Leaning on Liens for Payment Construction and renovation work can sometimes involve multi-layered contractual relationships between the various players in a construction project, where there are numerous complex areas of consideration. An owner or developer may hire a general contractor, who will then contract with subcontractors for various jobs such as carpentry, plumbing, and electrical work. In the same way, subcontractors may hire sub-subcontractors, those sub-subcontractors may hire sub-sub-sub contractors, and so on. This is often referred to as the “construction pyramid”. The pyramid dictates not only who works for whom, but also who pays whom: the owner pays the general contractor, who then pays its subcontractors, and who in turn pays the sub-subcontractors, all the way down to the bottom. One of the purposes of the construction lien is to ensure that the general contractor and any subcontractors down the pyramid are remunerated for the services and materials that they have supplied towards improvement, as stated in a recent discussion regarding proposed changes to the Construction Lien Act. Thus, a lien secures the payment that is due to the general contractor and subcontractors. A lien is one means of enforcement provided under the Construction Lien Act that allows a contractor the ability to potentially take steps to sell the property and gives the contractor and subcontractors priority over certain creditors who may have claims against the owner of the property. As soon as a contractor begins providing services or materials to improvement, it has a lien for the value of services or materials actually supplied to the improvement. However, that lien will expire unless certain steps are taken: (1) the lien must be “preserved”; and (2) the must then lien is “perfected”. To preserve a lien, a contractor must register it on the title to the property where the work was done. To perfect the lien requires the contractor to commence an action and register a certificate of action on the title to the property. There are strict deadlines for the preservation and perfection of liens, typically triggered by either the date of last supply or the publication of a certificate of substantial performance, although the complete framework for the timing of preservation and perfection of liens is somewhat complicated and depends on when the work was actually performed. Once a lien has been perfected, the action by which it was perfected must be set down for trial within two years of having been commenced otherwise the lien will expire (although the legal action itself may continue). For more information or any other questions regarding construction liens, please contact our construction lawyers. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Real EstateJanuary 20, 2017June 16, 2020
Making Canadian Courts Great Again Trump’s upcoming inauguration for our neighbour down south is looming as many of us are still coming to terms with the election results. To say that the election was a controversial and polarizing one is a gross understatement. Canada tuned in, as social media, newspapers, radio stations and everything in between exploded with every tweet, every colourful comment made at the debates, and pieces dug up from the candidates’ past. Everyone woke up on November 9, 2016, to the news of Trump’s stunning victory. However, for some Canadians that morning, Trump hit much closer to home. On the morning of November 9, 2016, Judge Bernd Zabel walked into the courtroom wearing a “Make America Great Again” cap before placing it on the bench in front of him. In the same courtroom on that day, he voiced his support for Donald Trump. This sparked outrage as the future president-elect has appeared to condone sexual assault on women and threaten various ethnic and sexual minorities, among others. However, more disturbing and problematic is the fact that judges, otherwise seen as the beacons of justice in Canada, are required to be impartial and neutral. One of the underlying values of the Canadian justice system, judicial independence, requires judges to make decisions pursuant to the rule of law absent any political interference. The Canadian Judicial Council provides that “Judges should strive to conduct themselves in a way that will sustain and contribute to public respect and confidence in their integrity, impartiality and good judgment.” The legal community reacted instantly with many calling for Justice Zabel to be disciplined. Justice Zabel quickly apologized the next week – “I wish to apologize for my misguided attempt to mark a moment in history by humour in the courtroom following the surprising result in the United States election”. However, just as an apology cannot absolve someone of wrongdoing or undo a contract, it cannot take back words that were said. The action was taken quickly, as Justice Zabel has now been suspended, and can no longer hear cases in court as of December 21, 2016. While Justice Zabel’s future remains uncertain, we know that Canadian courts strive to be better than great. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Human Rights LawJanuary 18, 2017June 16, 2020
Oh Canada, Our Home and “Snow-washed” Tax Haven?? The release of a joint CBC / Toronto Star investigation has made headlines across the world and calls Canada’s tax system into question. Most Canadians would argue that Canada’s tax rates are among the highest in the world and that the Canadian tax system is designed to ensure that income earned in Canada is subject to Canadian income tax, whether that income is earned by an individual, a corporation, a partnership, joint venture, or any other form of organization. In the normal course, a Canadian entity earning income in Canada from a business or property is required to report, calculate, and remit income taxes on such income to the Canada Revenue Agency. The CBC and the Toronto Star used the term “snow washing” to refer to the use of Canadian corporations and limited partnerships as part of complex offshore money laundering and tax evasion schemes, due to the perception of the legitimacy of such