Category: Blog

New Ontario Superior Court Decision holds that COVID-19 related Temporary Layoffs do not Amount to Constructive Dismissal at Common Law – Taylor v Hanley Hospitality Inc., 2021 ONSC 3135

In earlier blog posts, which can be found here and here, we wrote about the implications of Regulation 228/20 (the “Regulation”), enacted pursuant to the Employment Standards Act, 2000(the “ESA”). The Regulation states that non-unionized employees who had their hours reduced or eliminated due to COVID-19 are deemed retroactively to be on Infectious Disease Emergency Leave (“IDEL”). Section 7 of the Regulation states that a temporary reduction or elimination of an employee’s work hours and/or wages due to COVID-19 will not constitute constructive dismissal during the “COVID-19 period”, which was recently extended until September 25, 2021.

The issue that remained unresolved was whether the Regulation also prevented an employee from advancing a claim for constructive dismissal at common law. As discussed in our previous blog about Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076 (CanLII) (“Coutinho”), the Court determined that the Regulation did not prevent the plaintiff, who had been temporarily laid off during the COVID-19 period and was on deemed IDEL under the ESA from pursuing a claim for constructive dismissal at common law. Under the common law, unless expressly stated in an employment contract, an employer does not have the right to temporarily lay off an employee, even if the employer complies with the provisions of the ESA. In accordance with Coutinho, many temporary layoffs due to COVID-19 could be considered unlawful and may entitle employees to damages.

However, in Taylor v Hanley Hospitality Inc., 2021 ONSC 3135 (“Taylor”), the court came to the opposite conclusion. In this case, an employee was placed on temporary lay-off in March 2020 due to the closure of her workplace during the pandemic. The plaintiff commenced an action against the employer claiming damages for constructive dismissal at common law. The employer relied on Section 7 of the Regulation and argued that the employee was deemed to be on IDEL and that the temporary reduction of her duties and work hours did not constitute a constructive dismissal at common law.

The Ontario Superior Court of Justice was asked to again consider whether an employee who had been temporarily laid off due to COVID-19 and was on deemed IDEL under the ESA had been constructively dismissed at common law.

Constructive Dismissal at Common Law

In contrast to the decision in Coutinho, the Court in Taylor determined that there was no constructive dismissal at common law. The Court held that it was clear that the Regulation was enacted to displace the common law with respect to constructive dismissal and layoffs, since all temporary layoffs relating to COVID-19 are deemed to be IDELs, retroactive to March 1, 2020 until the end of the COVID-19 period. As such, employees who were placed on IDEL were not constructively dismissed at common law.

The Court disagreed with the analysis in Coutinho, stating that Coutinho failed to properly apply the principles of statutory interpretation. In particular, Coutinho had improperly interpreted Section 8(1) of the ESA to mean that the ESA may not displace the common law. The Court referred to the Court of Appeal’s reasoning in Elsegood v. Cambridge Spring Service (2001) Ltd., 2011 ONCA 831 (CanLII), in which the court expressly concluded that “Simply put, statutes enacted by the legislature displace the common law” and that it is incorrect to presume that the common law continues to operate independently of the ESA.

Conclusion

The decision in Taylor is in direct conflict with Coutinho and creates uncertainty as to whether employers would be liable at common law for constructive dismissal in relation to COVID-19. While Taylor provides relief for employers that have relied upon IDEL, the decision leaves the state of the law ambiguous for constructive dismissal claims at common law. It is very likely both of these decisions will be appealed and that the Court of Appeal for Ontario (the highest court in Ontario) will ultimately be asked to resolve this inconsistency in the law.

“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 Justin DominicBlog, COVID-19, Employment LawJune 15, 2021June 15, 2021

What if separating parents disagree over vaccinating their children?

Children in Ontario between the ages of 12 – 17 became eligible for the first dose of the Pfizer vaccine on May 23, 2021. This raises a new question for separating parents: what happens when one parent wants their child vaccinated against COVID-19, but the other refuses?

