By Patrick Westaway – 2016/10/06
Original published on LinkedIn
This week’s announcement that Ottawa is closing a loophole which allows non-residents of Canada to claim the principal residence exemption must have the country scratching its collective head. Surely if people who have never lived in Canada qualify for an exemption intended for Canadian residents then black is white, up is down and the whole sorry tax system is done for. Hopefully so. But does the problem lie with a devious cabal of tax professionals or elsewhere?
Not enough is said about the fact that tax laws are too complex to be understood other than by a small minority of lawyers and accountants. Given the most basic of legal tenets that a law must be knowable, anyone without access to those few lawyers and accountants must surely be tax exempt: imagine living in a country where the criminal laws were so little understood and were, as tax laws are, imposed retroactively. So let us look at the “loophole” cited on Monday by our Finance Minister, the Honourable Bill Morneau.
As written by the Minister’s own department, property can be designated as a principal residence if it is “ordinarily inhabited” in the year. So what does “ordinarily inhabited” mean? How many days in the year constitute ordinary habitation? The legislation is silent on this point and the choice of wording intentionally vague. Referring to an Income Tax Folio published by the Canada Revenue Agency, one is told that the answer depends on the facts. Only from a tax specialist is one likely to learn that property will usually be considered to be “ordinarily inhabited” no matter how short the habitation so long as the property does not generate rental income.
Having reasonable grounds for believing that the property qualifies for the principal residence exemption, what of the taxpayer? Must one be a Canadian resident to claim the principal residence exemption? On a casual reading, the answer to this question is ‘yes’ since the years for which the deduction is available are described (within factor ‘B’ of a mathematical formula) as “one plus the number of taxation years that end after the acquisition date for which the property was the taxpayer’s principal residence and during which the taxpayer was resident in Canada”. Upon a closer reading, however, it appears that the Canadian residence requirement qualifies only “the number of taxation years that end after the acquisition date”, leaving non-residents with the benefit of the “one plus”. If, now, the Department of Finance says this reading does not reflect the legislative intent, why is the residence requirement buried within a formula? If the exemption is intended only for Canadian residents, the drafting alternative is simple and obvious.
As a result of this wording, non-residents have been entitled to deduct from their taxable income that portion of the capital gain that “one” is of the total number of years in which the non-resident owned the property. If the non-resident bought and sold the property in the same year then the full amount of the gain was exempt. If the non-resident held the property for ten years then only one-tenth of the gain was exempt. In the case, then, of a 10% gain on a Toronto condo purchased for $2,500,000.00 the year before it was sold, the principal residence designation was worth approximately $33,000.00—assuming combined Federal and Ontario top marginal rates. More commonly, a 15% gain on a Toronto condo purchased while under construction for $800,000.00 and re-sold post completion within the year for a 15% gain is worth slightly less than $32,000.00.
If the Department of Finance remains true to form, the revisions announced this week will serve only to further complicate the provision in question. Thankfully, we will have the text of this week’s announcement with which to interpret those revisions.
By Jennifer Black – 2016/10/04
When it comes to a separation, there are different types of costs to consider. Right away, most people think about the financial cost. However, there are other important costs as well. Another big consideration is the time cost; most people wish to deal with the issues of their separation in a timely manner so that they can move on with their lives. Finally, people often don’t consider the emotional costs of a separation, even though, sometimes, this might be the most important consideration in choosing a process to deal with a separation.
Therefore, the costs of separation can be broken down into three main categories:
1) Financial Costs
2) Time Costs
3) Emotional Costs
Financial costs are generally what many spouses think about when going through a separation. The Collaborative Process is a much more cost-effective process than the Court process. While the cost will depend upon the complexity of the issues and the time necessary to negotiate an agreement, in the Collaborative Process, most cases cost substantially less than Court cases. In the Collaborative Process, the matter is dealt with out of Court so costs can be kept to a minimum. The Court process is very expensive due to all of the paperwork that needs to be filed with the Court and all the procedural steps of a Court process. Often in the Court process, parties are incurring fees while their lawyer is simply waiting at the Courthouse for the Judge to hear their case.
In the Collaborative Process, parties are able to work with a neutral family professional along with their respective lawyers. Going through a separation is extremely difficult and emotions are often high which can side-track potential progress and cause legal fees to soar. In the Collaborative Process the neutral family professional will help people manage their emotions and keep the process on track, which helps keep legal costs down.
Often a neutral parenting professional becomes involved with the parties as well to resolve issues related to children. He or she can assist with minimizing costs by facilitating the negotiation of a parenting plan. The parenting professional is experienced in the needs of children in the divorce process and is able to provide the parties with advice about what is needed for the children given their ages and current circumstances.
