A Tax Trap for The Unwary! In its April 2021 budget the Trudeau government proposed a new tax on vacant residential properties owned by nonresidents. According to the budget document “This will help to ensure that foreign, non-resident owners, who simply use Canada as a place to passively store their wealth in housing, pay their fair share.” Finance Minister Chrystia Freeland told reporters at the time “The idea here is that homes are for Canadians to live in, they are not assets for parking offshore money.” The Underused Housing Tax Act passed in June of 2022 and introduced an annual 1% tax on the targeted properties. The tax is retroactive to calendar years commencing January 1, 2022. The Canada Revenue Agency published technical details as well as the form of the return on January 31st, 2023. Unfortunately, the legislation has a far greater impact than simply taxing “foreign, non-resident owners” who are “parking offshore money” in Canadian residential real estate. Every Canadian partnership, private corporation and trust which holds title to residential properties MUST file a return each year for each property held on December 31of any calendar year. The filing deadline is the same for all entities regardless of their tax year-end date – April 30 of the subsequent calendar year. Failure to file a return results in a minimum penalty of $5,000 for individuals and $10,000 for corporations for each property. The penalty applies even if the property is not subject to the 1% tax. If the property is taxable, a percentage of the tax may be added to the penalty. In order for a corporation or partnership to file a return, it must first register for an “RU” extension to its Business Number. CRA has indicated that registration will be possible after February 6, 2023. Non-residents who are required to file a return must first obtain an Individual Tax Number from CRA. Individuals who are Canadian citizens or Permanent Residents as defined in the Immigration and Refugee Protection Act, governments, publicly listed companies, REITs, charities, co-ops, mutual funds, municipal governments, schools and some other entities are exempt from both the requirement to file a return and from the tax itself. Every Canadian private corporation, partnership and trust holding residential property on December 31 in a year is required to file a return whether or not tax is payable. A corporation is only exempt from taxation if more than 90% of its shares are held by Canadian citizens or residents. In the case of partnerships holding residential property, the exemption is only available if all of the partners are Canadian citizens or residents. Similarly, in the case of a trust, the threshold is that all of the beneficiaries are Canadian citizens or residents. Many trusts, particularly testamentary trusts – trusts created by a will – may have non-Canadian beneficiaries. Estate trustees must file a return if the estate assets included a residential property on December 31. There is a potential impact on testamentary trusts as the exemption from taxation only applies to the year in which the testator died and the subsequent year. Cottages or other residential property held through a family trust or cottage trust also trigger the filing requirement. It cannot be over-emphasized that there is no exemption from the penalties for failure to file a return for each residential property so owners of private corporations, partners in partnerships, trustees, and executors need to be vigilant if any of the assets of these entities meet the definition of residential property in the Act. Residential property is described as follows: residential property means property (other than prescribed property) that is situated in Canada and that is (a)a detached house or similar building, containing not more than three dwelling units, together with that proportion of the appurtenances to the building and the land subjacent or immediately contiguous to the building that is reasonably necessary for its use and enjoyment as a place of residence for individuals; (b)a part of a building that is a semi-detached house, rowhouse unit, residential condominium unit or other similar premises that is, or is intended to be, a separate parcel or other division of real or immovable property owned, or intended to be owned, apart from any other unit in the building together with that proportion of any common areas and other appurtenances to the building and the land subjacent or immediately contiguous to the building that is attributable to the house, unit or premises and that is reasonably necessary for its use and enjoyment as a place of residence for individuals; or (c)a prescribed property Whether or not a property is “owned” is based on whether it holds legal title or a lease, it is not based on beneficial ownership. Whether or not the tax applies depends on a number of factors set out in the Act which determine whether the property is “underused” in the year. It should be noted however that there is no exemption from taxation for properties that meet the statutory definition of residential property and are not vacant, but are used for non-residential purposes such as offices, hotels, or vacation rentals. If you are an executor trustee or partner or have an interest in a private corporation, partnership or trust that holds residential property you should be prepared to register and file a return, or obtain professional assistance in doing so. Remember that the UHTA is reported on a calendar year basis, so corporations will have to file by the end of April each year even if they have an off-calendar year-end. The filing deadline for this year is May 1st, 2023 as April 30 falls on a Sunday. “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 situations and needs.” By Fauzan SiddiquiBlog, TaxFebruary 6, 2023June 10, 2023