The legal test for family law matters involving parenting issues remains the best interests of the child. Decisions involving children are always considered on a case-by-case basis, while considering the prevailing social or medical evidence available at the time. For example, court decisions involving virtual vs. in-person schooling during the pandemic such as Chase v Chase 2020 ONSC 5083 and Zinati v Spence 2020 ONSC 5231 largely deferred to public health guidelines in deciding whether children should be enrolled in virtual school. The short answer is this: where the government endorses in-person schooling, the court is likely to accept this conclusion unless one parent is able to advance evidence showing why it would be contrary to that specific child’s best interests.

Court decisions dealing with children’s pre-pandemic vaccines have adopted similar reasoning. For example, in the earlier case of C.M.G. v. D.W.S. 2015 ONSC 2201, the father sought to have the child vaccinated before travelling overseas, while the mother refused. The court ultimately concluded that vaccinating the child would be in her best interests and relied on Canada’s public policy in favour of vaccinations of children generally, in addition to the expert evidence presented by the father in favour of the child’s vaccination.

In Tarkowski v Lemieux, 2020 ONCJ 280, (decided before COVID-19 vaccines were approved for children), the court provided the father with the sole authority to vaccinate the child against COVID-19 should a vaccine be approved in the future. The court reached this conclusion, in part, due to the mother’s lack of trust in Western medicine generally, and her history of refusing or delaying the child’s routine vaccinations to date. The court further acknowledged that children and young people in general do not appear to have a high risk of developing adverse reactions to the COVID-19 vaccine, and that vaccinations could be beneficial in preventing the spread of the virus to more vulnerable members of the population.

The court’s reasoning was similar to how pre-pandemic vaccines and the issue of virtual vs. in-person schooling were treated. In short, the courts are likely to defer to the accepted public health guidelines on the issue, unless one parent is able to advance evidence showing that the vaccine would not be in their child’s best interests. This would likely need to be accomplished by way of a credible expert’s opinion with respect to the specific child’s needs. A parent might succeed in making this kind of argument where, for example, the child has a history of adverse reactions to previous vaccines.

If you have any questions related to your family law matter contact Mason Morningstar at mason.morningstar@devrylaw.ca or 416-446-3336.

By Justin DominicBlog, COVID-19, Family LawJune 8, 2021June 8, 2021

Ontario COVID-19 – Can Your Company Work This Construction Season?

The extension to the provincial stay-at-home order has caused even greater confusion among all industries, but most specifically, the construction sector which is now subject to additional guidelines.

On April 16^th, the government announced enhanced regulations for the construction sector, adding to and revising how the construction community is to operate at this time. This restriction is in effect until Step 1 of the re-opening plan begins on June 13^th.

The government’s original requirements, which include physical distancing, good ventilation, and disinfection of surfaces/machines/tools, remain in place. With respect to the recent government regulations, the important change to now note is what construction is considered essential? This post provides an update on what activities and projects are considered essential and an update on the guidelines that were announced.

As set out in the amended Ontario Regulation 82/20, permitted construction projects and related activities (including land surveying and demolition services) are those that:

(a) are associated with the health care sector or long-term care, including new facilities, expansions, renovations, and conversion of spaces that could be repurposed for health care space;

(b) ensure safe and reliable operations of, or provide new capacity in,

(i) municipal infrastructure, or (ii) provincial infrastructure, including but not limited to, the transit, transportation, resource, energy and justice sectors;

(c) support the operations of, or provide new capacity in, electricity generation, transmission, distribution and storage, natural gas distribution, transmission and storage or in the supply of resources;

(d) support the operations of, or provide new capacity in, schools, colleges, universities, or child care centers within the meaning of the Child Care and Early Years Act, 2014;

(e) are required for,

(i) the maintenance and operations of petrochemical plants and refineries, (ii) significant industrial petrochemical projects where preliminary work commenced before April 17, 2021, or (iii) industrial construction and modifications to existing industrial structures limited solely to work necessary for the production, maintenance or enhancement of personal protective equipment, medical devices such as ventilators and other identified products directly related to combatting the COVID-19 pandemic;

(f) would provide additional capacity in the production, processing, manufacturing or distribution of food, beverages or agricultural products;

