The New Brunswick Court of Appeal has allowed an impecunious man to claim the interest on a litigation loan he needed to fund a damages claim resulting from a motorcycle accident.  

While the province’s Rules of Court don’t expressly categorize loan interest as a disbursement, Chief Justice Ernest Drapeau found the loans need only be “necessarily incurred” and the interest rate “reasonable” to qualify for reimbursement.

“Mr. [Francis] LeBlanc lacked the means to finance the litigation and his impecuniosity resulted in the loans that generated the interest in issue. Accordingly, it is an expense that was ‘necessarily incurred,’ Drapeau wrote for the unanimous court in his Oct. 18 judgment. “Finally, I am driven to conclude the interest claimed was ‘reasonable’ since the respondents adduced no evidence to establish Mr. LeBlanc could have borrowed money at a rate of interest lower than the one he negotiated with the independent third party.”

Drapeau ordered the defendants to pay almost $13,000 to Le Blanc to cover the interest on his $26,000 loan from litigation funder Seahold Investments, and said there was “every reason for satisfaction with the resulting regime, one that contributes significantly to improving access to justice for the citizens of our province.”

“As the Chief Justice of Canada, the Honourable Beverley McLachlin, regularly reminds us, access to justice is one of the cornerstones of the rule of law, and it behooves courts, whenever possible, to do their part in fashioning means conducive to its improvement. Courts must walk the talk,” he added.

Le Blanc was 17 in September 2004, when he was seriously injured as his motorcycle went off the road when a van driven by an employee of the New Brunswick Power Corporation crossed into his lane. The accident left him unable to work, and his only income was $200 per week in disability payments, according to the decision.

When the statement of defence came back laying the blame entirely at Le Blanc’s feet, he went to a bank and credit union looking for money to fund his action, but was turned down by both. Litigation funder Seahold Investments stepped in, loaning him $26,000 at a compounded monthly rate of 2.4 per cent, for an effective annual rate of 33 per cent.  

“The interest rate it set reflected an assessment of the risk assumed in granting the loans in question, a risk that two financial institutions had previously deemed prohibitive. Only a foolhardy lawyer would have agreed to undertake that risk,” Drapeau wrote.

A Court of Queen’s Bench judge found the power corporation employee entirely at fault, awarding costs of $20,000 to Le Blanc, plus taxable disbursements. That’s when Le Blanc claimed the interest on his loan, but was turned down by a court clerk tasked with deciding which disbursements were allowable.  

The decision stands in contrast to a 2011 Ontario case, Giuliani v. Region of Halton, in which a judge disallowed the plaintiff’s claim for recovery of interest paid on a litigator loan, and criticized her lawyer for referring her to a lender charging “unconscionable” rates of interest. The rate in that case was 3.5 per cent compounded monthly for an effective annual rate of 51 per cent.

Canada

 Montreal mayor implicated in latest information from Quebec corruption probe, The Globe and Mail

Constitution limits provinces from looking into federal institutions, Calgary Herald

Libyan gov't to decide if it will take legal steps to claim Saadi Gaddafi's Toronto condo, The National Post


United States

Victims of theatre rampage denied access to criminal files for civil suit , Reuters

17-year-old boy convicted by Ohio jury for Craigslist murders, Reuters


International

Italy passes anti-corruption law to stem 'rampant corruption', Reuters

Croatia sentences five former police officers for war crimes, Reuters

LawPRO's Dan Pinnington says 80 per cent of lawyers will have at least one claim in their career.

CALGARY — Law firms face a range of threats to the businesses they run but many can be mitigated with some careful risk management from the top.

At the eighth annual Canadian Bar Association’s Law Firm Leadership Conference held here, managing partners were presented with an overview of the top risks presenting in law firms today.  

Malpractice claims were given special attention with Dan Pinnington, LawPRO vice president, claims prevention & stakeholder relations, providing an overview of trends.

“We’re seeing more claims and more complex claims,” he said, noting that in Ontario there are an average of 105 claims per year per 1,000 lawyers. “The claims are more costly to resolve and defence costs are increasing.”

In Alberta, while claims were going up over the last three years, it’s now heading back down.

“Generally, across Canada the same kinds of mistakes are happening regardless of where the firm is and regardless of area of law,” said Pinnington.

He noted that four out of five lawyers will have at least one claim in their career. Of the 23,000 lawyers in Ontario, each year about 450 are calling LawPRO for the first time. It can take two to three years for the claim to come up after the work is done. The highest level of claims comes from lawyers in the 10- to 25-year span of practice.

Looking at claims from 2001 to 2011, Pinnington said most claims are reported on average two to three years after the service is provided. The biggest claims risk occurs not with substantive law (12 per cent), but rather within lawyer/client communication and relationship issues at 35 per cent of all claims, followed by time and deadline management (17 per cent), inadequate investigation/discovery of fact (16 per cent), clerical (six per cent), and confidentiality (five per cent).