Canadian entities and Canada’s reputation as a “whitelisted, respectable jurisdiction”. The Toronto Star / CBC investigation identifies the practice, advocated by some other offshore jurisdictions, of non-residents incorporating companies or setting up other entities (such as Canadian limited partnerships) and installing Canadian “nominee directors”. The Toronto Star article reports as follows: “Canada is a new player in the world of offshore companies,” claims the website of a Swiss firm. “Canada is the most preferable destination for compliant tax planning since it has no negative offshore reputation and no association with tax avoidance or evasion. It is by far one of the best neutral jurisdictions, providing offshore benefits without any of the traditional offshore drawbacks.” In another article in the series, the Toronto Star states the following: Nominee directors are not illegal in Canada, but the secrecy they provide facilitates abuse. The tax haven industry relies on nominee directors to put a legitimate face on companies, masking their real owners and allowing them to evade tax, launder ill-gotten money or bribe corrupt officials. Corporate statutes, both provincial and federal, impose duties and liabilities on directors of Canadian corporations. Directors are regarded as fiduciaries of their corporation, and as such, are required to exercise a duty of care, to act honestly and in good faith, and to ensure that they protect the corporation’s interests. Other statutes (such as the Income Tax Act), impose other responsibilities on corporate directors. The key premise of the Toronto Star / CBC joint investigation is that the opacity of our corporate registry system, whereby it is almost impossible to identify the real owners of companies, creates an environment of secrecy that encourages money laundering and tax evasion. The Toronto Star articles make the assertion that “[t]he use of nominee directors is a key channel of tax evasion”, and that “[s]ecrecy is at the heart of financial crime”. The conclusions reached in the series of Toronto Star and CBC investigative articles, are that, to curb abuse of the system, Canada needs to adopt a more transparent corporate registry system, such as one recently adopted in the U.K., which provides that individuals holding more than 25% of the shares or voting rights in a company are listed on a public database. In addition, the articles conclude that some structures, such as Canadian limited partnerships, help avoid tax because non-resident owners are not required to file a Canadian tax return. This is not entirely correct. Limited partnerships are required to file annual information returns setting out details of their income and the names of the partners who are entitled to such income. Tax evasion, avoidance and abuse of our financial, corporate, and legal system are deplorable and certainly have negative repercussions for all Canadian taxpayers. It is commendable that the CBC and the Toronto Star have undertaken this investigation, exposing the deficiencies in the system and the opportunities for exploitation that such deficiencies create. We can hope that as a consequence of these articles, the Federal and Provincial governments will act to close loopholes in reporting and accountability and minimize opportunities for abuse. That being said, it is a maxim of Canadian tax law that taxpayers are entitled to arrange their affairs to minimize tax. There are many valid and legal strategies that can be implemented by Canadian taxpayers through effective tax planning. If you have a tax question or concern, please contact one of our tax lawyers, for a consultation. If you have any other legal issues, please contact one of our lawyers at Devry Smith Frank LLP. By Fauzan SiddiquiBlog, TaxJanuary 16, 2017June 16, 2020
Denied Access To Your Child? Here’s What You Need To Know Breaking up, as they say, is hard to do. Where there are children in the equation, the question of a parent’s access to the child(ren) can add substantially to the hardship. All too often, the animosity associated with separation leads one parent to frustrate the other’s access to the child(ren). In the following, we discuss what a parent who is denied access to their child(ren) can do, and provide some context to help make sense of this situation. In a perfect world, parents would put aside their differences and cooperate to ensure both parties play an active role in their children’s lives. One way of doing this involves the parents executing a contract as to custody and access – namely, a “parenting agreement” or “separation agreement.” Such agreements are valid and enforceable when in writing, signed, witnessed and where both parties have received independent legal advice. One helpful resource that can work with families toward reaching an agreement, is a parenting mediator. A mediator acts as a neutral third party who works to facilitate productive communication between parties, with a view to settling issues including access. Mediated resolutions must be voluntarily accepted by both sides. While both come at a price, failing to agree and escalating the conflict can often prove much more costly. If parents cannot come to an agreement without assistance, or if the agreement is not being observed, they often turn to the courts and to legal professionals. This is where the experienced family law practitioners at Devry Smith Frank LLP enter the fray. To be clear, there are circumstances where a parent is justified in denying the other parent access. This will be the case where a parent presents a protection risk to the child(ren) – for example, where an access parent is abusive, does not maintain a safe accommodation for the child(ren), or is intoxicated. However, where access is denied without justification, a parent can seek remedies from the court. In applying any remedy, the courts’ paramount consideration is the “best interests of the child.” The courts will not enforce or approve a parenting agreement, in terms of access or otherwise, unless it accords with that principle. While the “best interests of the child” are not precisely defined, courts must consider specific factors – these include facilitating the child’s access to the other parent.