(g) were commenced before April 17, 2021, and that would, (i) provide additional capacity for businesses that provide logistical support, distribution services, warehousing, storage or shipping, and delivery services,(ii) provide additional capacity in the operation and delivery of Information Technology (IT) services or telecommunications services, or (iii) provide additional capacity to, or enhance the efficiency or operations of, businesses that extract, manufacture, process and distribute goods, products, equipment, and materials;

(h) support the operations of broadband internet and cellular technologies and services;

(i) are residential construction activities or projects and related services;

(j) prepare a site for an institutional, commercial, industrial or residential development, including any necessary excavation, grading, roads or utilities infrastructure;

(k) are necessary to temporarily close construction sites that have paused, or that are not active, to ensure ongoing public safety;

(l) are funded in whole or in part by, (i) the Crown in right of Canada or in right of Ontario, (ii) an agency of the Crown in right of Canada or in right of Ontario, or (iii) a municipality;

(m) are, (i) intended to provide shelter or supports for vulnerable persons or affordable housing, and (ii) being funded in whole or in part by, or are being undertaken by, (A) the Crown in right of Canada or in right of Ontario, (B) an agency of the Crown in right of Canada or in right of Ontario, (C) a municipality, (D) a service manager as defined the Housing Services Act, 2011, (E) a registered charity within the meaning of the Income Tax Act (Canada), or (F) a not-for-profit corporation; or (n) support the operations of or provide new capacity for, veterinary facilities within the meaning of the Veterinarians Act.

It is clear from the aforementioned list of permitted activities in the regulation that the majority of them are focused on the health care, telecommunications, and personal protection equipment sectors. In addition to that, some other essential construction activities include the maintenance and construction of roads and infrastructure, public safety, and affordable housing services.

If you have any questions about whether your construction company is able to work during Ontario’s battle against COVID-19, please contact Devry Smith Frank LLP Lawyer Adam Grossi at adam.grossi@devrylaw.ca or 416 446 5094 for any assistance with this matter.

By Justin DominicBlog, Construction LawJune 2, 2021June 3, 2021

Temporary Layoffs during COVID-19 Can Amount to Constructive Dismissal under Common Law – Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076 (CanLII)

In earlier blog posts, which can be found here and here, we wrote about the implications of Regulation 228/20 (the “Regulation”), enacted pursuant to the Employment Standards Act, 2000(the “ESA”). The Regulation states that non-unionized employees who had their hours reduced or eliminated due to COVID-19 are deemed retroactively to be on Infectious Disease Emergency Leave. Section 7 of the Regulation states that a temporary reduction or elimination of an employee’s work hours and/or wages due to COVID-19 will not constitute constructive dismissal during the “COVID-19 period”, which currently lasts until July 3, 2021.

The issue that remained unresolved was whether the Regulation also prevented an employee from advancing a claim for constructive dismissal at common law.

In general, for the common law to be altered by statute, there would need to be express language in the statute to that effect.

In Coutinho, an employee was placed on temporary lay-off in May 2020 due to the closure of her workplace during the pandemic. The plaintiff commenced an action against the employer claiming damages for constructive dismissal at common law, along with punitive and aggravated damages. Relying on section 7 of the Regulation, the employer argued that the plaintiff was deemed to be on Infectious Disease Emergency Leave and that the temporary reduction of her duties and work hours did not constitute a constructive dismissal at common law.

The Ontario Superior Court was asked to consider whether a temporary reduction in hours of work and/or wages constitutes constructive dismissal at common law, despite the Regulation.

Scope of Regulation 228/20 under the ESA

The defendant argued that due to the unprecedented emergency caused by COVID-19, section 7 of the Regulation should be interpreted to apply not only to constructive dismissals for the purposes of the ESA but also at common law. The Court found that the scope of section 7 of the Regulation must be interpreted with section 8(1) of the ESA which provides that “no civil remedy of an employee against his or her employer is affected by this Act.” The Court determined that the scope of the Regulation was constrained by its enabling legislation and could not be interpreted in the same manner as a statutory provision.