Furthermore, a financial professional can assist in managing costs in the Collaborative Process by collecting the various financial documents needed and facilitating a discussion on the financial issues involved.
The Court process is an adversarial process, which often means costs are unpredictable and can escalate rapidly. In the Collaborative Process, your lawyers work together with both parties and other professionals to reach a mutually agreeable resolution. This team approach makes the Collaborative Process financially efficient by bringing together professional resources within a collaborative atmosphere, as costs are therefore more manageable.
The details of each specific situation influence how quickly a separation or divorce proceeds. The Collaborative Process can be a more direct and efficient process than going to Court. In the Collaborative Process there is a focus on problem-solving, rather than blame and accusations. There is an opportunity to strive for respectful negotiated results. Full disclosure and open communication will help to address all of the issues in a timely manner. Working together, the parties, lawyers and other professionals involved, set the timelines in the process in order to keep the matter moving efficiently. In the Court process, you often have to wait for multiple court dates in order to move the matter forward. If your matter must proceed to trial there is often a long wait on the trial list. Matters in the Court process may take years to resolve.
The Court process can take a huge emotional toll on people going through a separation. In the Court process, Affidavits are required to be sworn as evidence and sometimes this can degenerate into an “affidavit war,” in which each side writes nasty things about the other in an often fruitless attempt to gain an advantage. Often the Court process can inflame conflict in a separation, whereas the Collaborative Process works to manage and deal with conflict and to find a mutually agreeable resolution.
There is a huge advantage to the Collaborative Process when it comes to emotional costs. The Collaborative Process involves both parties, along with their lawyers and other professionals, to improve communication and work at resolving any conflict. Part of the Collaborative Process is minimizing the emotional costs associated with a separation.
A final important consideration is that an agreement reached together through mutual problem-solving, as in the Collaborative Process, is more likely to be complied with in the long term, as opposed to one reached through an adversarial process.
* * This article is intended only to inform and educate. It is not legal advice. Be sure to contact a lawyer to obtain legal advice on any specific matter.
Jennifer Black is an experienced family law lawyer, collaborative law professional and mediator at SorbaraLaw.
05 Oct 2016
By Jessica Chyc, student, and James Peluch – 2016/10/04
In an almost fairytale-like ending to a four year battle with the Toronto Children’s Aid Society (C.A.S.), Jim Peluch of the SorbaraLaw Family Law department (Guelph office) received news on Christmas Eve 2015 that two young children would be reunited with their older half-sibling. The Child and Family Services Review Board overturned an earlier 2011 C.A.S. decision and ordered that two young children with special needs be returned to the care of Jim’s clients, so that they could reside with their older half-sibling and hopefully eventually be adopted by the couple.
This was a good outcome for our Family Law department on a very complicated and narrowly defined legislative issue.
The Child and Family Services Review Board (C.F.S.R.B.) is an administrative tribunal whose powers are prescribed by the Ontario Child and Family Services Act. The issue of children being “at risk” or in need of “protection” in cases of physical abuse, sexual abuse, neglect, or emotional harm, is always determined by a Provincial Court. However, the placement of children once they have been made Crown Wards is an issue in which C.F.S.R.B. can intervene in limited circumstances.
In this case, an older half-sibling of the young children was put in the care of the couple by C.A.S. in 2005. The birth mother went on to have four more children with various male partners over the years. The second and third children were placed in foster care. The fourth and fifth children were born in 2009 and 2010 respectively. Jim’s clients went through a number of screening procedures and after the youngest two children were made Crown Wards in 2011, they were placed with the (potential adoptive) couple in 2011, together with the older half-sibling. After six months the C.A.S. felt that the couple was not a good fit for the two younger children, even though there were no reported problems with the oldest child between 2005 and 2011, and there were favourable reports for four of the first six months that the younger children were placed there. Communication issues arose when the couple relocated to a larger rural property in a neighbouring municipality. The C.A.S. also felt that one of the parents was not sharing information about the children in a straightforward manner; however, the C.A.S. had failed to fully investigate the circumstances surrounding the lack of information sharing.
Jim and his clients attended a hearing which was heard over 6 days between May through November, 2015. The Board heard evidence of the children’s needs and the efforts of the C.A.S. and of the clients to meet those needs. Jim was able to negate the evidence of the C.A.S.’s child-specific adoption homestudy expert, who had prepared a lengthy written report explaining why the couple was not a proper placement for the two youngest children. Her 2015 report essentially confirmed the 2011 C.A.S. decision to remove the children after six months. The C.F.S.R.B. did not agree with the rationale of the C.A.S. or their expert following Jim’s skillful cross examination. They released a 28-page decision outlining their reasons for having the children returned to Jim’s clients on December 24, 2015, and both children were home with the couple by December 30, 2015. At present, all indications are that the three children are getting along reasonably well. The C.F.S.R.B.’s intention of maintaining the sibling relationship where possible was certainly prescient in this particular case.