Norwich Orders: A Powerful Tool For Gathering Evidence and Locating Stolen Assets An employer being defrauded by an employee is often faced with a difficult problem: how to gather information about the fraud and the location of stolen assets, including money, before the employee takes steps to destroy evidence and dissipate or hide misappropriated assets? To address this problem, Ontario courts may compel an innocent third party to disclose otherwise confidential information about a client, including his or her assets as well as the history and use of bank accounts and credit facilities. It does so by way of a “Norwich order”, named after a British case, which permits the victim to obtain information from third parties for the purpose of proving a fraud, identifying the wrongdoer, and recovering stolen property. An application for a Norwich order can be brought without notice, may be heard in a closed courtroom and will often be joined with confidentiality orders, including one which seals the court file for a certain period, so as to avoid tipping off the wrongdoer. The order is, however, an extraordinary one, requiring the following: that the applicant for it show that the fraud claim is valid, bona fide and not frivolous or vexatious; that the third party from whom information is being sought is “involved”, even innocently, as will be the case with a bank holding, without knowing, stolen funds on deposit; that the third party is the only practicable source for the information being sought; that the applicant indemnify the third party for the costs associated with compliance with the order; and that after weighing the interests of and potential injury to the parties involved, the court is satisfied that it is in the interests of justice that the order be made. Once granted, a Norwich order can be a powerful tool. With it, an employer can gather information that will often be critical to unraveling a fraud and determining where stolen property has gone – ideally well before the wrongdoer knows that he or she has been found out. The employer can then take steps to try to freeze assets and to preserve evidence. “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 situations and needs.” By Fauzan SiddiquiBlog, LitigationFebruary 3, 2023June 10, 2023
Homeowner Beware: A Reminder That You Should Consider Title Insurance For Your Home A recent headline in the Toronto Sun caught my eye: Homeowners urged to get title insurance after Etobicoke real estate fraud.[1] The related article tells the tale of unknown individuals who allegedly impersonated the owners of a home and sold it while the owners were away. The story includes a recommendation from Tim Hudak, of the Ontario Real Estate Association, to get title insurance for your home. In addition to being the place where you live and raise your family, the home is often your largest single asset. What do you do if you find out one day that the registered owner of it is someone whom you have never heard of or that there is now a whopping $500,000 mortgage on it to which you did not agree? How do you navigate trying to undo the fraud? Reporting the matter to the police can be important, but it will not reverse the fraud. Having title insurance which insures your property against fraud may be the answer. We often get retained by title insurers to take the legal steps necessary to fix or delete fraudulent transfers and fraudulently registered mortgages, the consequence of which could otherwise be devastating. So, what is title insurance? In general terms, it is insurance to protect property owners and lenders against certain losses related to the property’s ownership and interests in it. It is available in Ontario from several insurers, including FCT,[2] Stewart Title Guaranty Company,[3] Chicago Title (Canada),[4] and TitlePLUS.[5] What does it cover? The title policy in question will set out what insurance is provided. Generally speaking, however, title insurance will cover, among other things, fraudulent registrations against the property, unknown title defects which may affect ownership, some liens, encroachments and right-of-way issues, and errors in surveys and public records. What does title insurance cost? Like other insurance, you need to pay a premium to obtain it. Unlike most other types, the premium is a one-time payment, usually a few hundred dollars, and, best of all, the insurance normally continues as long as you own the insured property. Mr. Hudak’s recommendation constitutes good advice. Every homeowner should, at the very least, consider title insurance. A good place to start is to ask your lawyer about it, especially before you buy your home. “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 situations and needs.” By Fauzan SiddiquiBlog, Real EstateJanuary 23, 2023July 5, 2023
Entering Canada After Being Convicted of an Offence (Criminal Rehabilitation vs. Record Suspension (Pardon)) By Dayna Devonish-Montique and Abby Leung Individuals who were convicted of a minor or serious criminal offence may be considered inadmissible to enter Canada. However, individuals can overcome this criminal inadmissibility either by applying for criminal rehabilitation or a record suspension/pardon. This blog will detail the requirements for both processes to determine eligibility to enter Canada. Criminal Rehabilitation Under Canada’s immigration laws, individuals who have committed or have been convicted of a minor or serious crime outside Canada may not be allowed to enter Canada and are considered “criminally inadmissible”. Depending on the crime, how long ago the crime was committed, and the individual’s behaviour since the crime was committed, individuals may still be allowed to come to Canada under this category if they are deemed rehabilitated or if an immigration officer approves an application for criminal rehabilitation. Deemed rehabilitation under Canada’s immigration laws means that enough time has passed since the crime was committed so that the individual’s criminal history does not bar entrance to Canada. Individuals are eligible to apply for deemed rehabilitation at a port of entry if the individual only had one conviction in total or committed only one crime, at least ten years have passed since the completion of all sentences, the crime committed is not considered a serious crime in Canada, and the crime did not involve any serious property damage, physical harm to any person, or any type of weapon. If an applicant believes that they are eligible, they must provide required documents including a recent police certificate from the country they were convicted in, along with court documents for each conviction, a recent criminal record check, and a passport or birth certificate. If deemed rehabilitated, applicants will be allowed to enter Canada, provided that they meet additional