In support of this interpretation, the Court considered an online publication of the Ontario Ministry of Labour, Training, and Skills Development, which states that the Regulation affects only what constitutes a constructive dismissal under the ESA and does not address what constitutes a constructive dismissal at common law.

Constructive Dismissal Under Common Law

While the Regulation precluded the plaintiff from pursuing damages under the ESA, the Court determined that the Regulation did not prevent the plaintiff from pursuing a claim for constructive dismissal at common law. Under the common law, unless expressly stated in an employment contract, an employer does not have a right to temporarily lay off an employee, even if the employer complies with the provisions of the ESA. The Court found that the plaintiff was entitled to treat the company’s unilateral imposition of the layoff as a termination at common law and therefore the employee had the right to sue for constructive dismissal.

This decision confirms that the Regulation to the ESA has no effect on an employee’s common law right to assert that a reduction in hours of work and/or wage constitutes a constructive dismissal, thus entitling them to wrongful dismissal damages. In light of the Court’s ruling, many temporary layoffs due to COVID-19 could be considered unlawful and may entitle employees to damages.

By Justin DominicBlog, Employment LawMay 26, 2021May 26, 2021

Be Prepared for In-Person Medical Examinations – Personal Injury: Mierzejewski v Brook, 2021 ONSC 2295

During the COVID-19 pandemic, many in the legal profession began transitioning their practice online with the widespread use of Zoom for hearings, trials, examinations for discovery, etc. However, the courts may require plaintiffs to attend in-person medical examinations in personal injury cases despite public health concerns.

In Mierzejewski, the defendant brought a motion seeking an order compelling the plaintiff to attend a neuropsychology defence medical examination and a physiatry defence medical examination, both of which would be conducted in person. The plaintiff did not agree to attend a neuropsychological examination on the basis that she did not place any brain injury or head trauma at issue. While the plaintiff agreed to the physiatry examination, the main issue was the form that the examination will take. The plaintiff argued against attending an in-person medical examination, citing the ongoing COVID-19 pandemic and her compromised health situation which included a heart attack and subsequent heart surgery in 2016, breast cancer in 2017, and a lumpectomy in 2018. The plaintiff does not leave her home unless necessary.

The Ontario Superior Court was asked to consider whether the plaintiff must attend the neuropsychological medical examination and if so, whether the plaintiff must attend both medical examinations in person.

Physiatry Examination

The plaintiff argued that her numerous health conditions placed her in the high end risk category to contract COVID-19 and suffer serious health consequences. One of the plaintiff’s doctors advised that physiatry examinations could not be completed virtually and it would be irresponsible for the plaintiff to attend an in-person medical examination given the plaintiff’s numerous health concerns. He cited public health recommendations to those with chronic conditions to limit physical contact with others outside of their residence.

The Court noted that since the trial was scheduled for June 2021, the examination could not be postponed until the pandemic improved. Citing Severin v Barker, 2020 ONSC 7784, the Court stated that a plaintiff who is required to attend an in-person defence medical assessment during the pandemic does not pose undue hardship on the plaintiff where the examination is to be conducted with COVID-19 safety protocols in place. The plaintiff had attended numerous necessary medical and legal appointments in person during the pandemic. The Court further noted that the medical assessment centre had extensive COVID-19 protocols in place including COVID-19 screenings, temperature checks, socially distanced waiting rooms, and the use of PPE. Given the presence of extensive COVID-19 safety protocols at the assessment centre, the Court ordered that the plaintiff must attend the physiatry examination in person.

Neuropsychological Examination

The plaintiff submitted that a neuropsychological examination would not be relevant as she did not put her neurocognitive state at issue on the basis that she did not complain of any head injuries, neurocognitive problems, post concussion symptoms, or psychological problems.

The Court referenced the plaintiff’s statement of claim which stated that the plaintiff suffered serious and permanent impairment of important mental and psychological functions, including but not limited to headaches, dizziness, depression, and memory difficulties. The Court also noted several medical reports from the plaintiff’s doctors which indicated that the plaintiff suffered from psychological problems, pain disorder with psychological factors, and chronic pain as a result of the accident. In assessing the plaintiff’s pleadings, the Court concluded that the plaintiff had put her cognitive state in issue and ordered a neuropsychological examination. Citing Severin and the neuropsychologist’s statement that he could not conduct a virtual neuropsychological assessment, the Court ordered the plaintiff to attend an in-person neuropsychological examination.