Congratulations to Jim and to his assistant, Karen Barber, without whom he could not have succeeded.
* * This article is intended only to inform and educate. It is not legal advice. Be sure to contact a lawyer to obtain legal advice on any specific matter.
James Peluch is a lawyer at SorbaraLaw, practising predominantly family law in the firm’s Guelph office.
05 Oct 2016
By Elikem Deley – 2016/10/04
A recent wave of Canadian case law has shone some light on testamentary freedom, and the exceptions to this freedom.
An individual has the freedom to dispose of his or her estate as he or she wishes. A clear and established exception to this freedom is when a testator has an obligation to a dependent (for example, a spouse, minor child, adult child or other person who is financially dependent on the testator). Another less clear exception to this freedom is when a Will contravenes public policy. The circumstances under which a Will may contravene public policy are varied and have recently been considered by lower provincial Courts and the Court of Appeal of Ontario.
In 2014, the Court of Queen’s Bench in New Brunswick considered whether the deceased’s Will, in which he left everything in his Estate to the National Alliance, a neo-Nazi group in the United States, was void for being illegal and contrary to public policy. The Court held that the monetary gift to the National Alliance should fail because the established mandate of the National Alliance was in contravention of section 319(2) of the Criminal Code of Canada (which prohibits hate propaganda) and because administering the testator’s Estate pursuant to his wishes and funding an association like this would not in the best interests of society: (McCorkill v. Streed, 2014 NBB 148).
In Spence v. BMO Trust Company (2016 ONCA 196), a recent decision of the Ontario Court of Appeal, the deceased left his Estate to one of his two daughters, Donna, and to her two sons. In his Will, Mr. Spence specifically excluded his other daughter, Verolin, and her children because “she has had no communication with me for several years and has shown no interest in me as a father.” In reality, Verolin and her father were very close, having immigrated together to Canada from the United Kingdom, and Mr. Spence and Donna had virtually no contact over many years. The trouble began when Verolin had children with a man who was not white, much to Mr. Spence’s dismay. As a result, he ceased communicating with her during the last 11 years of his life and changed his Will to exclude her and her children. Verolin brought a claim against the Estate, arguing that her exclusion from the Will was for racist reasons and was therefore void for public policy. These racist intentions were reported by family and friends who had knowledge of it from personal conversations with Mr. Spence. Justice Gilmore of the Superior Court of Justice of Ontario agreed with Verolin, finding that Mr. Spence’s reasons for disinheriting his daughter were based on a clearly-stated racist principle and that the provisions of the Will offended “not only human sensibilities but also public policy.” The case was successfully appealed to the Court of Appeal of Ontario in 2016. Mr. Spence’s Will was very clear with respect to his testamentary intentions and did not contain any clauses that were expressly racist. As the Will was unambiguous, the Court of Appeal held that there was no reason to consider any other evidence about Mr. Spence’s intentions, such as the recollections of family and friends. The Court of Appeal therefore held that the Will was not void for being contrary to public policy, and Mr. Spence’s Estate could be distributed as he wished.
In another recent Ontario case, Royal Trust Corporation of Canada v. The University of Western Ontario et al., 2016 ONSC 1143, the Court held that the deceased’s Will was, in fact, void for offending public policy. In this case, Dr. Priebe created a Will that created a scholarship for white, single, heterosexual, female or male science students who are not feminists or athletes. Justice Mitchell of the Superior Court of Justice of Ontario relied on a similar 1990 case about another discriminatory scholarship, and found that Dr. Priebe’s scholarship and the qualifications relating to “race, marital status, and sexual orientation and, in the case of female candidates, philosophical ideology” are void for being contrary to public policy. Even though the Will did not expressly show that Dr. Priebe was misogynistic, homophobic or a white supremacist, Justice Mitchell found that there was no doubt as to Dr. Priebe’s views and that his intention was to discriminate. It is unclear as of August 2016 whether this case has been appealed.
Courts take testamentary freedom very seriously; however, they take Canadian criminal laws and human rights and freedoms very seriously as well. It seems as though the Courts will intervene when a Will is expressly discriminatory, or where the administration of an Estate would place an Executor in a position to contravene public policy or criminal laws. Every case is different, and it is important to discuss your Will and Estate plans with a lawyer to ensure that your wishes are enforceable.