requirements for entry such as visitor visa requirements. Any request for deemed rehabilitation is not guaranteed to be approved. If an individual is not eligible to apply for deemed rehabilitation, they may apply for criminal rehabilitation if the criminal act occurred outside of Canada and if five years have elapsed since the act or since the end of the sentence imposed. An application for criminal rehabilitation for a US applicant requires submitting a state police certificate, an FBI police certificate, documents relating to the sentence imposed, and court judgments that demonstrate the charge/s, the verdict, and the sentence imposed, among other documents. If an individual needs to travel to Canada but cannot apply for rehabilitation because five (5) years have not passed since the end of the sentence imposed or are not eligible to apply for a record suspension, they must request special permission to enter or remain in Canada. After reviewing the application, an immigration officer may advise that the applicant could apply for special permission (temporary resident’s permit) to enter Canada, or to advise that they do not recommend that the applicant travel to Canada. Record Suspension (Pardon) A record suspension (previously called pardon) allows people who were convicted of a criminal offence but have completed their sentence and demonstrated that they are law-abiding citizens to have their criminal record kept separate and apart from other criminal records. A record suspension has the effect of removing a person’s criminal record from the Canadian Police Information Centre (CPIC). However, a record suspension does not erase a convicted offence nor guarantees entry or visa privileges to another country. A record suspension can be revoked or cease to have effect if the applicant is convicted of a new indictable offence, is found to no longer be of good conduct, found to have made a misleading statement, or is found ineligible for a record suspension at the time the record suspension was ordered. If a record suspension is revoked or ceases to have effect, the record of offence is added back to CPIC. An applicant may apply for a record suspension if they were convicted of an offence in Canada under a federal act or regulation of Canada as an adult and/or were convicted of a crime in another country and were transferred to Canada while serving that sentence under the International Transfer of Offenders Act. An applicant does not need to apply for a record suspension if the applicant only received an absolute or conditional discharge, or were only convicted in a youth court or youth justice court. To apply for a record suspension, an applicant must have completed all of their sentences which includes all fines, costs, restitutions, sentences of imprisonment, conditional sentences, probation orders, etc. The waiting period begins after an applicant has completed all of their sentences. The following table provides a short summary of the waiting periods: Date Waiting Period Before June 29, 2010 · 5 years – an offence prosecuted by indictment · 3 years – an offence punishable on summary conviction Between June 29, 2010 and March 12, 2012 · 10 years – serious personal injury offence including manslaughter, an offence where an individual was sentenced to a prison term of 2 years or more, and an offence referred to in Schedule 1 that was prosecuted by indictment · 5 years – any other offence by indictment and an offence referred to in Schedule 1 that is punishable on summary conviction · 3 years – an offence other than the ones mentioned above, that is punishable on summary conviction. On or after March 13, 2012 · 10 years – an offence prosecuted by indictment · 5 years – an offence that is punishable on summary conviction. If eligible to apply, applicants can apply directly to the Parole Board of Canada (PBC) for a Record Suspension. Applicants must provide their criminal record, court information for each of their convictions, local police record checks, and documents to support identification, among other forms. Conclusion While criminal rehabilitation and record suspensions appear similar on its face, an important difference is that criminal rehabilitation focuses on criminal offences committed outside Canada while record suspensions focus on criminal offences committed within Canada. When the conviction is inside Canada, rehabilitation is not an option and applicants can apply for record suspension. Conversely, when the conviction is outside Canada, record suspension is usually not an option (unless convicted of a crime in another country and were transferred to Canada while serving that sentence under the International Transfer of Offenders Act) and applicants can apply for rehabilitation. Important to note, if an individual committed offences both inside and Canada and, they require both an approval of rehabilitation and a record suspension in order to be admissible to Canada. The request for criminal rehabilitation cannot be made until a record suspension is first approved, unless the individual has only one (1) summary conviction offence in Canada. If you have any questions related to your immigration law matter, please visit our website or contact Dayna Devonish-Montique at Devry Smith Frank LLP at 705-526-9328 ext 101 or at dayna@prostlaw.com. “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 situations and needs.” This blog was co-authored by student-at-law, Abby Leung By Fauzan SiddiquiBlog, ImmigrationJanuary 17, 2023June 10, 2023