[1] Generally, the courts frown upon parents who obstruct the other parent’s access to their children. They have even taken away custody from such parents. Where a parent is not able to exercise access with their child, and where another parent is preventing the access from taking place, a parent can bring a motion seeking that the court Order the access. In Ontario, the courts have awarded a parent who was denied access the costs incurred in attempting to exercise access. The courts may also award compensatory access, so that the access time denied to a parent will be made up. Alongside a court Order dictating that they will have access, the court will award the party who succeeds at the motion their costs – that is, the losing party will have to pay for a portion or all of the other side’s legal costs. In more severe cases, a parent may disregard even a court order. When a court order for access is not obeyed – “deliberately or willfully or knowingly” – the offending party can be found in contempt under the Family Law Rules (O. Reg. 114/99). A contempt order is sought by motion, and can result in fines, other penalties, or even imprisonment. Again, because the best interests of the child are the primary consideration, the courts are reluctant to criminally charge or even fine a parent. This is an exceptional remedy, meant to convey clearly the importance of obeying court orders. In exceptionally rare circumstances, a parent denied access may also seek an apprehension order. The parent, or the police, are thereby empowered by the court to apprehend the child. It must be emphasized that, given the immense psychological harm a child could be exposed to, a court is extremely unlikely to consider this to be in the best interests of the child(ren). Indeed, such orders are all but unheard of. Instead, a court asked to make this order may give the parent denying access another chance to comply, perhaps under threat of consequences for remaining in contempt of an order. Ultimately, Courts must balance the desire to ensure parents’ access and respect for court orders, with the desire to avoid exacerbating tension and financial trouble within families. Overlaying all other considerations, are the best interests of the child. They therefore tend to gradually raise the stakes, escalating from warnings and compensatory cost awards to the more severe contempt orders where all else fails. When faced with a denial of access, it is important to remain composed and resist taking matters into one’s own hands. Emergency motions are available in certain circumstances. If there is a genuine risk of harm, the police are also available in the immediate term. Longer term solutions, however, will require engaging with the courts. Navigating court processes without assistance can be complex and stressful. If you are facing a denial of access, or any other family law issue, please feel free to contact Devry Smith Frank LLP. ______________________________________________________________________________________________________________________________ [1] Among other factors, the courts consider the ability of those seeking access to the child to act as a parent. An integral part of acting as a parent is the ability to facilitate access to those for whom the child has “love, affection and emotional ties”. In the vast majority of cases, this includes both parents. By Fauzan SiddiquiBlog, Family LawDecember 12, 2016November 14, 2020
Caught My Spouse Recording/Spying On Me! Toronto area family law attorney John P. Schuman was recently asked the following question: “I came home to notice my wife was recording/spying on me with her laptop though she wasn’t around. I was able to notice because the webcam light was on. Is this a crime?” Yes. Intercepting any form of conversation, to which you are not a party is a breach of section 184 of the Criminal Code of Canada and possibly other sections, depending on what your ex records. And, recording conversations usually will not help you in family court. While it may not be one of the top 10 biggest family court mistakes, breaking the law will not make a judge like your ex. In addition, except in extreme circumstances where the evidence is necessary to protect a child from harm, illegally obtained evidence is not admissible. Judges only pay attention to admissible evidence, so even if your ex does record something that she thinks helps her case, chances are the judge will not even look at (or listen to) it. Judges also really hate it when one parent tries to interfere with the other parent’s time with the children, or even worse, tries to prevent the children from having a relationship with the other parent. If your ex was trying to record your time with the kids, that will come off really badly – the only worse thing your ex could do would be to “interview” the kids about the child custody issues and record that conversation. No good comes from putting your kids in the middle in Family Court. Chances are, unless your are a lawyer, you will not know the Rules of Evidence, or the specifics of the Criminal Code. That is why it is good to get legal advice for your specific situation. If you are in a similar situation, please contact our family lawyers. If you would like to contact John Schuman directly or to find out more about his practice, click here. By Fauzan SiddiquiBlog, Family LawOctober 24, 2016November 14, 2020