* * This article is intended only to inform and educate. It is not legal advice. Be sure to contact a lawyer to obtain legal advice on any specific matter.
Elikem Deley is a member of the estates group and practises in the areas of wills, powers of attorney, estate administration and estate litigation.
05 Oct 2016
By Steven Kenney – 2016/10/04
When an individual is injured in a car accident, he or she is entitled to apply for Statutory Accident Benefits (SABs) through his or her own auto insurer. There are exceptions and limitations to these benefits. Thus it is extremely important to obtain legal advice as soon as possible.
This article focuses on two changes to the Regulation that governs SABs. These amendments were effective as of February 1, 2014.
Why are these changes significant?
If you have ever been involved or know someone who has been injured in a car accident, then you are also aware of the difficulties faced by victims and their families. It is never just the injured person who is impacted by the trauma. The stress of the medical circumstances is the first part of the crisis. The next hurdle involves legal and insurance questions.
One aspect of being injured is attendant care. Is the injured person medically able to be independent? Do they need assistance to prepare meals, complete personal hygiene, administer medication, change dressings or be mobile?
Our society’s foundation is based upon helping others. This moral guideline is more prevalent during the time of crisis and trauma.
Families and friends come together to support, and assist the injured person. In some instances, it is reflected by driving the individual to appointments, making meals or cleaning the house or helping with personal hygiene. These unprofessional aides are providing attendant care.
The aides do not ask for compensation, but provide assistance willingly. Perhaps it is the familial connection or returning a favour. Whatever the reason, the majority of family and friends will give their time and energy in order to meet the needs of the injured.
How long assistance is needed is largely dependent on the degree of injury. Those victims who are “catastrophic” (for example: paralyzed or brain injured) often receive professional care simply because of the type of medical care required. But not all victims are “catastrophic”. A badly fractured limb, torn muscles/tendons or severe neck injury, generally not determined to be catastrophic, will still need some form of “attendant care”.
Generally, the injured person does not want to impose, or take advantage of family and friends. However, there is comfort in having a family member or close friend nearby, giving encouraging words, and simply being there.
Payment of attendant care benefits to family members and friends has changed over the years. The reason for the changes may relate to the number of fraudulent claims, audit difficulties, or the fact that the benefit is too expensive to cover. Whatever the reason, on February 1, 2014, there was another change.
Previously, the payment of attendant care benefits related to economic loss or the payment of a service, whether to a professional or a family member or friend. The Ontario Court of Appeal (Henry v. Gore) reviewed the terminology and indicated “economic loss” was not a defined term. In other words, the Regulation pertaining to attendant care was not clear.
The amendment now states that if an attendant care provider is not acting in the ordinary course of employment, the benefit payable shall not exceed the amount of economic loss sustained.
What the change means may still require Court interpretation. Until that occurs, in all likelihood, family members and friends who provide attendant care will be giving of their time and energy freely or for a minimal amount.
The impact will vary depending on the degree of injury, need and time involved. Many family members and friends will continue to provide assistance as that is often the nature of those individuals. However, at some point, the stress of being an unprofessional caregiver will become unbearable and create its own victims.
Another aspect of injury is the Minor Injury Guidelines (MIG).
The purpose of the MIG was to provide payment of benefits to a maximum of $3,500, for minor injuries. The insurance industry wanted to remove some of the frustration associated with payment of benefits to make life a little easier for those individuals who sustained minor injuries and to achieve maximum recovery in a short time frame.
Sometimes the body does not recover quickly for many reasons. Pre-existing medical conditions have been cited by physicians as one major factor. For example, the victim may have osteoarthritis, migraines or old injuries.
Previously, an injured party/insured had the opportunity of being removed from the MIG when a physician provided an opinion supporting a pre-existing condition. In other words, the individual would not achieve maximum recovery because of the other medical condition.
The amendment will now require that the pre-existing condition must be in the physician’s clinical records prior to the accident. If there isn’t a clinical record somewhere of this pre-existing condition, then the insurance company will not likely accept it.
Many individuals do not have family physicians, or have not sought medical investigation for suspected health issues or never realized that a prior injury has led to a medical condition. Similarly, physicians do not have detailed notes of every discussion with patients, nor do they have clinical records from retired physicians.
Therefore, some individuals, who are diagnosed after a car accident with a medical condition that existed pre-car accident, will likely have difficulty arguing that the MIG ought not to apply to their situation.
First and foremost, it is important to obtain legal advice. Secondly, consider hiring a professional caregiver. Thirdly, inform your physician or treating medical professional of all health conditions.
Steven Kenney is a lawyer at SorbaraLaw, currently practising primarily in the areas of medical malpractice and personal injury, though he maintains an interest in corporate and commercial matters as well as employment law.