Welcome to Canada: Canada Grants Unprecedented Number of Permanent Residency Permits in 2022 On January 3, 2023, Immigration Refugees and Citizenship Canada (IRCC), the federal department responsible for the processing of immigration applications, announced that Canada welcomed over 437,000 new immigrants in 2022.[1] This number is higher than the target set at 431,645 new immigrants in Canada by the end of 2022, and marks a new record for the number of Canadian permanent residence admissions in one year, breaking the previous record of over 405,000 new immigrants in 2021.[2] In achieving this record, IRCC credits new technology, streamlined processing, and the use of online applications. IRCC processed over 4.8 million applications across all lines of business in 2022 which includes applications for permanent residence, temporary residence, and citizenship. This is double the number of applications processed in 2021.[3] IRCC has emphasized the importance of immigration as a key part of Canada’s long-term economic growth plan. Economic migration addresses labour shortages and stimulates the Canadian economy by providing government and business with critical workers. Shortages of skilled workers in industries such as healthcare, manufacturing, building trades and STEM (Science, Technology, Engineering and Math) are acute and require a high number of skilled immigrants and workers to fill these positions. New features in Express Entry will target qualified immigrants in these sectors. Additional measures to promote economic growth include regional programs to address labour needs and in-demand skillsets for small towns and rural communities. IRCC has also struggled to keep up with the backlog of applications resulting from the COVID-19 pandemic. As pandemic-related restrictions eased, the number of processed applications steadily increased in 2022, with the federal government moving forward with its plan to boost the number of immigrants in Canada. The immigration levels plan for 2023-2025 sets an ambitious target of welcoming approximately 500,000 new permanent residents each year by 2025, with a target of 465,000 new immigrants for 2023.[4] As IRCC continues to add more resources, streamline processing, and expand its programs, immigration will remain a priority in achieving Canada’s economic goals. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. For more information about immigration and your specific circumstances, please contact a lawyer in the Immigration Law Group. This blog was co-authored by student-at-law, Abby Leung [1] https://twitter.com/CitImmCanada/status/1610403133355659264 [2] https://www.canada.ca/en/immigration-refugees-citizenship/news/2022/12/canada-welcomes-historic-number-of-newcomers-in-2022.html [3] https://www.canada.ca/en/immigration-refugees-citizenship/news/2022/12/canada-marks-record-breaking-year-for-processing-immigration-applications.html [4] https://www.canada.ca/en/immigration-refugees-citizenship/news/notices/supplementary-immigration-levels-2023-2025.html By Fauzan SiddiquiBlog, ImmigrationJanuary 9, 2023June 10, 2023
The Laws Surrounding Formal Wills and Holographic Wills in Ontario Wills are a powerful tool that people can use to ensure that their families and loved ones are cared for after they pass away. The purpose of a Will is to convey the Testator’s wishes regarding the distribution of their properties and assets. Although not mandatory, Wills are often drafted by a lawyer. For a Will to be validly executed, section 4(2) of the Succession Law Reform Act, R.S.O., 1990, c. S.26 (“SLRA”) states that a Will must be signed at its end by the Testator (or some other person in the Testator’s presence by the Testator’s direction) in the presence of two or more attesting witnesses who will also subscribe the Will at the same time. More specifically, in order for the Will to be deemed valid in Ontario, the SLRA requires the two witnesses to be present when the Testator signs and dates the Will. Due to the COVID-19 pandemic, several provinces have implemented virtual witnessing of legal documents. Effective August 1, 2020, O. Reg. 431/20 was enacted to permit remote commissioning in Ontario. In order for Wills to be witnessed remotely and in counterpart, at least one of the witnesses must be a lawyer licensed by the Law Society of Ontario. “Remote witnessing” means that the signing of Wills can be completed with audio-visual communication technology. “In counterpart” means the witnesses can sign their respective copies of the Will. Furthermore, all the signed copies must be kept together in order to finalize the Will. Wet signatures on paper documents are still required in Ontario. Such Wills are known as a “Formal Will”. A Formal Will is the best way to convey the individual’s wishes and intentions regarding their Estate. Requirements for Formal Wills The Will must be created by an individual of sound mind, and over the age of majority in Ontario (age of 18); The Will must be made by the Testator – no one else can make it on their behalf; The Will must be signed in the “presence” of two valid witnesses; A witness should not be a beneficiary or the spouse or parent of any beneficiary; The witnesses must sign the last page of the Will together with the Testator; The Will must be signed in “wet ink” (a pen, seal, or other identifying mark) and stored as a physical copy. The second kind of Will recognized in Ontario is known as a Holographic Will. According to section 6 of the SLRA, a Testator may make a valid Will wholly by his or her own handwriting and signature, without formality, and without the presence, attestation or signature of a witness. Requirements for Holographic Wills The Holographic Will must wholly be the handwriting of the Testator; The Holographic Will must be signed by the testator at the end of the document; The Holographic Will must contain a “deliberate or fixed and final expression of intention as to the [Testator’s] disposal of property upon death”; Any gifts ‘below’ the signature are NOT be valid; Holographic Wills do not require witnesses; Holographic Wills do not require a date (although this can be very helpful). Changes to Existing Wills A Codicil is a legal document that is used to make minor modifications to an already existing Last Will and Testament. A Codicil has the same signing requirements as a Formal Will. In order to create a Holographic codicil, the entire amending document must be handwritten, with the date and signatory at the end of the document. Codicils are typically used for the purposes of changing the name of an executor, guardian, or beneficiary, or adding or deleting specific bequests. It is generally not recommended to have more than one Codicil to your Will as multiple documents may lead to a misinterpretation of the Testator’s intentions. The Case of Lacroix Estate, 2021 ONSC 2919 The Testator, Rebecca Lacroix, instructed solicitor Margaret Opatovsky to prepare her Will while she was hospitalised with late-stage cancer in 2020. Due to COVID-19 restrictions, Opatovsky was unable to visit Lacroix in the hospital to have the Will properly executed. Consequently, she