a right that somebody else has over a piece of property, usually tied to a neighbouring property. A right-of-way is a common easement. I sever my back yard from the rest of my property and sell it to you, but there's no road access to my back yard, so I also sell you an easement allowing you to travel over my other parcel of property in order to access your property. If I sell the other parcel to someone else, you still own the easement. If you convey your property to a third party, you would usually convey the easement with it. Other easements include the rights of a utility company to run equipment on, over, or under your property.
So an easement is a property interest. The cleanest property interest is always a registered property interest. So if you check the title and it turns out that your neighbour's property is "subject to" an easement allowing use of the driveway, and your title is "together with" that same easement, then you're all set. You have a clean, registered interest to use the driveway, and there isn't much left to fight over.
However, not all interests are registered. Even with the land titles system, we still have "prescriptive interests". This includes adverse possession (known colloquially as "squatter's rights") and a thing called a "prescriptive easement" or "prescriptive right-of-way". (Not exactly synonyms, mind you, but close enough for this purpose.) What that means is that, when a person has openly used a piece of land for a particular period for a long enough period of time, they become entitled to continue that use. So if you can sufficiently trace back the use of the driveway to the owner of your property for long enough (usually 20 or 40 years, depending on circumstances), then you can claim a prescriptive easement, and therefore a legal right to use the driveway.
(The effect of land titles is that prescriptive interests can no longer be formed, but such interests that existed prior to conversion, even if they weren't registered or otherwise acknowledged at the time, will generally survive.)
The unregistered easements can result in very nasty neighbour disputes, and very contentious litigation. The person who thinks he has an unregistered interest wants to continue (and usually does continue) with business as usual; the legal owner (usually a new legal owner) insists that he owns full title to the land, and uses physical measures to block access. The police can end up getting called, and sometimes the dispute can become very unpleasant.
The lesson? Well, firstly, if you're buying a property and you see evidence that somebody else has been making use of it, crossing it, etc., beware.
Secondly, just because you technically own a property won't necessarily give you the right to exercise full control over it. Consult a lawyer before blocking somebody else's historical use of the land.
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
Not a good thing to do. For a few reasons.
The first is simply practical. Litigation is not a good way of getting to know the neighbourhood. Granted, there are times when one's legal rights are more important than 'playing nice' - hence why I have a job - but even if you have a legal entitlement, you need to carefully weigh the consequences of exercising it when you know it will create an adversarial situation with the neighbours.
Secondly, apparently the Toronto Star now covers arguments between neighbours.
But thirdly, and most substantively, is that the aforementioned legal entitlement doesn't necessarily exist.
If you read the comments on the story, you will see a great many remarks about "squatter's rights", "adverse possession", "prescriptive rights", and "Land Titles". Some of the remarks are correct; some not.
In rural Ontario, it is not the least bit uncommon to discover that your driveway is not, in fact, on your land. It's not something your lawyer will necessarily pick up on during the purchase of the property, either, unless a survey is done. The time and expense of surveys, and the improbability of them picking up serious title defects, means that they are seldom done for the purpose of a residential real estate sale.
So here you are, you've been living in your house with your nice yard and 100-meter driveway for a few years, then your neighbour gets a survey done and discovers that, in fact, your driveway is on his land. What happens next? It's his land, right? Which means he gets to say that you can't use it anymore; ain't that so?
Well, maybe not. In property law, there's this thing called an "easement". Put simply, it's a right that somebody else has over a piece of property, usually tied to a neighbouring property. A right-of-way is a common easement. I sever my back yard from the rest of my property and sell it to you, but there's no road access to my back yard, so I also sell you an easement allowing you to travel over my other parcel of property in order to access your property. If I sell the other parcel to someone else, you still own the easement. If you convey your property to a third party, you would usually convey the easement with it. Other easements include the rights of a utility company to run equipment on, over, or under your property.
So an easement is a property interest. The cleanest property interest is always a registered property interest. So if you check the title and it turns out that your neighbour's property is "subject to" an easement allowing use of the driveway, and your title is "together with" that same easement, then you're all set. You have a clean, registered interest to use the driveway, and there isn't much left to fight over.
However, not all interests are registered. Even with the land titles system, we still have "prescriptive interests". This includes adverse possession (known colloquially as "squatter's rights") and a thing called a "prescriptive easement" or "prescriptive right-of-way". (Not exactly synonyms, mind you, but close enough for this purpose.) What that means is that, when a person has openly used a piece of land for a particular period for a long enough period of time, they become entitled to continue that use. So if you can sufficiently trace back the use of the driveway to the owner of your property for long enough (usually 20 or 40 years, depending on circumstances), then you can claim a prescriptive easement, and therefore a legal right to use the driveway.
(The effect of land titles is that prescriptive interests can no longer be formed, but such interests that existed prior to conversion, even if they weren't registered or otherwise acknowledged at the time, will generally survive.)
The unregistered easements can result in very nasty neighbour disputes, and very contentious litigation. The person who thinks he has an unregistered interest wants to continue (and usually does continue) with business as usual; the legal owner (usually a new legal owner) insists that he owns full title to the land, and uses physical measures to block access. The police can end up getting called, and sometimes the dispute can become very unpleasant.
The lesson? Well, firstly, if you're buying a property and you see evidence that somebody else has been making use of it, crossing it, etc., beware.
Secondly, just because you technically own a property won't necessarily give you the right to exercise full control over it. Consult a lawyer before blocking somebody else's historical use of the land.
*****
This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.
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