30 Mar 2016
By Patrick Westaway – 2016/03/30
The next time you travel to the US and a customs official asks whether your purpose is business or pleasure, consider the consequences. Outside the U.S., we are accustomed to rely upon income tax treaties to avoid foreign tax in the absence of a material foreign presence. And, we assume that foreign tax applies only to foreign source income. Certainly, we expect that when Americans come to Canada on business, they avoid personal Canadian income tax so long as they remain for less than 183 days. The corollary, however, does not hold true. The rules do not apply equally. And, if Canadians—individuals as well as the companies that employ them—are to sidestep the U.S. tax traps, we must first know they exist.
Both Canada and the U.S., together with most jurisdictions in this world, tax non-residents on business income, employment income and property income sourced from the particular jurisdiction. That is a matter of domestic law. Such laws are then modified by treaties designed to promote international trade and investment and to allocate the tax base among nations rationally and with some degree of uniformity. Typically, those treaties provide a six-month grace period for employees and, in the absence of a permanent establishment, wholly exempt the business income of their employers. The difficulty for Canadians and other foreigners entering the U.S. is that when the U.S. government signs a treaty, the state governments are not bound.
On the employee side, forty-one out of the fifty states tax out-of-state employees. Of these, twenty-four levy tax from the date on which that employee sets foot in the jurisdiction. The other seventeen have varying de minimis thresholds. Fly to Philadelphia for a conference and owe Pennsylvania tax on day one. Visit clients in New York City and enjoy a two-week grace period. It does not matter that your salary is paid by your Canadian employer and that neither you nor your employer have any income sourced in the state. The theory is that if you exercise your employment in that state then you should be taxed in that state: total annual employment income would likely—but not necessarily—be prorated by the number of days (or part days) spent in that state.
The employer then has a corresponding obligation to track the time spent by each employee in each state and apply: (i) a different method of quantifying the time spent in each state; (ii) a different method of quantifying the tax base for each state—that is, for determining the amount of income on which the employee is taxed; and, (iii) a different tax rate for each state. The employer must then file different paperwork for each state. This requires administration, which entails a not-insignificant cost.
Third, the employer has its own tax liability to consider since, by definition, it carries on business in each state to which it sends its employees. One might object that if the employer has no revenue source in a given State then there is no income to tax. Unfortunately, this is the point at which the U.S. throws something at us called the “Unitary Business Principle”. This principle traces its origins back to the 19th century when states won the right to levy property tax based on a railway company’s value instead of the value of the tracks which crisscross its territory. Today, this principle enables states to apply income tax to a portion of worldwide profits based on the nebulous notion of “value flow”, underpinned by such cryptic concepts as “functional integration”, “centralization of management” and “economies of scale”.
Accepting that there might be foreign tax payable, one might expect to recover the tax cost through foreign tax credits. This will work for Canadian employees since U.S. personal income tax is generally lower than Canadian personal income tax. Unfortunately for their incorporated employers, however, Canadian corporate tax rates are typically 13% lower than the U.S. equivalent: the effect is to bump up the employer’s tax rate from about 26.5% to 40%.
This situation applies not only to non-residents of the U.S. but to Americans themselves. The problem is, in fact, greatest for U.S. businesses and Congress has responded by introducing the Mobile Workforce State Income Tax Simplification Act (known as the Mobile Workforce Act). The purpose of this Act is to reduce compliance costs by introducing uniformity among the states. Unfortunately, this legislation has been introduced, shot down and re-introduced every year for almost a decade. At present, the 2015 iteration remains alive, having passed committee stage last year. One hopes that this bill will finally become law.
In light of the above, what are Canadians to do?
The answer to that question is to think carefully about whether a Skype or conference call is a suitable substitute for a personal visit. If flying down for a conference, consider the tax laws of the state to which you are headed. And, when next flying south, be sure that you can truthfully answer that your purpose is pleasure.
Patrick Westaway is a corporate/commercial and tax lawyer at SorbaraLaw. He regularly advises in such technology industries as animated feature film production, online gaming and telecommunications with an emphasis upon cross-border enterprise and investment structuring.
By Sam Sorbara and Katy Hughes 2016/03/15
The regulation of pesticides in Canada is shared between the federal and provincial levels of government. The federal government is responsible for pre-market assessment, approval, and registration while the provincial governments deal with the sale, use and distribution of approved pesticides. The federal Pest Control Products Act (“PCPA”) is supplemented by the Pest Control Product Regulations (“the Regulations”), which outline the criteria for assessment and registration of pest control products. Federal regulation is under the ambit of the Minister of Health and the Pest Management Regulatory Authority (“PMRA”). This pest control legislation is intended to create a fair process for data protection while encouraging the registration of new pesticides and facilitating the timely entry of competitively priced generic pesticides. To this end, section 17.7 of the Regulations requires new applicants to compensate prior registrants for using or relying on the data that has been submitted by those registrants. This is beneficial for companies spending time and resources developing new pesticide products, as it ensures that the data they collect and disclose when applying for registration attracts compensation from other parties who subsequently use or rely on their data.
