Legal blog by WARDS LAWYERS PC.

Featuring "Hard Labour" by Jason Ward


A WARNING TO EMPLOYERS - THINK YOU HAVE CAUSE? THING AGAIN......THE HEAVY PRICE YOU MAY PAY

The September, 2015 Case: Gordon v. Altus Group Limited 2015 ONSC 5663.

The Outcome:

The employer alleged cause for termination. The Court held there was no cause for termination. The employer had to pay not only damages for failure to provide reasonable notice, but also $100,000 in punitive damages (for a failure to perform the parties’ employment agreement honestly) and reimbursement of the employee’s legal expenses.

The Reason:

The employer effectively launched a campaign of ‘trumped up’ allegations to try to establish cause for termination, effectively to intimidate the employee from making a claim for wrongful termination. They included: improper behaviour in the workplace, conflict of interest and, for example, hiring a friend (who allegedly had been a fraudulent person).

The employer failed to follow a progressive discipline process properly or procedurally. It should have, for example, held meetings with the employee to identify the concerns, provided written warnings and provide the employee opportunity and guidance to correct the alleged problems. The employer did not follow its own internal discipline policy. The Court also found the employer held ulterior motives in its conduct.

The Warning to Employers:

If you think you should fire an employee for cause, critically examine the existence of solid facts and solid evidence to substantiate the claim, as well as your motives.  Also consider whether you have followed the procedural steps required of you, such as providing the employee with a warning of the problematic behaviour before the termination occurs. There will be occasions when you may be able to terminate for cause with minimal risk because the problematic behaviour is very serious, has been documented, and the employee in question has been clearly warned that his or her job is in jeopardy.  In addition, there will be no extraneous circumstances that put into question your intentions. However, if you could be perceived as advancing “trumped up” allegations, or your position simply doesn’t pass the ‘smell test’, this case may persuade you to take a different course – it affirms and demonstrates the heavy cost you may pay if you proceed down the wrong path.

This WARDS PC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.

More information? We're here to help - jason@wardlegal.ca  www.wardlegal.ca

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WHEN NEIGHBOUR DISPUTES REACH THE COURTROOM - A POX ON BOTH YOUR HOUSES. YOU BOTH LOSE.

The Case: Morland-Jones v. Taerk, 2014 ONSC 3061 (CanLII)

The Dispute:

Neighbours. Mutual allegations about family pets, profanity, disturbing the peace and misbehaviour generally. An injunction was sought.

The Outcome:

A pox on both their houses. The Court dismissed all of the claims and, effectively, admonished both sides for usurping the limited resources of the judiciary as a forum for their Hatfield-McCoy-style dispute. Both sides, which obviously were sufficiently wealthy to fund this litigation, got no costs.

Here is the actual decision:

ENDORSEMENT

[1]               The parties to this action live across the road from each other in Toronto’s tony Forest Hill neighbourhood. The video footage played at the hearing shows that both families live in stately houses on a well-manicured, picturesque street. They have numerous high end automobiles parked outside their homes.

[2]               The Plaintiff, John Morland-Jones, is an oil company executive; the Defendant, Gary Taerk, is a psychiatrist. They do not seem to like each other, and neither do their respective spouses, the Plaintiff, Paris Morland-Jones and the Defendant, Audrey Taerk.

[3]               In this motion, the Plaintiffs seek various forms of injunctive relief on an interlocutory basis. It all flows from the Plaintiffs’ allegation that the Defendants have been misbehaving and disturbing their peaceful life in this leafy corner of paradise.

[4]               As counsel for the Plaintiffs explains it, the Plaintiffs’ house is ringed with eleven video cameras for security purposes. Two of them are aimed directly at the Defendants’ front door and driveway. They record, 24/7/365, every movement in and out of the Defendants’ home. The Plaintiffs can see when Ms. Taerk leaves to go shopping, they can study what the Defendants are wearing every morning when they pick up their newspaper on the front step, they have a videotaped record of when Mr. Taerk goes to work or walks his dog, etc.