In terms of total losses, 86 per cent of claims are under $100,000 and only four per cent are over $250,000.

“There are lots and lots of tiny claims. It’s not just count that matters — it’s cost. A few very large claims can really impact our costs on any given basis,” he said.

Real estate was ranked as the area of law with the biggest claims cost.

Class actions against law firms also continue to also pose a significant threat, said Simon Chester, a partner with Heenan Blaikie LLP.

“The epidemic of class action litigation has reached us from the [United] States,” he said. “Courts are starting to take a very generous view in Canada, more generous than the United States, to certification.”

He noted that a specific area to be watchful of is when law firm partners want to serve on boards of directors which creates potential for conflict of interest and liability threats, referring to Allen v. Aspen Group Resources Corp. as an example.

Anthony Davis, a partner with Hinshaw & Culbertson LLP in New York, declared it something that should be completely off limits for law firm members.

“It’s a really bad idea. You put all kinds of things in jeopardy when a partner serves as a director on a board. It’s no better for non-profits, just think about the claims for churches and synagogues, or when claims of fraud occur in major charities. If you’re going to allow it, make sure anyone who is serving as a director may not also provide legal services to the company. You need a very thorough disclosure letter to the board saying, ‘He’s not your lawyer and he’s not to give you legal advice,’” said Davis.

Davis advised firms to have their own general counsel and an ethics partner to keep tabs on issues.

The panel also addressed cyber risks, including the use of social media, and the importance of stressing to young lawyers that activity on social media is “permanent” and law firm policies need to be crystal clear.

Canada

Federal court deports war criminal a decade after being deemed complicit in Rwanda genocide, The National Post

Nigerian students in Sask. to be deported after hearing at Canada Border Services, The Globe and Mail

Another blow to RCMP: woman sues Surrey officer over alleged intimidation, misuse of police resources, Vancouver Sun


United States

Florida judge rules against gag order in Trayvon Martin case, Reuters

Supreme Court considers who can challenge government eavesdropping to combat terrorism, Reuters


International

Greek journalist on trial over publishing names of those with Swiss bank accounts, Reuters

Prosecutors in Bulgaria charge 12 with 'preaching radical Islam' , Reuters

The City of Toronto breached its collective agreement with firefighters by not initiating a recruit class for the department in 2011, says an arbitrator. Photo: Shutterstock

Despite “extreme fiscal pressures,” an arbitrator has found the City of Toronto breached its collective agreement with its firefighters when it elected not to initiate a recruit class for the department in 2011.

The case, Toronto (City) v. Toronto Professional Firefighters’ Association Local 3888, considers management’s rights not to hire staff versus its obligations under its union contracts.

The issue at hand, the decision not to initiate a recruit class in May 2011, came at a time when the city was under severe financial pressures given recently elected Mayor Rob Ford’s campaign against the infamous gravy train. The city, last week’s decision notes, argued it was under “the most extreme fiscal pressures it had ever faced.”

A key question before arbitrator Russell Goodfellow was the city’s obligations under Article 49.01 of the collective agreement with its firefighters. It stated: “A recruit class would be initiated when vacancies in the present workforce created by death, retirement, resignation or discharge reaches 40.”

What, then, was the meaning of “would?” According to the city, the word “would” wasn’t an ironclad obligation. Further, it argued, another provision in the agreement provides management the exclusive right to hire, something that also presumably grants it the ability not to hire.

Goodfellow, however, saw the issue otherwise. “To put it only slightly differently, the effect of the city’s position would be that the parties have gone to the trouble of constructing a provision entitled ‘Filling of Vacancies’ (not ‘Possible Filling of Vacancies’ or ‘Partial Information About Filling of Vacancies’ or ‘When Vacancies Will Usually Be Filled’) that depends on certain events that does nothing more than reserve, preserve or confirm a pre-existing discretion,” he noted.

“Thus, it may have been in response to this concern that the city submits that the provision creates a ‘more limited’ discretion i.e. it does not do nothing, it does something, and what it does is describe an expectation, a preference or a goal: what the parties hope to achieve most of the time. In my view, that is simply not plausible. It is not how parties bargain collective agreements. Parties do not negotiate wishes, hopes, possibilities or even probabilities; they negotiate certainties, requirements and obligations.”

As a result, Goodfellow upheld the union’s grievance but found the city hadn’t acted in bad faith given city manager Joe Pennachetti’s submissions “about the enormity of the fiscal challenges facing the city in 2011 and the various ways that he sought to deal with them.”

Goodfellow did, however, find the city breached the agreement and said he remains “seized in respect of any other remedial relief upon which the parties may be unable to agree.”