One area of concern for many agricultural companies researching and registering pest control products is whether or not all data and studies submitted to the Minister in support of an application are compensable, even if the data requirements have been met by an earlier submission and irrespective of whether or not they are formally reviewed. Section 17.7(2) clearly states that (a) test data that supports an application to register a pest control product whose active ingredient is already registered and (b) test data that supports an application to amend a registration are “compensable data” if submitted to or considered by the Minister for the first time, and remain compensable for 12 years after the date of the application. Furthermore, Section 17.8 requires that the Minister provide applicants with “a list of the compensable data that they may use or rely on and in respect of which they will need to enter an agreement with the registrant.” A plain reading of Section 17.8 indicates that new applicants will have a choice as to which prior “compensable data” to rely on and can then enter into negotiations on that basis.
What happens when, for example, Company B submits a study in support of its application, but the data requirements have been previously met by an earlier submission from Company A? In the past, the PMRA has taken the position that in such a situation, Company B’s studies would not constitute compensable data, only Company A’s would. So where new applicant Company C wishes to use and rely on Company B’s submissions, it would not be able to negotiate with company B to do so. Not only does the PMRA’s interpretation remove compensation from Company B, it also necessarily prevents Company C from using Company B’s data despite the fact that it might be more relevant to Company C’s objectives than the data submitted by Company A.
The plain language of the Regulations does not support this interpretation. The Regulations clearly indicate that data supporting an application to register or amend the registration of a pest control product that is submitted to or considered by the Minister is compensable. To this end, if Company B has submitted studies and data in support of an application, it is compensable even if Company A has already done so. If this were not the case, a company who submits data that is already included in another applicant or registrant’s submission will never be eligible for compensation by a new applicant who uses or relies on that data. Such an interpretation goes against the spirit and intention of the Regulations.
The crux of Section 17 of the Regulations is to ensure that all data that has been submitted or reviewed is considered compensable data and to mandate the negotiation of that compensation. This leaves it to the applicants involved to choose which data to rely on and enter into negotiations for compensation based on that choice. This process fosters innovation and encourages fair competition, while a contrary interpretation would only serve to constrain choice and ultimately diminish the market. While the Regulations are relatively new, it will be interesting to see how the PMRA chooses to interpret them, and the effects of such interpretation on the pest control sector.
Sam Sorbara is the managing partner of SorbaraLaw. His extensive experience includes all aspects of real estate development as well as corporate and commercial transactions. Katy Hughes is an articling student.
By Elikem Deley 2016/02/02
Acting as an attorney under a Continuing Power of Attorney for Property (PoA) for an incapable person or as the Executor of an Estate, can involve considerable time and effort. In recognition of the time spent and the care taken to manage an incapable person’s property, or to administer an Estate, Ontario laws provide that compensation (or an allowance) may be payable.
Under the Substitute Decisions Act, 1992, S.O. 1992, c. 30 (“S.D.A.”), a guardian of property or an attorney under a PoA may take compensation annually, monthly or quarterly in accordance with a prescribed fee scale. Currently, the prescribed fee scale is as follows: 3% on capital and income receipts; 3% on capital and income disbursements; and three fifths (3/5ths) of 1% of the annual average value of the assets, as a care and management fee (although this last fee has been determined to be an extra fee, and is only included as part of compensation in some circumstances).
This fee scale is generally followed unless, in certain circumstances, the Office of the Public Guardian and Trustee objects or a Court determines that it is not appropriate. Furthermore, the fee scale is subject to any specific instructions with respect to compensation that may be contained in the PoA document itself.
An Executor for an Estate may also receive compensation. Unlike the compensation for attorneys under POA, there is no prescribed fee scale set out in the legislation. Instead, section 61 of the Trustee Act, R.S.O. 1990, c. T.23, simply states that “[a] Trustee, guardian or personal representative is entitled to such fair and reasonable allowance for the care, pains and trouble, and time expended in and about the Estate, as may be allowed by a judge of the Superior Court of Justice.” (This section of the Trustee Act also applies to compensation for attorneys under Powers of Attorney for Personal Care, whereas the section of the S.D.A., above, deals only with Continuing Powers of Attorney for Property). Although the Trustee Act is silent on the quantum of compensation, a compensation fee scale has evolved at common law (i.e., through cases decided by the Courts) over the years: 2.5% of capital receipts; 2.5% of capital disbursements; 2.5% of income receipts and 2.5% of income disbursements. This fee scale is generally followed, unless the Will specifically states otherwise, or the Court determines that it would be unreasonable or unfair to do so.