delivered the typewritten Will to the hospital and advised Lacroix to create a Holographic Will incorporating the draft Will. Accordingly, Lacroix stated in a handwritten note: “I, Rebecca Stephanie Lacroix, declare that this holographic will shall constitute my last will and testament and I hereby incorporate into this my will the attached draft will which I have initialed on each page for identification purposes.” She attached this note to the draft Will and initialed each page. When the Estate Trustee named in the draft Will applied to the Court for a Certificate of Appointment, the Court denied the Application. The Court examined sections 6 and 7 of the SLRA and found that the Holographic Will satisfied the requirements under the Act to be valid. However, the Holograph Will alone was not a valid testamentary document, as it did not independently dispose of any property. Moreover, the Court noted that a Holographic Will cannot incorporate by reference a typewritten document, and the Holographic Will must be wholly in the deceased’s handwriting. Recent Legislative Amendments The Accelerating Access to Justice Act is a large omnibus Bill that amends various Ontario statutes and regulations, including the SLRA. As of January 1, 2022, Schedule 9 amends the SLRA by adding section 21.1 to give the Superior Court of Justice authority to, on application, make an order validating and rendering fully effective a document or writing that was not properly executed or made under the SLRA if the Court is satisfied that the document or writing sets out the testamentary intentions of a deceased, or an intention of a deceased to revoke, alter or revive a Will. Electronic Wills form an exception to this provision. Previously, Ontario adhered to a strict compliance regime such that the Court had no discretion in determining a document as constituting a valid Will if it did not fully comply with the requirements prescribed by the SLRA. Now, under section 21.1, improperly signed Wills are treated with more flexibility such that the Superior Court is authorized, on application, to determine a non-compliant Will valid. It is important to note that one can only make an application under section 21.1 where the date of death of the Testator is on or after the effective date, being January 1, 2022. Conclusion Recent amendments to the SLRA show that the law governing Wills and testamentary documents in Ontario is gradually but steadily evolving. However, Ontario legislators should take a cue from other provinces, such as British Columbia, where digital signing of Wills by Testators is now legal. Courts should also work to clarify the law governing the inclusion of typewritten documents in Holographic Wills. For more information regarding Wills, Trusts, and/or Estates related topics, please contact Kelli Preston at Devry Smith Frank LLP at (416) 446-3344 or kelli.preston@devrylaw.ca. “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 situations and needs.” This blog was co-authored by Owais Hashmi* By Fauzan SiddiquiBlog, Wills and EstatesJanuary 4, 2023July 6, 2023
When can multiple entities be considered a single employer? O’Reilly v. ClearMRI Solutions Ltd., 2021 ONCA 385 (CanLII) Under the common law Doctrine of Common Employer, multiple entities can be considered a single employer under particular circumstances. The O’Reilly case is crucial for clarifying the “common employer” doctrine in Ontario employment law. Specifically, it articulates the need to show intent to create an employer/employee relationship between the employee and the alleged common employer(s). Overview In October of 2014, William O’Reilly commenced a claim for six months’ wages and twelve months vacation pay against his employer(s) via myriad defendants: ClearMRI Solutions Ltd. (“ClearMRI Canada”), ClearMRI Solutions, Inc (“ClearMRI US”), Tornado Medical Systems Inc. (“Tornado”), as well as against individual directors of these corporations.[1] All of the corporations were sued collectively as “common employers.” Tornado was the majority shareholder of ClearMRI Canada which itself had ClearMRI US as its own wholly owned subsidiary.[2] Although William did not have a written employment contract or position with Tornado, he alleged that Tornado—along with the other corporations—were all his common employers.[3] William obtained default judgment against the ClearMRI companies and successfully moved for summary judgment against the other defendants.[4] Tornado appealed.[5] The Ontario Court of Appeal allowed Tornado’s appeal, stating that the motion judge erred in the articulation and application of the common employer doctrine.[6] In doing so, the Court of Appeal confirmed that the motion judge made an extricable error of law in concluding that Tornado was a common employer.[7] The Lower Decision William served as the CEO of ClearMRI Canada.[8] In 2012, William signed an agreement with ClearMRI US confirming the terms of his employment which named ClearMRI US as the employer.[9] William did not hold any formal position with Tornado.[10] Although ClearMRI US was named as William’s employer in the written agreement, the motion judge found that William was also employed by Tornado.[11] The motion judge identified three factors that should be considered in determining whether there was a common employer: the employment agreement itself, where the effective control over the employee resides, and whether there was common control between the different legal entities.[12] Using these factors, the motion judge found that Tornado was a common employer of the plaintiff as Tornado exercised “a sufficient amount of control” over the plaintiff and found that there was common control between Tornado and the different legal entities.[13] Tornado appealed. Ontario Court of Appeal Decision On appeal, the Court of Appeal determined that Tornado was not liable as a common employer. A corporation is not held to be a common employer simply because it is owned, controlled, or was affiliated with another corporation that had a direct employment relationship with the employee.[14] Rather, a corporation will be found to be a common employer only where it can be shown that there was an intention to create an employer/employee relationship between the individual and the related corporation.