Conclusion

The Ontario Superior Court’s decision is concerning given the significant health and safety concerns for at-risk individuals during the COVID-19 pandemic. Studies from the Guidelines for Best Practices in Psychological Remote Assessments from the OPA/CAPDA indicate that remote psychometric testing is just as effective as in-person testing. The reports also note that psychological services and assessments can be conducted effectively through online platforms with some modifications or alternatives for fully remote procedures. Plaintiffs should consider alternative assessment models when faced with an insistence that the plaintiff attends an in-person examination during the COVID-19 pandemic.

If you have a specific question related to your personal injury matter contact Marc G. Spivak, managing partner of the personal injury group at marc.spivak@devrylaw.ca or 416-446-5855.

By Justin DominicBlog, COVID-19, Personal InjuryMay 19, 2021May 19, 2021

Fraud Against The Elderly Via Continuing Power Of Attorney For Property

When people get older and their mental capacity dwindles, it can be a great relief to have someone else look after one’s financial affairs. There often comes a time in our lives when it becomes difficult to keep track of bills and payments and to keep the necessary overview required to make financial decisions. A trusted relative or friend may be willing and able to help when such tasks become more and more cumbersome. A continuing power of attorney for property is an excellent tool that permits the ‘grantor’ to grant a power of attorney (POA in the following) to a person of their choice who will remain in charge of the grantor’s property even in the event the grantor becomes mentally incapable. That is why it is called a continuing power of attorney.

Scope

With great power comes great responsibility and on the flip side great risk of abuse. The more encompassing the POA, the more vulnerable the elderly. S. 7(2) of the Substitute Decision Act (SDA) provides that a grantor may authorize the attorney to do anything in respect of property that the grantor, if capable, could do, except make a will. The grantor may also decide to limit the scope of authority to mitigate some of the risks that come with granting a POA. For example, the attorney may only be entitled to deal with certain assets, or the commencement of the power may be postponed to a specific time or event, i.e. when the grantor becomes mentally incapable. Such limitations would need to be clearly written into the POA.

The POA loses its effect of entitling the attorney to act on the grantor’s behalf in property matters once the grantor dies.

Legal Requirements

According to s. 8 of the SDA, the grantor is capable of giving a continuing POA if the grantor

knows what kind of property the grantor has and its approximate value;
is aware of obligations owed to the grantor’s dependants;
knows that the attorney will be able to do on the grantor’s behalf anything in respect of property that the grantor could do if capable, except make a will, subject to the conditions and restrictions set out in the power of attorney;
knows that the attorney must account for the attorney’s dealings with the grantor’s property;
knows that the grantor may, if capable, revoke the continuing power of attorney;
appreciates that unless the attorney manages the property prudently, its value may decline; and
appreciates the possibility that the attorney could misuse the authority given.

Fraudulent Schemes

A relative, an alleged friend, or even a stranger may fraud the elderly victim by having them sign a POA by misrepresenting its content or scope to them. Such a POA does not meet the above-mentioned requirements and is void. Yet, third parties may rely on the signed POA nevertheless and conduct business with the fraudster. While such transactions are void and legally the sold asset is recoverable, there might be insurmountable practical hurdles to recovery. The asset may simply have disappeared by the time the fraud is discovered. If the asset is a piece of land, there are certain statutory protections against a title transfer by a fraudster. However, if a good faith purchaser who bought the land from the fraudster resells the land and title is registered for the benefit of the next purchaser, the title of the original owner is extinguished.

There even remains a risk of abuse after the grantor has died because third parties with whom the attorney conducts business purportedly on behalf of the deceased grantor may not know of the grantor’s death. They may again reasonably rely on the POA presented to them by the attorney. This risk is at this stage of course a risk for the estate of the deceased grantor.