[5]               Nothing that the Defendants do escapes the Plaintiffs’ video camera lens. The cameras trained on the Defendants’ house may or may not provide the Plaintiffs with a sense of security, but as demonstrated by the dozen or so videos produced in this motion, the Plaintiff’s “security system” is as much a sword as it is a shield.

[6]               The hearing before me started off with counsel for the Plaintiffs playing a short excerpt from security footage shot by the Plaintiffs several years ago, in which Ms. Taerk is seen performing a “poop and scoop” after a dog did its business on her front lawn. The Plaintiffs’ security camera shows her crossing the street with the plastic bag-full in hand, and then walking toward the Plaintiffs’ driveway where the garbage cans were out for collection. Although the impugned deed actually takes place off camera, Ms. Taerk can be seen moments later returning to her side of the street empty-handed.

[7]               Apparently, much to the consternation of the Plaintiffs, she deposited the goods in the Plaintiffs’ garbage can. In doing so, she failed to walk to the back of her house to place it in her own receptacle like a truly good neighbour would do.

[8]               The “dog feces incident”, as counsel for the Plaintiffs calls it, is a high point of this claim. At the hearing, it was followed by counsel’s description of a cease and desist letter sent to the Defendants in 2008 by a lawyer then representing the Plaintiffs, which describes what is now referred to by counsel as the “dog urination issue”. This letter enclosed photographs – apparently stills taken from the Plaintiffs’ non-stop video footage – documenting Mr. Taerk walking his dog and occasionally allowing it to lift its leg in a canine way next to the bushes lining the Plaintiffs’ lawn.

[9]               The Defendants did not respond to this erudite piece of legal correspondence. Counsel for the Plaintiffs characterizes this silence as an “admission”, although it is unclear just what legal wrong was being admitted to.

[10]           And it goes downhill from there. For example, the Defendants are accused of occasionally parking one of their cars on the street in a legal parking spot in front of the Plaintiff’s home. The Defendants do this now and then, according to the Plaintiffs, just to annoy them. This accusation was admittedly pressed rather sheepishly by Plaintiffs’ counsel, since the Plaintiffs have conceded that they park one of their own cars in front of the Defendants’ home every day. Indeed, the Plaintiffs cannot help but concede that fact, since their own non-stop video surveillance of the Defendant’s house shows the Plaintiff’s car sitting there day after day.

[11]           The Plaintiffs also complain quite vociferously about the fact that the Defendants – in particular Ms. Taerk – are in the habit of sometimes standing in their own driveway and taking cell phone pictures of the Plaintiffs’ house across the street. Apparently, the Plaintiffs, who keep two video cameras trained on the Defendants’ house night and day, do not like their own house being the target of Ms. Taerk’s occasional point-and-click.

[12]           The Plaintiffs also accuse Ms. Taerk of taking pictures of the Plaintiffs’ housekeeper taking their dog for its daily constitutional. The video tapes show the housekeeper leading the dog to what they describe as its favorite grassy spot in a parkette only feet from the Defendants’ front lawn. The housekeeper has deposed that she goes there with the dog every day. Ms. Taerk has made of show of documenting that activity.

[13]           Another complaint submitted by the Plaintiffs is that Mr. Taerk has taken up the habit of walking by their house with a voice recorder in hand, trying to catch some of the verbal exchanges between the parties. According to Mr. Taerk’s affidavit, Ms. Morland-Jones occasionally shouts profanity or other insults at him when he is on his walks, so he now only ventures onto the road armed with his dictaphone. He tends to hold it at the ready in his right hand as he walks rather than holstering it on his hip. 