Small Claims Court awards double the standard in costs for unreasonable behaviour As a plaintiff, losing your court case is bad. Having to pay thousands of dollars for the defendant’s legal fees is much worse. Part of the strategy in any litigation proceeding is weighing what your case is worth versus how much you might spend to prove that case. From a financial perspective, there is not much point proceeding to trial over a $1,000 loss if it will cost you $5,000 in legal fees by the end of trial. Many people believe that the loser in any court case automatically has to pay for the winner’s legal fees. This is partially true, but also misleading. In a typical court case, it is exceptionally rare to get 80-90% of your legal fees paid for, let alone 100%. The amount of the winner’s legal fees that must be paid for by the losing party is called a “costs award”. Considering how much you will incur in legal fees plus the cost of the other side’s legal fees is something about which any prudent lawyer would advise his client. In Small Claims Court, costs awards work differently. The Courts of Justice Act places a cap of 15% of the amount claimed (up to $25,000 which is the limit of the Small Claims Court), plus disbursements, such as travel expenses. In rare circumstances, the judge can award additional costs to penalize a party for unreasonable behaviour. For a more detailed breakdown on how Small Claims Court works, there is helpful information available from the Ministry of the Attorney General. Barton v Bowerman is one those rare circumstances where the judge awarded more than the 15% limit. The plaintiff was hired by the defendant to be an administrative assistant at their accounting firm, subject to a six month probation period. Within weeks of starting her new position, the plaintiff was fired. She sued the defendant for $25,000 claiming she was owed pay for the full six months of her probation. The court noted that the issue was not whether the plaintiff was wrongfully dismissed, but whether she was entitled to more pay in lieu of notice than the two weeks’ pay the defendant gave her. Given her six month probation period, she was not. In the costs decision, the judge awarded the defendant-employer $7,500.00 in costs plus $500.00 in disbursements. This is double the traditional 15% limit. In his written reasons, Deputy Judge Lyon Gilbert wrote the plaintiff wasted a full day of the court’s time exploring evidence regarding just cause for her dismissal even though the defendant stated she was fired without cause. The plaintiff also amended her claim to include claims under the Human Rights Code, but never gave any evidence to support these claims. The defendants also made an offer to settle one year before the trial which would have given the plaintiff a better result than was obtained at the trial. The plaintiff did not accept this offer. The plaintiff was also a sophisticated litigant: she had practiced as a paralegal and was represented by a retired litigation lawyer. All of these factors point to the conclusion that there was no reason for the plaintiff to have dragged out her issue as much as she did. You can read about the full costs award here. This decision highlights the importance of presenting a clear case for the court to consider. While you may want to advance every possible cause of action in your claim, without the proper evidence to back up your claim, this could create a very costly detriment. While there are several self-represented litigants who are able to successfully argue their claim in court, a lawyer may be able to argue a small claims file in less time and for less money than one might expect. If you would like to discuss your small claims file, a member of the Devry Smith Frank LLP team would be pleased to assist you. By Fauzan SiddiquiBlog, Employment LawOctober 3, 2016December 3, 2020
Off-Duty Conduct: Can you be Terminated over Tweets? Toronto Arbitrator Elaine Newman says you can. On November 12, 2014, the Ontario Labour Relations Board upheld the City of Toronto’s dismissal of Matt Bowman, a firefighter with 2.5 years of service, for inappropriate use off-duty use of his Twitter account. Bowman’s Twitter account included a picture of himself posing in a Toronto Fire Services (“TFS”) uniform. Three of his tweets, published in an article by the National Post, read: “Reject a woman and she will never let it go. One of the many defects of their kind. Also weak arms.” “I’d never let a woman kick my ass. If she tried something I’d be like hey! you get your bitch ass back in the kitchen and make me some pie!” “The way to a woman’s heart is through anal.” When the employer became aware of the offensive tweets, they suspended Bowman with pay pending an investigation. Bowman produced a letter of apology for his first interview with his employer and later completed a course in sensitivity training. During the course of the employer’s investigation, further offensive tweets were discovered. The tweets were found to be overtly racist or demeaning to women, ethnic minorities, homeless persons and persons with disabilities. The employer alleged that Bowman’s tweets violated the employer’s human rights and social media policies and guidelines and harmed the reputation of TFS. TFS had recently launched a program through which is intended to increase the recruitment of female firefighters and those that represent the diversity of Toronto’s population. In her analysis, Arbitrator Newman recited the test established in Re Millhaven Fibres Ltd. v. Atomic Workers Int’l Union, that provides that in order to uphold a dismissal on the basis of just cause arising out of off-duty conduct, there is an onus on the employer to prove that: the conduct of the employee harms the employer’s reputation or product; the employee’s behaviour renders the employee unable to perform his duties satisfactorily; the employee’s behaviour leads to refusal, reluctance or inability of the other employees to work with him; the employee has been guilty of a serious breach of the Criminal Code and thus rendering his conduct injurious to the general reputation of the employer and its employees; places difficulty in the way of the employer properly carrying out its function of efficiently managing its works and efficiently directing its working forces. Arbitrator Newman confirmed that the test requires an employer to prove any one of the above-noted criteria. Newman noted that, over the past 4 decades since the Millhaven test was devised, cultural awareness and sensitivity in Canada has grown, along with the diversification of its communities and workplaces. As such, she expanded the fourth branch of the Millhaven test above to