These extreme examples are criminal matters, as they are in clear violation of s. 331 of the Criminal Code ‘Theft by person holding power of attorney’.

Another scheme can be conducted with a perfectly valid POA. The attorney may decide not to act solely in the interest of the grantor, as he or she is obliged to do under the SDA. For example, the attorney has the power to make gifts and loans to the grantor’s friends. This is deemed to be in the interest of the grantor by the SDA. A limit imposed on such gifts is the unduly depletion of the grantor’s property to a degree where it does not suffice to satisfy the support and care of the grantor. Obviously, where this line must be drawn is quite debatable and the attorney has significant leeway under the law. A further restriction to the attorney’s power lies in the fact that, if challenged, the attorney must prove that he or she had reason to believe, based on the intentions of the grantor expressed before becoming incapable, that the grantor would have made the gift as well.

The reality is those elderly people who do not have the mental capacity to look after their own assets are also not in the position to challenge the abuse of a power of attorney. They are helpless and rely on better friends or kinder relatives to look after their interests.

If you believe you discovered POA fraud performed on a grantor, do not hesitate to reach out to DSF lawyer Tracey Rynard at Tracey.Rynard@devrylaw.ca or 249-888-6647 for assistance with this litigation matter.

By Justin DominicBlog, Litigation, Wills and EstatesMay 7, 2021May 7, 2021

Challenging a Termination Clause in Small Claims Court

A 2019 decision of the Ottawa Small Claims Court serves as a caution for employers and may encourage employees to fight wrongful dismissals. When an employee is terminated without cause, (s)he may be entitled to severance pay in lieu of notice of termination. The amount will depend on the length of time the employee has worked for the employer. If the sum of severance pay in dispute is equal to or less than $35,000, the dispute can be brought in Small Claims Courts. Small Claims Court proceedings are somewhat simpler and can lead to a quicker resolution of the matter. The parties in a Small Claims Court matter have no right to pre-trial examinations for discovery and hence proceed to trial relatively quickly (unless of course there is a raging pandemic).

A further benefit of Small Claims Court actions is that the parties may represent themselves if they so wish, which will reduce litigation costs. Caution is advised, however, as the law around termination clauses is quite complex and can be confusing.

Given this complexity, many termination clauses are drafted in a way that renders them unenforceable. That was the case in the above-mentioned decision. If an employer wishes to limit its exposure to wrongful dismissal damages, it is a good idea to consult an employment lawyer and to have the employment contract reviewed.

An employment contract may eliminate a common law wrongful dismissal claim if (1) the agreement complies with the minimum standards of the Employment Standards Act (ESA) and (2) is clear and unambiguous and (3) ideally states that the severance pay offered is intended to extinguish all common law remedies.

The Termination Clause

In this case, the termination clause read as follows:

Your employment may be terminated for cause at any time without notice or payment in lieu thereof. Your employment may be terminated for any other reason by the company upon delivery of one week’s notice per year of Espial service or payment in lieu thereof, or such other amount as is required under the Employment Standards Act, whichever is greater.

The intention was to limit the employer’s right to claim severance pay under the common law and to grant him or her the entitlements under the ESA.

This wording failed to have this effect, however. First, the clause did not provide for the continuation of benefits as is required under the ESA. This is a violation of the ESA, which sets out minimum entitlements for employees that cannot be contracted out of. A violation of the ESA renders the contract void.

The second problem with the termination clause was its ambiguity. The clause could be interpreted to lack reference to severance pay, another entitlement under the ESA. If a termination clause is ambiguous, meaning that the employee upon signing the contract cannot know what his or her entitlement will be upon termination, the clause is void.

Thirdly, an argument was advanced by the employee that the contract did not make it clear that the employer intended to oust the employee’s common law entitlements upon termination. The court found that there is no obligation to include a “warning sign” in the termination clause, but that the legal standard is whether the clause is sufficiently clear. Out of an abundance of caution, it may be advisable to explicitly state in the employment contract that the common law remedies are eliminated.

The claim succeeded and $25,000 was awarded as damages. The plaintiff had been employed slightly less than three years.