[14]           The controversy has even extended to other lucky residents. The Plaintiffs summoned under Rule 39.03 no less than four of their neighbours to testify on the pending motion, no doubt endearing themselves to all of them. One witness, a lawyer, was asked to confirm that he had warned the Plaintiffs about the Defendants when they first moved into the neighbourhood; he responded that can recall saying no such thing. Another witness, a professor, was asked to confirm that she sold her house for below market value just to get away from the Defendants; she said she did not.

[15]           Each of the summonsed witnesses was asked by Plaintiffs’ counsel to confirm the affidavit evidence sworn by Mr. Morland-Jones that the Defendants are difficult people. None of them seemed to want to do that, although one of them did recount that the Defendants had objected to a renovation permit that the Plaintiffs once sought, and that the matter had proceeded to the Ontario Municipal Board. Another of the neighbours was asked to recount the rude nicknames that some neighbourhood children had given Ms. Taerk when she was a substitute teacher at a nearby school.

[16]           In what is perhaps the piece de resistance of the claim, the Plaintiffs allege that the Defendants – again focusing primarily on Ms. Taerk – sometimes stand in their own driveway or elsewhere on their property and look at the Plaintiffs’ house. One of the video exhibits shows Ms. Taerk doing just that, casting her gaze from her own property across the street and resting her eyes on the Plaintiffs’ abode for a full 25 seconds. There is no denying that Ms. Taerk is guilty as charged. The camera doesn’t lie.

[17]           For their part, the Defendants have not been entirely innocent. They appear to have learned that the Plaintiffs – and especially Ms. Morland-Jones – have certain sensitivities, and they seem to relish playing on those sensitivities. They realize, for example, that Ms. Morland-Jones does not enjoy having her house photographed, and so Ms. Taerk tends to take her cell phone out and point it at the Plaintiffs’ house precisely when Ms. Morland-Jones can see her doing it.

[18]           Ms. Taerk has testified that, in fact, she has not taken any pictures but rather has been pretending to do so by simply pointing her phone and clicking it randomly. Ms. Taerk presents this as a justification for not producing any photographs in the evidentiary record, but of course the explanation reflects more malevolence than what it attempts to excuse. In any case, Ms. Morland-Jones can be counted on to respond as predicted. It is a repeated form of hijinks that could, if a sponsor were found, be broadcast and screened weekly, although probably limited to the cable channels high up in the 300’s.

[19]           The same is true with Mr. Taerk’s voice recording technique. Although Mr. Taerk may have started carrying this device in order to record Ms. Morland-Jones’ spontaneous eruptions, cause and effect have now been reversed. Mr. Taerk appears to enjoy walking by the Plaintiffs’ residence with his dictaphone conspicuously raised to shoulder level when he sees Ms. Morland-Jones in her garden, which then prompts the very outbursts that he was at first reacting to. On one of the tapes, Ms. Taerk can actually be heard prompting Mr. Taerk to go out and goad Ms. Morland-Jones in this fashion.

[20]           The Plaintiffs’ teenage son has testified that when he was 10 years old, Ms. Taerk instructed him to stay off the public parkette adjacent to her home, saying that it belongs to the Defendants. He also deposed that when he was 16 the Defendants appeared to be photographing him one day as he sat in a parked car in front of his house – or, more accurately, just across from the Defendants’ house – with his girlfriend. He speculated, but could not entirely recall, precisely what he and the young woman were doing in the car at that moment.

[21]           The antics have only gotten worse since then. Ms. Morland-Jones has shouted at the Taerks from her front yard, and Ms. Taerk has given Ms. Morland-Jones “the finger” from her front driveway. The Defendants have apparently called the police on the Plaintiffs numerous times in recent years; the Plaintiffs have responded by retaining a criminal lawyer to attempt to have a peace bond issued that would restrict the Defendants’ movements. All of that has been to no avail.

[22]           Now the Plaintiffs have pursued civil litigation. To their credit, or perhaps to the credit of their counsel who has advised them well in this regard, the Defendants have not counterclaimed. Having acted provocatively to egg the Plaintiffs on and to prompt this gem of a lawsuit, the Defendants did not need to bring any claim themselves. The Plaintiffs have been their own worst adversaries.