[15] Where there is a written employment agreement with an entity other than the alleged common employer, the court must assess how such an agreement bears on whether there was an intention to create an employment agreement with the alleged common employer.[16] The Court of Appeal found that the motion judge failed to undertake the required analysis of the effect the written agreement had in determining whether there was intention that Tornado was a party to the employment agreement.[17] Further, the Court of Appeal found that none of the three factors that the motion judge relied on were enough to find that Tornado exercised control over the plaintiff as an employee. [18] Lastly, the Court of Appeal found that the motion judge failed to explain why the existence of a corporate relationship between Tornado and the ClearMRI companies provided an intention that Tornado was a party to the employment agreement with the plaintiff.[19] In all, the Court of Appeal found that there was no intention between the plaintiff and Tornado to contract with Tornado as a common employer. In the absence of evidence that would show an intention to have Tornado as a common employer, the Court of Appeal allowed the appeal and set aside the summary judgment against Tornado.[20] Analysis and Conclusion The Court of Appeal makes it clear that whether an entity is considered a common employer is dependent on the intention of the parties in addition to factors such as the existence of an employment agreement, control over the plaintiff, and existence of a corporate relationship between the entities. The courts will strictly interpret the application of the common employer doctrine to ensure that intercorporate relationships would not be conflated as evidence of a common employer relationship. Employees who provide services for multiple entities should seek legal advice as they may be able to seek recovery from multiple parties. Conversely, employers should be careful of having employees perform services for or take direction from other entities unless the intention is to create a common employer relationship. “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 situations and needs.” This blog was co-authored by student-at-law, Abby Leung [1] 2021 ONCA 385 at para 26. [2] Ibid at para 15. [3] Ibid at para 6. [4] Ibid at para 7. [5] Ibid at para 8. [6] Ibid at para 11. [7] Ibid. [8] Ibid at para 19. [9] Ibid at para 20. [10] Ibid at para 19. [11] Ibid at para 35. [12] Ibid at para 31. [13] Ibid at para 35. [14] Ibid at para 50. [15] Ibid. [16] Ibid at para 75 [17] Ibid at para 75. [18] Ibid at para 86. [19] Ibid at para 91. [20] Ibid at para 92. By Fauzan SiddiquiBlog, Employment LawDecember 29, 2022August 15, 2023
Non-Canadians Will be Prohibited from Buying Canadian Residential Property in 2023 Proposed in the Federal Budget of 2022, and passed in June of 2022, the Government of Canada has enacted the Prohibition on the Purchase of Residential Property by Non-Canadians Act[1] (the “Act”). As is made clear by the title, the Act prohibits the purchase of Canadian residential property by non-Canadians, directly or indirectly. ‘Indirectly’ refers to scenarios where a purchase is attempted through a trust, partnership, or an unincorporated association. Interestingly, the Act overrides section 34 of the Citizenship Act[2], which otherwise explicitly grants this right to non-Canadians. The Act will be enforced for a two-year period beginning January 1, 2023 and does not apply if a non-Canadian becomes liable or assumes liability under an agreement of purchase of sale of residential property before this date.[3] To understand the extent of the application of the Act to potential purchasers, it is important to pay close attention to the Act’s definition of a “non-Canadian”. The definition is as follows: an individual who is not a Canadian citizen, permanent resident of Canada or registered as an Indian under the Indian Act,[4] a corporation that is not incorporated under the laws of Canada or a Canadian province, a private corporation that is incorporated in Canada but that is controlled by a person referred to in paragraph (a) or (b) above. In addition, “purchase” means to acquire or agree conditionally or unconditionally to acquire a legal or equitable interest, or an immovable real right in a residential property. There have been proposals to preclude certain situations under this term, specifically those pertaining to an acquisition resulting from divorce or separation, the rental of a residential dwelling unit, or an acquisition resulting from succession. These proposals are expected to be included in a set of Supporting Regulations (the “Supporting Regulations”) that will be released to provide additional detail regarding the application of the Act. Exemptions As is common to many laws and regulations, the Act provides for certain exemptions. These exemptions include: temporary residents within the meaning of the Immigration and Refugee Protection Act[5] who satisfy prescribed conditions set out in the Supporting Regulations; a refugee; an individual who is a non-Canadian and who purchases residential property in Canada with their spouse or common-law partner if the spouse or common law partner is a Canadian citizen, person registered as an Indian under the Indian Act[6] permanent resident or person referred to in paragraph (a) or (b) above; or, a person of a prescribed class of persons under supporting regulations.[7] Penalties, Enforcement and Liability Under section 6(1) of the Act, anyone who contravenes or counsels, induces, aides or abets a contravention of the Act, or attempts any of the above, is guilty of a summary conviction of a fine of not more than $10,000. Additionally, if the offence is committed by a corporation, then any officer, director, or agent or other authorized individual that “directed, authorized, assented to, acquiesced in or participated in” the commission of the offence is a party and is held equally liable, regardless of whether the corporation was prosecuted.