Conclusion

Given the complexity of the law regarding termination clauses, it is advisable for employers to ask a lawyer to review their employment contracts regularly to ensure their enforceability. The law is evolving and even when a clause was enforceable at some point in time, new case law may have rendered it unenforceable.

For employees who believe they have been wrongfully dismissed, the Small Claims Court may provide a good forum to obtain relatively quick relief. While they can represent themselves in front of Small Claims Courts, a lawyer’s advice can be indispensable in determining the prospects and the risk involved in the litigation.

If you have more questions about an employment law matter contact Elyse Mallins at 416-446-4017 or Elyse.Mallins@devrylaw.ca.

By Justin DominicBlog, Employment LawMay 4, 2021May 4, 2021

How To Prepare For Changes In A Shareholder’s Life Circumstances: Buy-Out Clauses

A shareholders’ agreement often includes the framework within which the business relationship will be governed. It can also provide mechanisms to address the dissolution of that relationship. This entry complements our previous blog on provisions by which shareholders or the corporation, can force a share transfer.

Disability, Death, or Insolvency of a Shareholder

An individual shareholder’s demise, insolvency or general inability to carry out his or her duties can be challenging for the remaining business partners. A shareholders’ agreement can provide that the remaining shareholders, or the corporation itself, are obliged to purchase the shares previously held by the affected shareholder or by his or her estate, and can set out the payment terms for the transaction. It can also include life insurance provisions, pursuant to which the insurance proceeds can be applied to payment of the purchase price.

Valuation Mechanism

Shareholders’ agreements will typically provide a mechanism by which to determine the fair market value of the shares at a given point in time. Provisions of this type can help avoid disputes as to value and as such are particularly helpful should the business relationship become less than amicable.

Transfer Restrictions

The shareholders’ agreement can restrict individuals or legal persons to whom or to which a shareholder may transfer his, her, or its shares. Provisions of this nature help ensure that the remaining shareholders have a means by which to control those with whom or with which they are business partners.

There are a variety of provisions that can be used in shareholder agreements to govern shareholder buyouts or provide for the sale of a company in the event of unforeseen circumstances that end the relationship between shareholders. To further discuss these provisions or other aspects of shareholder agreements, please contact Elisabeth Colson, senior corporate lawyer at Devry Smith Frank LLP. You can reach her directly at (416) 446-5048 or by email at lisabeth.colson@devrylaw.ca.

By Justin DominicBlog, Corporate LawApril 26, 2021June 3, 2021

New Process for Administering Small Estates in Ontario

Following an announcement by the provincial government this past February, on April 1, 2021 Ontario’s new procedure to administer small estates came into effect. The new procedures, which are designed to ease the administration process on “Small Estates” are welcomed and should facilitate a cost effective and timely probate on modest estates.

Under The Smarter and Stronger Justice Act,[1] amendments were made to The Estates Act[2], one of which was the introduction of the “Small Estate.” A Small Estate is an estate with a value of $150,000 or less. The new and simpler procedures for Small Estate administration include the following:

completing the new and simpler application forms;[3]
in some instances, removing the requirement of the applicant to provide certain supporting documents (such as an affidavit of service for the notice of application); and
in most circumstances, removing the requirement to post a bond.[4]

Estate administration tax is still payable on Small Estates. As with all estates, the first $50,000 is exempt from estate administration tax, and the remainder is taxed at approximately 1.5% of the value of the estate as of the date of death. Once probate has been issued, estate trustees are required to file the Estate Information Return with the Ministry of Finance within 180 days of the issuance of probate.

Regardless of the amount of money held in an account, banks and other financial institutions often cannot take instructions from an estate trustee unless probate has been granted. By easing the administration requirements on Small Estates, the hope is that less people will leave these estates unsettled due to the burdens and costs associated with probate.

We understand that dealing with a loved one’s estate can be overwhelming. If you have questions regarding Ontario’s new procedures for the administration of Small Estates, or any questions regarding wills and estates in general please contact Esther Abecassis, wills and estates lawyer at Devry Smith Frank LLP at esther.abecassis@devrylaw.ca or 416-446-3310.