[23]           In my view, the parties do not need a judge; what they need is a rather stern kindergarten teacher. I say this with the greatest of respect, as both the Plaintiffs and the Defendants are educated professionals who are successful in their work lives and are otherwise productive members of the community. Despite their many advantages in life, however, they are acting like children. And now that the matter has taken up an entire day in what is already a crowded motions court, they are doing so at the taxpayer’s expense.

[24]           As I explained to Plaintiffs’ counsel at the hearing, a court cannot order the Defendants to be nice to the Plaintiffs. Litigation must focus on legal wrongs and legal rights – commodities which are in remarkably short supply in this action. As my colleague Perell J. put it in High Parklane Consulting Inc. v  Royal Group Technologies Ltd., [2007] OJ No 107 (SCJ), at para 36, “[i]t is trite to say that making a living is a stressful activity and that much of life can be nasty and brutish. Tort law does not provide compensation for all stress-causing and nasty conduct that individuals may suffer at the hands of another…”

[25]           I cannot help but comment that the courts as public institutions are already bursting at the seams with all manner of claims. To add to that public burden the type of exchanges that these parties have engaged in would be to let the litigious society stray without a leash – or perhaps without a lis.  I note the observation made to this effect by the Supreme Court of New York in Johnson v Douglas, 734 NYS 2d 847, 187 Misc 2d 509, at 510 (2001):

Although we live in a particularly litigious society, the court is not about to recognize a tortious cause of action to recover for emotional distress due to the death of a family pet. Such an expansion of the law would place an unnecessary burden on the ever burgeoning case loads of the court in resolving serious tort claims for injuries to individuals.

[26]           What is true regarding the death of a family pet is certainly true regarding the scatology of a family pet. There is no claim for pooping and scooping into the neighbour’s garbage can, and there is no claim for letting Rover water the neighbour’s hedge. Likewise, there is no claim for looking at the neighbour’s pretty house, parking a car legally but with malintent, engaging in faux photography on a public street, raising objections at a municipal hearing, walking on the sidewalk with dictaphone in hand, or just plain thinking badly of a person who lives nearby.

[27]           There is no serious issue to be tried in this action. The Plaintiff’s motion is therefore dismissed.

[28]           Both counsel have submitted costs outlines indicating that the parties have spent tens of thousands of dollars in legal fees. Costs awards are a discretionary matter under section 131 of the Courts of Justice Act. In exercising that discretion, Rule 57.01(1) of the Rules of Civil Procedure authorizes me to consider a number of factors including, in Rule 57.01(1)(d), “the importance of the issues”.

[29]           There will be no costs order. Each side deserves to bear its own costs.

This WARDS PC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.

More information? We're here to help - jason@wardlegal.ca  www.wardlegal.ca

 

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THE NEW ONTARIO RETIREMENT PENSION PLAN - AN UPDATE AND WHAT IT MEANS FOR YOU

"The Ontario Ministry of Finance released more information on the key features of the Ontario Retirement Pension Plan (ORPP) on August 11, 2015. By 2020, everyone employed in Ontario (other than certain "exempted" employees) will accrue pension benefits under either a "comparable workplace pension plan" or the ORPP. Many details of the ORPP remain unknown (e.g., what is "exempted" employment). The ORPP Administration Corporation, the administrator of the ORPP, will start contacting all Ontario employers in early 2016 to verify whether there is an existing pension plan and assess the coverage offered to employees.

Our Pension and Benefits Group will issue a series of ORPP updates on developments. This first update focuses on the key features of the ORPP. Our next update will be issued after the federal election in October 2015 to discuss the impact of the federal election on the ORPP and the options available to employers.