[8] Note that a contravention of the Act will not void a contract to purchase residential property from an innocent vendor. However, if a non-Canadian is convicted of having contravened the Act, a court may order that the property be sold in a prescribed manner and under prescribed conditions. Subsection 8(2) of the Act indicates that when a court orders the sale of residential property bought by a non-Canadian in contravention of the Act, the non-Canadian cannot receive more than the purchase price paid for the property from the proceeds of sale. Given the implications of the Act, individuals who are involved in the real estate industry, such as real estate agents, mortgage brokers and lawyers, should take extra care to ensure that they confirm the residential status of purchasing clients. Real estate professionals should independently verify their clients’ identity, document their clients’ Canadian status, and have the clients confirm their status in writing. Real estate professionals acting for the vendor in a transaction should also be wary about contravening the Act unintentionally. Even though it may not be the direct responsibility of the selling party to verify the Canadian status of the purchaser, do not be quick to conclude liability may not extend that far. It would be good practice to include certain provisions within an Agreement of Purchase and Sale to shield the selling party from potential liability at the outset of the transaction. If you have additional questions or concerns regarding the Prohibition on the purchase of residential property by Non-Canadians Act, please feel free to contact Jason Lane at Woitzik Polsinelli LLP at 289-220-3241 or jason@durhamlawyers.ca. 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 legal advice tailored to your specific situation and needs. [1] SC 2022, c. 10 s. 235 [2] RSC, 1985 c. C-29. [3] Supra note 1, s. 4(5). [emphasis added] [4] RSC 1985 c.I-5. [5] SC 2001 c.27. [6] Supra note 5. [7] Supra note 1, s. 4(2). [8] Ibid, s. 6(2). By Fauzan SiddiquiBlog, Real EstateDecember 20, 2022June 10, 2023
Sticker Shock: Market Adjustment Fees in the Automobile Industry Automotive dealers have a supply and demand issue: they cannot secure enough supply to meet the customer demand. In the wake of supply chain issues, and in the face of these market realities, many dealerships resort to including “market adjustment fees” on top of the final bill charged to the end customer. This market adjustment fee could be added even after the parties have negotiated the price. This sticker shock to the consumer can cause surprise and dismay. Market adjustment fees may be hundreds or even thousands of dollars over the manufacturer’s suggested retail price. These fees are becoming more commonplace in the market of low inventory and inflated prices. However, many consumers wonder if dealerships can include market adjustment fees even after an agreement is reached between the customer and the dealership. The answer will likely depend on if the agreement is a binding contract. Binding Contract or Negotiated Price? A binding contract includes all the terms and conditions in which the dealer and the consumer agree to, including any additional fees. In order for a purchase agreement to be binding, each purchase agreement must contain the following statement next to the purchaser’s signature: Sales Final Please review the entire contract, including all attached statements, before signing. This contract is final and binding once you have signed it unless the motor vehicle dealer has failed to comply with certain legal obligations.[1] If an agreement reached between the dealership and the customer is not a binding contract, a dealership could add market adjustment fees in the final contract. Background: The Law and Ethics The legal framework is articulated by statute and regulations. The Ontario Motor Vehicle Industry Council (“OMVIC”) administers the Motor Vehicle Dealers Act, 2002, SO 2002, c 30, Sched B (the “Act”) which sets out the requirements that must be fulfilled by those engaging in the business of buying and selling vehicles. The OMVIC provides that under the Act, if a motor vehicle dealer advertises a price for a new or used vehicle, the price must include all fees and charges the dealer intends to collect with the exception of HST and licensing.[2] Examples of fees that must be included in an advertised price include government levies, pre-delivery inspection or expense fees, administration fees, and OMVIC fees.[3] However, adding additional fees to vehicles that catches a customer’s eye at a dealership is permitted — provided that the fees are clearly indicated in the contract. The legal framework is complemented by a code of ethics for the industry. The OMVIC may not have the authority to stop the practice of adding market adjustment fees, but they may have the prerogative to remind dealerships to abide by the Act’s code of ethics. Section six (6) of the Act enshrines a code of ethics which requires dealerships to act with integrity, respect, and honesty.[4] This is a requirement to maintain registration. OMVIC encourages their dealers and salespeople to meet the high standards enshrined in the legislation. However, none of the OMVIC bulletins issued since the pandemic specifically discourage dealerships from adding market adjustment fees or other unexpected charges in final contracts.[5] In particular, OMVIC did not provide any refutation that adding market adjustment fees are unethical, or that dealerships should not change interest rates or prices after prior negotiations. Little Recourse without a Binding Contract (For Now) Currently, consumers in Ontario have little recourse when a negotiated price is not a binding agreement. Consumers should ensure that all promises, terms, and conditions and a statement providing that the contract is final and binding once signed unless the dealer fails to comply with certain legal obligations are written on the contract. South of the border, the Federal Trade Commission in the United States is proposing new rules which aim to prohibit market adjustment fees and bait-and-switch advertising tactics in an effort to eliminate unwanted charges.[6] If similar rules were adopted in Ontario, it would help protect consumers by making the car-buying process more clear and competitive. It would further allow OMVIC to recover money when consumers are misled or charged without their consent. Until such rules are implemented, customers will need to take the extra step to ensure their price negotiations are binding. “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 situations and needs.” This blog was co-authored by student-at-law, Abby Leung [1] https://www.omvic.on.ca/portal/Consumers/ConsumerProtection/CancellinganAgreement.aspx [2] https://www.omvic.on.ca/portal/Consumers/ConsumerProtection/AllInPricing.aspx [3] Ibid. [4] SO 2002, c. 30 Sched B, s. 6. [5] https://www.cbc.ca/news/business/market-adjustment-fee-car-sales-1.6653676 [6] https://www.ftc.gov/news-events/news/press-releases/2022/06/ftc-proposes-rule-ban-junk-fees-bait-switch-tactics-plaguing-car-buyers By Fauzan SiddiquiBlog, Commercial LitigationDecember 16, 2022June 10, 2023