It is important to note, however, that being an attorney under PoA or an Executor does not guarantee compensation. In the 2013 case, Aber Estate, 2013 ONSC 6363, Justice Carole Brown confirmed that the Court, in considering compensation, must be satisfied that compensating the guardian of property or the attorney under PoA based on the prescribed fee schedule would be fair and reasonable. This is the same governing principle that exists in determining an Executor’s compensation.
What is fair and reasonable?
In Aber Estate, Justice Brown refers to the 1905 Ontario case, Toronto General Trust Corp v. Central Ontario Railway, which sets out five factors to be considered when determining what is “fair and reasonable”: 1) the size of the trust; 2) the care and responsibility involved; 3) the time occupied in performing the duties; 4) the skill and ability displayed; and 5) the success of the administration.
While compensation may be available to attorneys under Power of Attorney and Executors, it is by no means guaranteed. The work done by an attorney or an Executor has to warrant compensation, and the quantum of compensation, if any, can change accordingly.
The issue of compensation for attorneys under PoA (for Property or for Personal Care) and for Executors is an important factor to consider when drafting your Will and Powers of Attorney. If you wish to designate the same person as your attorney under PoA and as the Executor of your Estate, consider that he or she could, in theory, take compensation for acting in both roles. One way of addressing double compensation is to include specific instructions in your Will and/or Power of Attorney.
Designating someone as your attorney under PoA or as your Executor is not an easy task, just as it is not an easy task to act as an attorney or Executor. Taking extra care in planning your Will and Powers of Attorney and in designating your representatives is recommended.
Elikem Deley is a member of the estates group and practices in the areas of wills, powers of attorney, estate administration and estate litigation.
By Brian McCann 2016/01/12
Family law lawyers are increasingly encountering issues arising on the breakdown of a marriage where the parties previously agreed that one spouse could take an early retirement, or a spouse unilaterally chooses to take early retirement, prior to or shortly after a separation.
The problem generally arises where one spouse has worked throughout the entire marriage, and by virtue of that hard work, prudent investing and maintenance of a comfortable but modest lifestyle, the family has accumulated wealth and other valuable assets in anticipation of and as a sound financial foundation for early retirement.
Generally speaking, the division of the parties’ assets can be easily accomplished pursuant to section 5 of the Family Law Act. When the matter of spousal support arises, however, that may very well have an impact on those plans for early retirement, regardless of any agreement previously reached between the parties.
Once the claimant for spousal support has met the “entitlement” threshold and has proven that he/she is deserving of spousal support, the quantum and duration are determined based upon the individual facts of the case with reference to factors including the financial means of the payor and the financial need of the recipient, among others. The current case law should give rise to caution when considering early retirement if one currently has, or will have, a support obligation to ones former spouse.
Early voluntary retirement involves the “choice” of the payor to retire and is typically accepted as reasonable by the Court if the payor had major health issues and/or worked in a non-sedentary field. Additionally, the Court will consider the age at which the payor retired, with those choosing early retirement closer to age 65 being seen as retiring at a more “reasonable” age. If the voluntary early retirement of the payor spouse will severely prejudice the recipient spouse, the court may “assign,” “impute” or “attribute” an income as though the payor had not retired, at what it considers to be a more realistic income despite retirement resulting in an actual lesser income.
In Teeple v. Teeple,  O.J. No. 3565 (C.A.), the judge found that the payor husband had deliberately taken early retirement just two weeks before trial to decrease his income for the purpose of decreasing or eliminating his spousal support obligation. The Court ordered continued monthly support to the wife despite the payor’s attempt to discontinue support. Thus, as seen in Teeple, if the Court finds that the payor intentionally retired early to frustrate his/her spousal support obligation, this action can be viewed by the Court as lacking in good faith and the court will impute income and order continued support.
In the recent case of Hickey v. Princ, (2015) ONSC 5596, the payor spouse retired at age 51 and attempted to reduce and ultimately discontinue paying spousal support to his former wife. The payor husband was successful at the Ontario Superior Court level; however, success was short-lived for the payor as the decision was set aside on appeal, and ongoing support was reinstated. The Court in that case held that the payor’s pension income alone was not the only source from which to determine the payor’s ability to pay support and stated: “[m]eans, therefore, includes both actual income as well as income-earning capacity.” The payor was ordered to resume payment of spousal support to the wife in the same amount as was being paid before his retirement, even though he was only receiving his pension at that time.