include a serious breach of human rights policies or the Human Rights Code. The question to be asked is this: Would a reasonable and fair-minded member of the public, if apprised of all the facts, consider that Bowman’s continued employment would so damage the reputation of the employer so as to render that employment untenable? Arbitrator Newman considered Bowman’s apology and candour at length. She found that he was not forthcoming, disclosed information selectively and was not fulsome in many of his responses. She also found that he was not candid or cooperative during the employer’s investigation. Arbitrator Newman also considered the severity of Bowman’s conduct: she found that Bowman’s comments violated a number of fundamental workplace policies, that he promoted forms of discrimination intentionally among his followers and recklessly made this promotion available to the general public. She noted that his conduct was not an isolated incident, but that it was a course of conduct and took place over a period of about two years. Arbitrator Newman found that actual damage to the employer’s reputation was caused by the National Post articles and their fallout and found potential damage has been caused to the employer’s ability to carry out its work, which includes implementation of its diversity initiative. In determining that dismissal was the appropriate penalty, in this case, Arbitrator Newman stated, “[Bowman] does not absolutely accept the proposition that his comments were offensive. He has said, repeatedly in his evidence, that ‘he can see how someone might consider them offensive.’ His words ring hollow. They do not reflect a real appreciation of the degree to which his comments offend.” The Arbitrator held that Bowman’s conduct harmed the reputation of his employer and impaired his ability to fulfill the complete range of responsibilities of a firefighter. She stated, “The job involves more than attending at a fire, or attending as the first responder when someone calls 911 for a medical emergency. It involves more than performing life-saving interventions that he has learned and practiced. The other part of the job, the part that I am not convinced he can perform to satisfaction, is the part that requires him to conduct himself in a way that brings honour to the uniform. I have to wonder if a deaf person, a woman in labour, a homeless person, a member of a visible minority group, apprised of his comments, would welcome this man into their home in a time of need.” Arbitrator Newman’s Award may be found here. What should employers take from this decision? the importance of implementing and maintaining human rights and social media policies in the workplace off-duty breaches of employers’ human rights policies or the Human Rights Code may be found to harm the employer’s reputation and be grounds for just cause dismissal certain types of employees, for example, firefighters, nurses and police officers may be held to a higher standard than other employees whose work is less intimate and does not involve serving the public or being in a position of trust Be careful what you tweet! Contact a member of the Employment Law group at Devry Smith Frank LLP to develop and update your workplace policies, including human rights and social media policies. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Employment LawJuly 17, 2016June 16, 2020
What marriage contracts or cohabitation agreements cannot do A previous blog discussed the many benefits to having a marriage contract or cohabitation agreement. That blog described how couples can have certainty in their lives, if they are married through a marriage contract, or if they are living together through a cohabitation agreement. There are many ways that they can set up their lives to be better than they would be if the couples stayed under the provisions of the Family Law Act, or went to court to resolve the matters between them. However, the law prohibits marriage contracts from doing eight important things: Marriage contracts cannot set parenting terms (address issues regarding custody or access). Judges always have the right to make the custody or access order that they feel is in the “best interest of a child”, regardless of an agreement between the parties. While the Family Law Act specifically allows marriage contracts and cohabitation agreements to address the educational and moral training of children, the Act also says that judges can override the contract if doing so is in “best interest of the child”. A marriage contract or cohabitation agreement cannot restrict either married spouse’s right to be in a possession of a matrimonial home. On separation, married spouses have an equal right to stay in any matrimonial home, and there can be more than one. Marriage contracts cannot require one spouse to leave a matrimonial home. They also cannot authorize one spouse to sell, mortgage or otherwise encumber or dispose of a matrimonial home before the spouses are divorced or they have a separation agreement or court order addressing the issue. Only married spouses can have matrimonial homes, so this restriction does not apply to cohabitation agreements unless the parties marry with the agreement still in effect. (Note: A cohabitation agreement could create rights to a property that are same as matrimonial home rights for parties who are married.) A marriage contract cannot opt parties out of the Child Support Guidelines unless the provisions benefit the child as much or more than the Child Support Guidelines. In any event, the court always has the right to make an order that is in accordance with the Child Support Guidelines if the judge does not like the terms of the agreement. A marriage contract cannot require that the parties go to mediation or arbitration instead of court after separation. The Family Law Act only allows parties to agree to mediation or arbitration after the dispute between them has already arisen. The parties can say that they would like to maintain a good relationship and use a more amicable process than court after they separate, but those terms in the marriage