More Homes Built Faster Act,2022 pt.2 Further to our 8 November article on this topic, the More Homes Built Faster Act (Bill 23) received Royal Assent on to 28 November 2022 and is now largely in force. It is intended to increase housing supply and affordable housing options for Ontarians by getting 1.5 million homes built over the next 10 years. It boldly does so in a number of very significant and controversial ways. The highlights of the approved form of Bill 23 include: Development Charges Act, 1997 Bill 23 creates a number of new exemptions from development charges as follows: the greater of 1 residential unit or 1% of existing residential units in a building containing 4+ residential units; up to 3 residential units in a new detached house, semi-detached house or rowhouse; non-profit housing development; and residential affordable housing pursuant to a development approved by way of a zoning by-law (after 28 November 2022); and residential units intended to be affordable or attainable for a period of 25 years or more (on a date to be proclaimed) Under section 5 of that Act the amount of development charges are now reduced on a sliding scale from 80% to 95% from the charges imposed pursuant to a by-law passed on or after January 1, 2022 (unless the DC is payable immediately prior to 28 November 2022). Development charges for rental housing projects are reduced by 25% for premises with three or more bedrooms, 20% for two bedroom units, and 15% for all other residential units. Commencing on 1 January 2023 municipalities are now required to spend and/or allocate each year at least 60% of the monies in reserve funds for water supply services, including distribution and treatment of services, waste water services, and treatment and services related to highways. A development charge by-law now expires every 10 as opposed to every 5 years. The Planning Act The most significant changes to the Planning Act will limit/extinguish the appeal rights of third-parties, including upper tier municipalities now characterised as upper tier municipalities without planning responsibilities (the GTA Regions of Durham, Halton, Niagara, Peel, Waterloo, York and Simcoe) and conservation authorities (date to be implemented TBD). For minor variances and consents the Act will restrict a right of appeal to applicants, public bodies and “specified persons” (public utilities, operators of railway lines, and telecommunications providers). This will increase the significance of local Committees of Adjustment as they may now be the only opportunity to oppose a project. Importantly this provision has retroactive effect and will nullify appeals where a hearing on the merits has not been scheduled before October 25, 2022. Upper Tier municipalities without planning responsibilities will cease to become approval authorities for local planning instruments. Bill 23 contains other consequential changes including: deleting the prohibition on making requests for official plan and zoning by-law amendments for the 2 year period following their coming into effect; allowing the Minister of Municipal Affairs and Housing to make amendments to official plans where the Minister is off the opinion that a plan will adversely affect a matter of provincial interest; allowing up to three residential units in a house to be permitted “as of right” (including placing restrictions on parking requirements); reducing the section 37 community benefit further by making the prescribed percentage of value (4%) subject to a ratio recognizing the existing floor area. This ratio will be further reduced where the formula takes into account affordable/attainable units (date to be implemented TBD); exempting from site plan control (section 41): A. residential development of up to 10 units and a land lease community home from site plan control; and B. exterior design as an element to be considered in site plan drawings. It will be interesting to see what effect this has on urban design guidelines; revising section 42, parkland dedication, requirements by: A. with respect to the dedication of land/cash-in-lieu of 5% (residential rate): decreasing that requirement by the percentage of affordable/attainable units (on a date to be proclaimed); and exempting up to 3 residential units and non-profit housing; B. with respect to the alternate rate (unless a building permit has been issued): changing the rate from 300 units/ha to 600 units/ha; restricting the calculation further to: if 5 ha or less of land, 10% of the land or the value of the land; if more than 5 ha 15% of the land or land value; excluding from the calculation: the number of existing units; and affordable/attainable units from the calculation of net residential units (date to be implemented TBD); C. permitting land owners to propose the conveyance of portions of their land, including encumbered lands, for parkland purposes as opposed to having to rely on the determination of the local municipality (date to be implemented TBD); and D. requiring municipalities to allocate at least 60% of monies collected for parkland purposes at the beginning of each year (1 January 2023). amending section 51 by removing the requirement for a public meeting on subdivision applications. Conservation Authorities Act The Conservation Authorities Act is amended to greatly reduce the ability of Conservation Authorities to regulate development activity by removing their ability to comment on development applications and to require permits for projects approved under the Planning Act. Moreover the Minister will have greater powers to make exceptions for development applications. (date to be implemented TBD). “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 situations and needs.” By Fauzan SiddiquiBlog, Real EstateDecember 9, 2022May 16, 2023