Key Features of the ORPP

Are You and Your Employees Required to Contribute to the ORPP? Generally speaking, an employer with employees "employed" in Ontario is required to contribute to the ORPP, irrespective of where the employer was established or where its head office is located. The contribution obligation applies only to employees "employed" in Ontario. The rules for determining whether an individual is "employed" in Ontario are not yet known. There are two key exceptions: if the employment is "exempted" employment (the meaning of "exempted" is not yet known but federal employment will likely be "exempted") or if the employee participates in a "comparable workplace pension plan".

What is a "Comparable Workplace Pension Plan"? "Comparable workplace pension plan" is a key factor in determining whether an employer and its employees are required to contribute to the ORPP.

A "comparable workplace pension plan" is a "registered pension plan" which meets a certain comparability threshold test. It can be a defined benefit (DB) pension plan or a defined contribution (DC) pension plan. In order to be considered "comparable", a DB pension plan must meet a minimum annual benefit accrual rate of 0.5% while a DC pension plan must have a minimum total contribution rate of 8% of base earnings with at least 50% matching of the minimum rate from the employer. These comparability tests are modified for different plan designs of DB/DC pension plans such as a hybrid plan, a flat-benefit DB plan or a flat-dollar DC plan.

A multi-employer pension plan and a pooled registered pension plan can also be "comparable workplace pension plans" if they meet the applicable comparability threshold tests which are yet to be determined.

Other types of retirement savings/income plans (e.g., group RRSP, TFSA, DPSP) are not "comparable workplace pension plans". If an employer offers a retirement savings arrangement which is not a "comparable workplace pension plan", it will be required to contribute to the ORPP.

Which Employees are Required to Contribute to the ORPP? The contribution obligation applies to all your "eligible employees" in Ontario. One important factor in determining whether an employee is an "eligible employee" is whether that employee "participates" in a "comparable workplace pension plan".

If an employer has a "comparable workplace pension plan" which has a membership eligibility requirement (e.g., not immediately eligible on date of hire) or where membership is not compulsory, contributions to the ORPP are required in respect of an employee during his/her membership eligibility waiting period or in respect of the period during which the employee has chosen not to join the optional "comparable workplace pension plan", as the case may be.

When are Contributions to the ORPP Required to Start? Compulsory enrolment and contributions will be staged in 4 waves between 2017 and 2020, determined by the number of employees and the existence or non-existence of a registered workplace pension plan. It is not yet clear whether only employees employed in Ontario will be included for this determination.

An employer which has a registered pension plan (irrespective of whether or not it is "comparable") as at August 11, 2015 will not be required to contribute to the ORPP before January 1, 2020. In other words, an employer with a pension plan which is not "comparable" will have slightly more than four years to structure its pension plan arrangement to become a "comparable workplace pension plan", if it does not want to contribute to the ORPP. If an employer does not have a registered pension plan, it has one to three years to set up a "comparable workplace pension plan" for its employees in Ontario, if it does not want to contribute to the ORPP.

What are the Contribution Rates under the ORPP? The combined contribution rate for an employer and an employee who are required to start contributing before January 1, 2020 is progressive from 1.6% (1st year), 3.2% (2nd year) to 3.8% (3rd year onwards) of the portion of the employee's base earnings between the minimum and maximum thresholds (with 50/50 share between the employer and the employee) while the combined contribution rate for an employer and an employee who are required to start contributing on or after January 1, 2020 is 3.8%, also on a 50/50 basis. The minimum threshold is not yet known. The maximum threshold for 2017 is $90,000 as adjusted to reflect the percentage increase to the Year's Maximum Pensionable Earnings under the Canada Pension Plan."