[1] Smarter and Stronger Justice Act, 2020, S.O. 2020, c. 11 – Bill 161.

[2] Estates Act, R.S.O. 1990, c. E.21.

[3] the following new forms have been introduced pursuant to the Rules of Civil Procedure (R.R.O. 1990, Reg. 194: Rules of Civil Procedure under Courts of Justice Act, R.S.O. 1990, c. C.43) Form 74.1A – Application for a Small Estate Certificate (the “Application”); Form 74.1B – Request to File an Application for a Small Estate Certificate or an Amended Estate Certificate; Form 74.1C – Small Estate Certificate (the “Certificate”); Form 74.1D – Registrar’s Notice to Applicant in an Application for a Small Estate Certificate or Amended Small Estate Certificate; Form 74.1E – Application to Amend Small Estate Certificate; and Form 74.1F – Amended Small Estate Certificate (the “Amended Certificate”)

[4] New section 36(3) of the Estates Act provides that “subject to section 6, a bond shall not be required in respect of a small estate, unless, (a) a beneficiary of the estate is a minor; or (b) a beneficiary of the estate is incapable within the meaning of section 6 of the Substitute Decisions Act, 1992 in respect of an issue in the proceeding, whether or not the person has a guardian.”

By Justin DominicBlog, Wills and EstatesApril 16, 2021April 16, 2021

Witness Statements- Best Practices

Obtaining Statements

Witness statements should be obtained as soon as possible after a loss. The likelihood of locating witnesses is highest immediately after an incident and diminishes over time. It will also be more likely that a precise and detailed statement can be obtained while the witnesses’ recollections are fresh.

Do not wait until preparing for trial to obtain witness statements. Statements should be obtained in sufficient time to be used at mediation or pre-trial. Get them as quickly as possible. Obtaining liability statements after notice of a pending action may help discourage further litigation. The information contained in the statements can also be helpful on examinations for discovery.

Statements should generally be obtained from all liability witnesses. Do not rely on the statements included in the police notes, as these are frequently incomplete or unclear and often inaccurate. It is important to iron out any inconsistencies at the outset.

Statements should also be obtained from any potential damages witnesses, such as neighbours, co-workers or friends. The identity of these potential witnesses can be obtained at examinations for discovery. Obtaining statements from these witnesses should be undertaken as soon as possible, and in any event well in advance of mediation or pre-trial.

Reviewing Statements

Where statements are obtained by an independent adjuster, they should be reviewed carefully to ensure that they are complete and unambiguous. Review the statements carefully for the following:

Does the statement pin down the liability issue adequately?
Is additional information required?
Is there scope to challenge the witness on cross-examination that should be addressed at the time of obtaining the statement?

If any additions or revisions to the statement(s) are required, they should be undertaken promptly and a revised statement should be prepared and forwarded to the witness for review. The witness should be asked to confirm the revised statement’s accuracy. If possible, the revised statement should be signed by the witness. The statement can also serve as an aide-memoire.

Use of Statements

Rule 31.06 (2) of the Rules of Civil Procedure requires disclosure of the names and addresses of potential witnesses. A summary of the evidence of the witness must also be given. The statement itself is privileged and except in rare circumstances, a copy of the witness statement should not be produced to opposing counsel. It is essential that the statement(s) be listed in Schedule B of the Affidavit of Documents.

The statement can be referenced at mediation or pre-trial, where it will retain its privileged character.

The statement can be used to assist in preparing the witness for trial. It is important, however, to ensure that the privilege attaching to the statement not be inadvertently waived. For example, if the witness states that they reviewed the statement to refresh their memory for trial, opposing counsel may be entitled to compel production of the statement. Accordingly, counsel should use the information in the statement to prepare the witness, without necessarily putting a copy of the statement before the witness.

Should the opposing counsel call the witness at trial, the statement can be used to cross-examine the witness.

If you have further questions about witness statements or any other insurance defence matter, do not hesitate to contact George O. Frank at 416-446-5858 or george.frank@devrylaw.ca.

By Justin DominicBlog, Insurance DefenceApril 14, 2021April 14, 2021

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