contract are not binding on the parties. Marriage contracts are not recognized under the Income Tax Act with regard to the treatment of support. Periodic spousal support paid during or after the marriage pursuant to the terms of a marriage contract or cohabitation agreement will not be deductible to the payer and taxable in the hands of the recipient. Unless the parties sign a separation agreement, or obtain a court order, confirming those terms. People who are living together cannot agree that one will pay support to the other to shift the tax burdens to the person who pays tax at the lower rate. Marriage contracts cannot waive a spouse’s entitlement to receive disclosure before signing the contract or signing a separation agreement. The Family Law Act gives judges the power to set aside any marriage contract, cohabitation agreement, or separation agreement that was negotiated without the parties receiving full financial disclosure. A marriage contract or a cohabitation agreement also cannot waive a spouse’s right to obtain independent legal advice on either the marriage contract, cohabitation agreement, or a subsequent separation agreement. Again, judges always have the power to set aside an agreement that one or both spouses did not understand. The best evidence that the spouses understood an agreement is for them to have had independent legal advice. A marriage contract or a cohabitation agreement is also not enforceable in relation to circumstances that the parties did not contemplate at the time that they signed it. If the couple wants their marriage contract or cohabitation agreement to be enforceable no matter what circumstances happen in the future, it is important that the agreement state that they have contemplated all possible future happenings and have still decided that, no matter what happens, they wish to be bound by the marriage contract or a cohabitation agreement. (Ensuring that a marriage contract meets this requirement is one of the trickier aspects of marriage contracts and it is another reason why lawyers need to be involved in the creation of a marriage contract.) The above are some of the restrictions on the creation of marriage contracts or cohabitation agreements. As long as couples stay away from the above restrictions, they will likely have an agreement that the court will enforce that will give them some certainty with regard to their affairs after marriage breakdown. By Fauzan SiddiquiBlog, Family LawJune 26, 2016July 7, 2023
Workplace Accommodation Has Limits In Pourasadi v Bentley Leathers Inc., the Human Rights Tribunal found that accommodating a store manager by permitting the employee not to assist customers was not required, since assisting customers was an essential duty of her position. Many are familiar with the concept of an employer’s duty to accommodate disabled employees under Ontario’s Human Rights Code, but the grey area of accommodation in the workplace is about how much an employer is expected to accommodate. You might guess that the answer is to the “point of undue hardship” — and you would be right — but even this phrase can be confusing. If you work as a server at a restaurant, is the employer expected to accommodate you so you do not have to serve patrons? The Human Rights Tribunal (“Tribunal”) considered a similar scenario in its decision in Pourasadi v Bentley Leathers Inc. The Respondent-Employer (“Employer”) sells a variety of merchandise including purses, backpacks, totes, luggage and briefcases. The Applicant-Employee (“Employee”) began working for the Respondent in 2005 and became a store manager in 2006, working at the employer’s Promenade Mall location. In 2008, the Employee injured her right wrist while unpacking a box and was compensated for these injuries through a WSIB claim. The Employee continued to work full time from August 2008 until November 2009, subject to her restrictions, and was provided with modified duties from November 2008 onward. The Employee underwent wrist surgery in November 2009 but her condition did not improve. She returned to work at the Promenade Mall store in April 2010 with various physical restrictions. A WSIB Functional Abilities Evaluation in July 2012 concluded that the store manager job was not suitable for the Employee because the position included tasks that she was restricted from performing and no further accommodations or modifications could be implemented. The Employer later dismissed the Employee after it learned the Employee had been turning customers away while she worked alone because of her physical limitations. The Employee filed an application under the Human Rights Code alleging discrimination on the basis of disability. The Employee argued that the Code required the Employer to schedule another employee to work with her, who could perform all tasks outside her abilities, or alternatively, that she should be allowed to turn away customers or ask them to come back when another employee was present. Her position was that aside from these limitations, her other work was still valuable to the Employer. Both parties conceded that roughly 65-70% of the Employee’s position involved sales and customer service, but disagreed about how often the Employee would turn away customers because of her disability. Further, the Employer argued that it was not required to provide an accommodation which would not require the employee to complete the essential functions of her job (see e.g. Yeats v Commissionaires Great Lakes and Perron v Revera Long Term Care Inc). Before rendering its decision, the Tribunal referenced some key provisions of the Code regarding accommodation: (1) A right of a person under this Act is not infringed for the reason only that the person is incapable of performing or fulfilling the essential duties or requirements attending the exercise of the right because of disability. (2) No tribunal or court shall find a person incapable unless it is satisfied that the needs of the person cannot be accommodated without undue hardship on the person responsible for accommodating those needs, considering the cost, outside sources