While the Court acknowledges that individuals are free to retire whenever they choose, it is clear that one cannot voluntarily choose to be unemployed or underemployed and thereby avoid or frustrate a spousal support obligation. Whether a person is “underemployed” is determined based upon the specific facts of a case. As stated in Cossette v. Cossette,  O.J. No. 2073 (Div. Ct.), “Parties cannot sidestep support obligations by unilaterally deciding to leave the workforce.”
Accordingly, exercise caution when considering early or voluntary retirement, if a spousal support obligation exists, or may exist thereafter.
Brian McCann is a partner at SorbaraLaw, whose practice includes all aspects of family law. Brian was recently selected by his peers for inclusion in The Best Lawyers in Canada® 2015 for Family Law.
18 Dec 2015
By Jim Peluch 2015/12/18
As a result of what appeared to be a misguided attempt to “get even” with his (ex-)wife for calling the police following a domestic assault in 2013, a Guelph man has been ordered to pay his (ex-)wife’s legal costs of $82,373.66.
Mr. Justice C. Herold ordered the self-represented (ex-)husband to pay the wife’s legal costs at the conclusion of a five-day trial in the Guelph Superior Court of Justice on October 16, 2015. The wife was represented by James Peluch of SorbaraLaw’s Guelph office, who was retained just days after the husband was arrested by the police in May, 2013 for an altercation that occurred at the couple’s Guelph residence. The husband was subsequently released, following a bail hearing, but for the next two and one-half years, their divorce proceeding could not reach a negotiated settlement on the main issues, which included the division of marital property, spousal support, child support and section 7 expenses for their two adolescent children and a variety of other minor items. The divorce itself was the only matter that the parties could, in fact, agree on.
The husband initially had legal representation in the divorce matter. The case went through a number of case management hearings where the husband often saw fit to bring the adolescent male children to Court. The Office of the Children’s Lawyer was ordered by the Court to represent the children’s views and preferences (despite them being ages 17 and 15 at the time) regarding custody and access. It quickly became apparent that the father had influenced the children to be in close alignment with his own personal beliefs. The mother was essentially being blamed for leaving the relationship and allegedly abandoning the children, when, in fact, all she wanted was an “ordinary” relationship with her children without the abuse and domination that the husband had exercised over the course of their 18-year marriage.
The Office of the Children’s Lawyer could not be of assistance under the circumstances and the mother’s relationship with the boys continued to deteriorate. The children continued to live in the former matrimonial home following her departure. She went to a nearby neighbourhood home to live with some of her relatives. Although the husband was released on a Recognizance of Bail, the wife did not wish to remain at the matrimonial home out of fear for her personal safety. She sought counselling for herself and her two sons, but since the boys would only participate on terms dictated by the father, the relationship she had with them suffered significantly post-separation.
Prior to the civil trial, the husband’s criminal trial was held in 2014. He entered a “not guilty” plea. The criminal Court trial judge convicted the husband of the domestic assault from 2013 and sentenced him to a 30-day period of incarceration which, unfortunately, did not seem to have any moderating effect on the husband’s views in the divorce proceeding. Despite the recommendations from the Settlement Conference judge in the family law proceeding, and offers from the wife to divide their assets equally, the husband wanted a greater share of the assets and sought child and spousal support payable by the wife to him.
At the conclusion of the family law trial, the Court divided the parties’ modest net family property into two very similar sized shares. The wife was not required to pay spousal support to the husband; however, he was required to pay her spousal support at the rate of $500 per month since she was trying to upgrade her academic credentials to become more employable in the workforce. Further, the two adolescent sons were deemed to be no longer “children of the marriage.” The wife’s income at the time of the trial was sufficiently modest to not attract the Child Support Guideline table amount in any event, even if the children had been considered “children of the marriage.”
Due to the husband’s intransigence, the Court ordered the husband to pay the wife’s legal costs, which exceeded his share of the property settlement. Had the husband been more conciliatory and receptive to the wife’s earlier Offers to Settle, it would not have been necessary to have a five-day trial, from which he came away unsuccessful on all fronts. The husband and his family law counsel parted ways early in 2015. Had the husband retained another lawyer or perhaps listened more sincerely to what the Court and his first lawyer had to say, he might not have incurred such a significant costs award.
Congratulations Jim on an excellent result, and kudos to his two administrative assistants, Tammy Smith and Jessica Chyc, without whose efforts he could not have succeeded!
Jim Peluch is a lawyer at SorbaraLaw, practising predominantly family law in the firm’s Guelph office