This entire blog article is written by Sonia T. Mark of Borden Ladner Gervais LLP. We have reproduced it because it is a great summary of this new Ontario pension program and very informative and helpful. Ms Mark's bio: http://www.blg.com/en/ourpeople/mak-sonia

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EMPLOYEES - CLAIMING YOUR MISCONDUCT IS DUE TO A DISABILITY (MENTAL HEALTH, ALCOHOLISM, etc.) MAY NOT SAVE YOU

This employee made threats againt co-workers. He was terminated. He sued for wrongful termination, claiming that his conduct was due to his dependency on alcohol (which is a recognized mental health disability). He claimed the employer discriminated against him under the Human Rights Code on the basis of his disability.

The Court of Appeal disagreed. The Court found that:

1.            the employer did not know of his alcohol dependency when he was terminated; and

2.            the employer’s decision was not based on the employee’s alcohol dependency, but rather on his inexcusable conduct in the workplace – the employer did not act arbitrarily or discriminatory in its decision.

Specifically, the Court of Appeal adopted this:

“I can find no suggestion in the evidence that Mr. Gooding’s termination was arbitrary and based on preconceived ideas concerning his alcohol dependency. It was based on his conduct that rose to the level of crime. That his conduct might have been influenced by his alcohol dependency is irrelevant if that admitted dependency played no part in the employer’s decision to terminate his employment and he suffered no impact for his misconduct greater than that another employee who suffered for the same misconduct.”

Therefore, it may not be enough for an employee to claim that a recognized disability caused, or contributed to, conduct in the workplace that would justify termination.

Case: Bellehumeur v. Windsor Factory Supply Ltd., 2015 ONCA 473 (CanLII)

This WARDS PC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.

More information? We're here to help - jason@wardlegal.ca  www.wardlegal.ca

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SEVERANCE PAY UNDER THE EMPLOYMENT STANDARDS ACT - MUST BE BASED ON YOUR EMPLOYER'S GLOBAL PAYROLL, NOT ONLY ONTARIO

If you are terminated from your job, you may be entitled by law to "severance pay" under the Employment Standards Act of Ontario. One of the conditions may be that your former employer had a annual payroll of $2.5 million or more when you were terminated. 

Now, in Ontario, this test is based on your former employer's total, annual payroll around the world (globally), not only in Ontario.

Therefore, if you are terminated, especially by a company that operates outside of Ontario, you and your lawyer should consider if you may be entitled by law to severance pay under Ontario's legislation (which you do not need to sue to receive) and carefully review the conditions, including this one.

Helpful resources:

Employment Standards Act of Ontario

Paquette c Quadraspec Inc., 2014 ONCS 2431

This WARDS PC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.

More information? We're here to help - jason@wardlegal.ca  www.wardlegal.ca

 

 

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TERMINATING AN EMPLOYEE FOR POOR PERFORMANCE - NOT IF YOU DON'T FOLLOW THE RULES

Before terminating an employee for unsatisfactory performance (especially if cause for termination is alleged), an employer must take proper steps to minimize the risk of liability for wrongful termination.

Generally, these steps, which sometimes are called ‘progressive discipline’, include:

  • the employee must be aware of the employer's expectations;
  • the employee's performance must be significantly unsatisfactory compared to that of the other employees;
  • the employee must have been warned that his or her performance is unsatisfactory;
  • the employee must have received the assistance and support needed to remedy the situation;
  • the employee must have been warned of the consequences that failing to improve would have on the   employment relation;
  • the employer's decision must not have been made in bad faith.

In addition, employers must now be rigorous in their employee performance evaluation process. This includes :

- properly documenting all training and support given to the employer before termination

- conducting proper, documented performance evaluations

- having a good performance profile of the employee to conduct a fulsome evaluation of performance  

- avoiding termination based on unverified facts, impressions or opinions

- conducting serious and rigorous evaluation (and documenting it) before terminating

To minimize exposure to liability for wrongful termination, employers must establish a specific and supervised procedure that includes documentation and a performance profile on which an objective evaluation may be based, prior to termination.

Ultimately an evaluation should be grounded on verified or verifiable facts, not only on perceptions or opinions that have not been validated.

This WARDS PC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.