of funding, if any, and health and safety requirements, if any. So the question then becomes, what constitutes undue hardship? As seen in the Supreme Court of Canada’s decision of Hydro‑Québec v. Syndicat des employé‑e‑s de techniques professionnelles et de bureau d’Hydro‑Québec, section locale 2000, “[t]he test is not whether it was impossible for the employer to accommodate the employee’s characteristics. The employer does not have a duty to change working conditions in a fundamental way, but does have a duty, if it can do so without undue hardship, to arrange the employee’s workplace or duties to enable the employee to do his or her work.” The Tribunal added, however, section 17 does not require permanently changing the essential duties of a position or permanently assigning the essential duties of a position to other employees. The duty to accommodate also does not require exempting employees from performing the essential duties of their position. The “accommodations” sought by the Employee would not enable her to meet the essential duties of her position, but instead pass them onto another employee. In light of these considerations, the Tribunal concluded the Employee had not discriminated against the Employee. The concept of accommodation in the workplace is a frequent discussion topic on our blog (see our past blog posts about religious accommodation, mental illness, childcare obligations and family status). What is interesting about this concept is that every situation is different because reasonable accommodation is very fact-dependent. In this case, the Employee had already undergone surgery and other means of recovery without success. It was evident from her support through WSIB that she would be unable to perform her job’s physical activities for an indefinite period. In fact, WSIB had commenced a re-training program for her shortly before her termination. Employers are held to a high standard when it comes to reasonable accommodation because of the importance of preventing discrimination in the workplace. But tribunals and courts are also aware of an employer’s limitations and employers cannot be expected to provide an infinite amount of accommodation, especially when the disability is permanent. This case shows that the length of accommodation and how core aspects of a job are defined will be large indicators for determining whether an employer has met their duty under the Code. As an aside, it is interesting to note that had the Employee in this case been unionized, this may have turned out differently, as collective agreements can be drafted to impose stricter accommodation policies on employees (see e.g. County of Brant v OPSEU). If you are an employee suffering from discrimination in your workplace or an employer looking to provide accommodation to an employee, the Employment Law Team at Devry Smith Frank LLP will be happy to assist you. By Fauzan SiddiquiBlogJune 14, 2016November 25, 2020
Tax Treatment of Family Law Matters Divorce and separation are understandably difficult periods in a person’s life. Often, they are focused on issues such as the parenting of children, dividing matrimonial property or ensuring that there is sufficient financial support for them or their children. Rarely do minds wander into the realm of wondering about the tax issues that can arise in the context of family law litigation. However, these issues are significant, live and should be diligently considered. In this article, I provide but a general overview of some of the tax issues that can frequently arise when spouses or parents separate. Each of these topics, by themselves, could warrant an article. The aim of this short piece is simply to highlight some of the more common tax issues that arise in the context of family law litigation so that parties can remain attuned to how any possible settlement or resolution can affect their tax liabilities. Tax Treatment of Spousal Support Provided that it meets the requirements in the Income Tax Act, spousal support is generally deductible from income for the payor spouse, and is included as income for the recipient spouse for tax purposes. However, there a number of different payments that could constitute ‘spousal support’ and it is important to examine them carefully to determine their tax treatment. What Qualifies As “Spousal Support” In many cases, it will be very clear what amount of money is being paid as spousal support pursuant to a written agreement or court order. However, in some cases, parties fail to apportion ‘support’ amounts as ‘child’ or ‘spousal’ and these designations (or lack thereof) can have some significant implications come tax time. In the case of orders made, or agreements entered into or altered after April 1997, only amounts that can be clearly identified as spousal support or payments for the benefit of the former spouse are considered spousal support. All other amounts are considered child support. In the case of these agreements or orders, only spousal support amounts are taxable/deductible. In case of orders made, or agreed to before May 1997, all payments for support are deductible to the payor and attributable to the recipient. As well, one must always remember that child support takes priority over spousal support. If a court order or agreement specifies that both spousal and child support, then any payments made by the payor will first be considered child support by the CRA. Once the full amount of child support has been paid, then the remainder of payments will be considered spousal support by the CRA. However, these rules do not apply when child support and spousal support are payable under different agreements or court orders. The Basic Rules In order to qualify for the support tax treatment under the Income Tax Act, payments must be: Subject to the recipient’s discretion (the payments must be with ‘no strings attached’) Made on a periodic basis (lump-sum payments do not qualify for these rules) Paid for the support of the recipient; and Paid pursuant to a written agreement or Court order. While most support payments made pursuant to Court order or marital