Canada

Former Quebec premier returns to practising law, The Globe and Mail

Doctor to leave Canada after legal battle over for-profit clinic, The National Post

Business man wanted in the U.S. arrested in Toronto, The Vancouver Sun

United States

Hurricane Sandy will not stop the top court, Reuters

Supreme Court to rule on use of drug-sniffing dogs, Reuters

International

Murder plot against top prosecutor uncovered by Cyprus police, Reuters

Former Philippine president pleads not guilty in plunder case, Reuters

Canada

Crown will soon have to report police they believe lied under oath, Toronto Star

Illegal waste should be removed by Metro Vancouver: Cache Creek mayor, Vancouver Sun

B.C. Supreme Court to hear case of man banned from his hot tub after noise complaints, The National Post


United States

Highest court to look at limits of government spying, Reuters

Planned Parenthood denied appeal; Texas will immediately cut funds says governor, Reuters


International

Italy's ex-PM sentenced to jail for fraud, Reuters

Prosecutors in Belgium look into shooting death of Exxon executive, Reuters

As advertised, it was "an evening of hilarity, camaraderie, stunning rhetoric, and taxing puns" at the fifth annual Boughton Law Corp./British Columbia Law Institute's Great Debate.

The debate was held Thursday night in Vancouver at the Pan Pacific Centre with more than 100 lawyers and supporters gathering to hear the learned thoughts on the pressing issue of maintaining the HST in British Columbia. No one was deterred that the issue had already been decided in a provincial referendum that will see a throwback to the separate PST and GST system reintroduced on April 1, 2013.

On the pro side (fighting to keep the HST, a lost cause as mentioned above) were Canadian Lawyer columnist and franchise lawyer Tony Wilson of Boughton Law Corp. and University of British Columbia law student Chris Thompson. Thompson had become somewhat of a local celeb on the HST scene prior to the referendum with his pro-HST YouTube video FightFightHST - A Letter to Bill Vander Zalm.

Against were Michael Bain, of Hamilton Howell Bain & Gould, and Greg Allen of Hunter Litigation Chambers.

The official judges for the debate were B.C. law deans Mary Anne Bobinski from UBC and Donna Greschner of the University of Victoria. "I was ready in case there was some thoughtfulness needed," remarked Bobinski. She was not called upon for that at any point in the evening.

The annual event raises money for the BCLI and was hosted by CBC Radio One’s Rick Cluff.

Photos: Gail J. Cohen

John Boscariol says foreign investors need to know what the Canadian laws and requirements are for takeovers.

Clarifying the rules on foreign takeovers will help Canadian lawyers advise their overseas clients, says one investment law partner.

John Boscariol, head of McCarthy Tétrault LLP's International Trade & Investment Law Group, has numerous foreign clients looking to invest in Canada but they're unsure about the approval process.

At a minimum, they need to understand what the Canadian laws and requirements are for foreign takeovers, says Boscariol.

"Whenever you have a system that allows more government discretion [and] less explanation of what factors the government takes into account in making decisions, that creates uncertainty, [which] makes jurisdiction unattractive to foreign investors," he says.

On Monday, Prime Minister Stephen Harper promised to reveal new guidelines soon on foreign takeovers after the government's surprise move last Friday to reject Malaysian state-owned oil company Petronas' $6-billion bid to take over Progress Energy Resources Corp., one of Calgary's natural gas producers.

"Right now we're in a pretty drastic situation where there's very little to guide foreign investors. In fact, the decisions that have come out — to some foreign investors — may not be so friendly," says Boscariol.

There are other big deals in the works that the government has yet to decide on, including Chinese state-owned CNOOC Ltd.'s $15.1-billion bid for Calgary-based Nexen Inc. and U.S. energy giant Exxon Mobil Corp.'s proposal to buy Western Canada's Celtic Exploration Ltd. for $3.1 billion.

Boscariol says foreign investors need some sort of assurance. "They're committing a huge amount of capital to the country, they need just some predictability as to how they will be treated [and] what the rules are," he says.

"It will depend on how they're drafted, but I presume that the guidelines in and of themselves will provide some certainty, so I think that's a step forward in making Canada a more favourable place for foreign investors," he adds.

Boscariol recognizes that it's a bit of a catch-22 situation in that having explicit guidelines on foreign takeovers reduces the government's discretion but, on the other hand, not having any guidelines deters foreign investment.

"Whenever government comes up with guidelines, to an extent they're handcuffing themselves — they're putting something out there, they're putting it in writing. So I can see why, from the government's point of view, it may make sense to be as flexible as possible; to retain as much opportunity as possible to treat different foreign investors differently," he says.

Canada

Federal court rules Conrad Black does not have to be given a hearing, The Globe and Mail

Disgraced legal star tells court forging signatures World Bank bids was the norm, The National Post

New trial for man accused of distributing child porn last resort: judge, Vancouver Sun


United States

Judge delays ruling on Romney's testimony allegedly misrepresenting the worth of friend's company, Reuters

Bank of America sued over alleged mortgage fraud, Reuters


International

Lawyer for disgraced Chinese politician unsure if he will be allowed to represent him, Reuters

Convicted ex-butler moved from house arrest to Vatican jail cell, Reuters