More information? We're here to help - jason@wardlegal.ca  www.wardlegal.ca

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BACK-TO-SCHOOL SAFETY

The countdown is on to the first day of school…  Take some time to remind your children about safe pedestrian practices.

In Canada, child pedestrian injuries are a leading cause of injury-related deaths for children under age 14.  More than 30 children are killed and 2,400 are seriously injured in a typical year.  Child pedestrians are most often hurt in September and October.  (Source)

Children’s physical and mental capacities are still developing well into their teens and they are often unable to make safe judgments about traffic and pedestrian safety.  Also, children’s small size, lower eye level and need to look up and over vehicles can limit their field of vision and make them vulnerable to pedestrian accidents.

And it’s not just the young children who need to take care.  A teen pedestrian safety survey found that 51% of Canadian teens reported being hit or almost hit by a car, bike or motorcycle.  Teens engaged in various types of risky behaviour while walking, including listening to music, texting and talking on the phone.

Here are some tips for back-to-school pedestrian safety: 

- Look both ways and listen before crossing

- Only cross at street corners, stop signs and crosswalks and obey all signals

- Never run or dart out into the street

- Eliminate distractions - cellphones and other electronic devices should not be used when walking across streets

- Wear a helmet when riding a skateboard or bicycle

Pedestrian safety is not just for the pedestrians…  It is also each driver’s responsibility.  When driving, be careful near school zones and nearby neighbourhoods, give the right of way to school kids and stop at school crossings and for school buses.  Reduce your speed and don’t drive distracted!  Click here for information regarding fines and penalties for distracted driving in Ontario.

In a pedestrian/vehicle accident, victims have the right to medical and rehabilitation benefits and to compensation when injury and harm is caused by negligence.  In Ontario, the law assumes that the driver of the vehicle is at fault unless the driver can prove otherwise.  There are also specific laws about personal injury claims involving children.  Be sure to speak to a qualified lawyer in the event of an accident.

Be aware on the roadways and let’s have a safe school season.

 

This WARDS PC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.

More information? We're here to help - monique@wardlegal.ca  www.wardlegal.ca

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PARENTS - PUTTING YOUR ADULT CHILD ON YOUR JOINT BANK ACCOUNT - DON'T LEAVE A LEGACY OF LITIGATION

Over the past six months, I receive more and more calls about cases involving joint bank accounts between a parent and an adult child (when the parent passed away), most of which involving disputes raised by other adult children of the parent who passes.

Joint bank accounts is an increasingly popular tool used by elderly parents (on the advice of financial planners, typically) for estate planning. The goal: the money in the joint account will not fall into the parent’s estate and, therefore, will not be subject to estate administration tax and not be available to the other beneficiaries under the last will and testament. The intention is for the surviving adult child to receive the proceeds remaining at death as a “gift”.  The intention, however, may not be achieved, but rather litigation can ensue.

Parents – be smart when using joint bank accounts (by adding an adult child, or someone else, to your joint account, which has a right of survivorship to the other person).

The law: there is a presumption of resulting trust when a parent makes a gratuitous transfer of property into a joint account with an adult child. This effectively means: the adult child may be found to be holding the bank account proceeds in trust for the parent’s estate, unless the child can rebut the presumption by proving that the parent intended to gift the proceeds. This can be a challenging onus for the child to prove, in Court, and often leads to acrimonious and very costly litigation for the adult child (typically with other children of the deceased parent, or beneficiaries under the parent’s last will and testament). The important case is Pecore v. Pecore (2007, Supreme Court of Canada), if you are so inclined.  

Recent cases where litigation has been caused, illustrating the very challenging on the adult child to try to rebut the presumption and prove there was an intention of gift by the parent:

Johnson v. Johnson Estate (2015, Ontario)

Foley (Re) (2015, Ontario – Court of Appeal)

Tip: if you, as a parent, intend to use a joint bank account with an adult child (by placing the child on your account), for estate planning or otherwise, ensure that your intention is very clearly ascertainable, such as in your last will and testament, by a written declaration of gift and other means, which your qualified lawyer can help you achieve.