agreement meet these requirements, it is nonetheless important to receive legal advice to ensure that you are not running afoul of the Act or the CRA policy. Lump-sum Payments Lump sum payments are not deductible by the payor or included in the income of the recipient. This isn’t common knowledge and, while it may play into the favour of support recipients, is certainly not the avenue to get preferable tax treatment as a payor. While the difference between ‘periodic’ and ‘lump-sum’ may seem clear, it (like most tax law formulae) is not. The following example should be illustrative. Parties A and B separate and enter into a separation agreement. If the agreement stipulated that the recipient would receive $12,000.00 in spousal support, payable in monthly installments of $1,000.00, this would most likely constitute a lump sum payment, and would not attract the special tax treatment. If the agreement stipulated that the recipient receive base spousal support in the amount of $1,000.00 per month, this would be a periodic payment. While the foregoing example is overly simplistic, it highlights the need for careful drafting and characterization of payments to ensure that parties reap the benefits of the special tax treatment. In order to avoid the CRA deeming periodic payments as lump-sum payments, it is important to consult a family law lawyer to ensure that the amounts are properly characterized. Third Party Payments In most cases, spousal support will be paid directly to the recipient. However, there are situations where payments are made by the payor to a third party, which are in the nature of spousal support. In order for these payments to qualify, they must meet certain requirements under the Income Tax Act. To qualify, the payments must be: Made pursuant to a written agreement or Court order; The agreement or order must specifically refer to ss.56.1(2) and 60.1(2) of the Income Tax Act or contain sufficiently clear language confirming the parties’ understanding that the payments will be considered spousal support and will be taxable/deductible; Paid for the support of the recipient. If the payments are for specific living expenses, such as medical, rent or mortgage expenses, they may not be included in determining the amount of deduction available. Made in the current or immediately preceding taxation year. While the above list may make third-party payments seem straightforward, they are, in reality, complicated. And because of their susceptibility in being employed in tax evasion schemes, these arrangements are subject to special scrutiny by the CRA. If you are planning on incorporating a third-party payment arrangement into your separation, it is advisable that you consult a lawyer prior to entering into the agreement or order to avoid any issues come tax time. Tax Treatment of Child Support Like spousal support, there is a divergence in the tax treatment of child support payments depending on the date on which the order or agreement was made. If the order or agreement arose after April 1997, then the child support is not deductible by the payor and is not included in the income of the recipient. For agreements or orders made before May 1997, child support is deductible by the payor and included in the income of the recipient, unless one of the following exemptions apply: Changes to the Quantum of Support – If the amount of support payable is changed after April 1997, then the child support will not be deductible/included in income. A New Court Order of Agreement – If 1) a new order or agreement is made after April 1997; 2) the previous order or agreement remains in effect; and 3) the effect of the new order or agreement is to change the overall amount of child support payable, the post-April 1997 tax rules apply to both orders or agreements. Express Terms – An order or written agreement may specify that child support payments made after a certain date (not earlier than May 1, 1997) will no longer be taxable and deductible Election – If there is an order or agreement prior to May 1997 and a person wishes, they can make an election with the CRA that the post-April 1997 rules will apply to the payments. Tax Treatment of Family Law Legal Fees In certain circumstances, legal fees incurred in the context of family law litigation are tax-deductible. Under Lines 221and 232 of your tax return, the following legal fee expenses can be deducted by a support recipient from their income: Legal fees incurred to establish entitlement to spousal or child support; Legal fees incurred to increase the amount of spousal or child support payable; Legal fees incurred to claim retroactive spousal or child support or to enforce arrears of support; Legal fees incurred to try and make child support non-taxable. However, a recipient cannot claim a deduction for the following legal fees: Legal fees incurred to get a divorce or separation; Legal fees incurred to obtain an equalization of family property, or any other division of property; Legal fees incurred in relation to custody and access; For a payor spouse, there is no income deduction for legal fees associated with contesting or negotiating the amount of support payable. How to Take Advantage of the Tax Benefits The best way to ensure that any support arrangements are taxed in a preferential way is to speak with a lawyer, preferably one well-versed in both family law and tax law. They will review any marriage, cohabitation or separation agreement to ensure that it is structured to maximize any tax benefits. They can help you file your income tax return to make sure it is in compliance with the Income Tax Act, its regulations and CRA policy. If you are engaged in family litigation, an experienced family lawyer can help you put your best foot forward in court to increase the likelihood that any orders will be in a form that allows you to minimize the tax payable on any support you receive. A good lawyer will take the necessary steps to ensure that the order or agreement is registered with the CRA, and is in compliance with their rules. By Fauzan SiddiquiBlog, Family LawMarch 16, 2016November 25, 2020