If you do not do so, your joint account may unintentionally fall into your estate, defeating your intention and estate plan, create confusion for those you leave behind and,  as often happens, leave a legacy of costly and protracted litigation for your family members. This would likely be a far worse outcome and potential savings to you than you intended to achieve by doing this in the first place. This can be done, but must be done correctly.

This WARDS PC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.

More information? We're here to help - jason@wardlegal.ca  www.wardlegal.ca

 

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FAMILY MEMBER CAREGIVERS - UNDERSTAND YOU ARE HELD TO A HIGHER STANDARD AND DUTY

Caregivers are increasingly being held to a higher legal standard. They are now generally regarded as a “fiduciary” to the person to whom they provide care. A fiduciary has higher obligations legally – caregivers are now in that category. 

Historically there are general categories of fiduciary relationships that have evolved in Ontario. They include: agent to principal; lawyer to client; trustee to beneficiary; business partner to partner; and, director to corporation.

Generally, a fiduciary obligation on a person will be imposed when:

  1. The fiduciary has scope for the exercise of some discretion or power;
  2. The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests; and
  3. The beneficiary is peculiarly vulnerable to, or at the mercy of, the fiduciary holding the discretion or power.

Vulnerability of the other person is often a key consideration.

This is important if a caregiver, for example (which may include a family member) is added to a bank account of a person in need of care, handles finances for a parent or generally provide financial assistance to, for example, an elderly parent or disabled person.

A recent case in British Columbia illustrates this trend in the law: Reeves v. Dean.

In this case, the caregiver was found to have misappropriated money from a bank account to which the caregiver was added by the person in need of the caregiver services. 

There are special remedies available from the Court when it is found that a fiduciary has acted unlawfully. They include: a constructive trust, accounting for profits, compensation to to the aggreived person (to restore them to their former position) and others. Generally, the remedies are identified by the Supreme Court of Canada in Frame v. Smith (1987).

Therefore, if you act as a caregiver, be very mindful of your higher duty.

On the other hand, if you receive, or you know someone who receives, caregiver services (particularly if they related to handling personal finances), be sure to speak to a qualified lawyer if you suspect there has potentially been wrongdoing by the caregiver. 

This WARDS PC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.

More information? We're here to help - jason@wardlegal.ca  www.wardlegal.ca

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CAN I TAKE OVER THE RESPs FOR THE KIDS?

You and your partner separate. What about the RESPs that you have accumulated during the relationship for the children? Commonly parents dispute who may and how to administer RESPs on relationship breakdowns. Often one co-trustee believes he or she should be responsible for the RESPs solely, without the involvement of the other.

An RESP is, effectively, a trust fund. Like other trusts, it is possible for one of the parent co-trustees to remove the other, legally. The parents hold the trust fund, as co-trustees, for the benefit of the beneficiaries, the children. So long as the RESP is properly established, specific trust-related legal documentation is not generally required. Each parent is held to a higher standard, as a trustee, and is a fiduciary to the children as the trustee of their trust funds. Therefore, if a parent acts inappropriately, the parent at fault may not only be removed, but be subject to a breach of fiduciary claim, too. 

If the parents/trustees cannot co-operate to administer the trust fund together, one can seek the removal of the other as a co-trustee and, if the grounds to do so are proved, the Court will likely remove one of the parents. The Court will apply the traditional legal test and factors for any co-trustee seeking the removal of another co-trustee, as sometimes arises in other types of trust arrangements, like estates.

The recent case in Ontario about this: McConnell v. McConnell (2015 ONSC 2243, CarswellOnt 4939).

This WARDS PC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.

More information? We're here to help - jason@wardlegal.ca  www.wardlegal.ca

 

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