By Catherine Hyde, Paralegal

I offered to buy my daughter birthday plates and supplies for the upcoming 5^th birthday party for my granddaughter.  I knew she liked anything princess so asked if I should pick up some plates with that theme.  I get a text asking if there are any superheroes.  I am curious about this so asked if there were princesses who were superheroes –I’m thinking “Wonder Women”. Other texts went back and forth leading me to total confusion.  Eventually we spoke on the phone and lo and behold she is having the class over so there are boys and girls so she needed superheroes for the boys and princesses for the girls.  As a girl of the 60’s I am somewhat opposed to such gender specific types, however, that is another story.  My point here is that sometimes it is just a matter of sitting down and talking with the other individual in order to clear up the misconceptions which have led to a Small Claims Court Claim or any litigation for that matter.

As paralegals we are required pursuant to the Rule 3(5) and (6) of the Rules of Conduct to “advise and encourage a client to compromise or settle a dispute whenever it is possible to do so on a reasonable basis.”  In conjunction with this, a paralegal is to “consider the use of alternative dispute resolution for every dispute” including advising the client of the options.

The options for alternative dispute resolutions include negotiation, mediation and arbitration.  What are these terms?  Negotiations relate to discussions between the parties or their representatives in an attempt to come to a reasonable resolution of the issues at hand.  If the parties are unable to negotiate a settlement, and a Claim is issued, the parties still have an opportunity to continue to negotiate. Once a Defence is filed, a Settlement Conference is set.  At the Settlement Conference the parties again have an opportunity to discuss the issues and attempt to resolve the matter.  It must be remembered that the best settlement is often where no one party is completely happy but both can live with the resolution.  At any time the parties can also agree to seek the assistance of a mediator. Mediation involves the parties discussing the matter with a qualified mediator who acts as a neutral third party. A mediator cannot take sides or give legal advice but will help the parties stay on track, ensure one party does not intimidate another, and ensure the parties have equal input into the discussions. A report will be made as to the proposed agreement and the parties’ representatives can then finalize or tweak the agreement. If mediation fails, the parties can continue through the Court system to a trial, or if they wish, they can arrange for arbitration.  At arbitration, the Arbitrator will assess the positions and make a determination which will be binding upon the parties.  There is always an opportunity to sit down and discuss the issues that led to the dispute and see if it can be resolved.   Your paralegal should advise you of these opportunities and ensure that every opportunity to negotiate a settlement is taken in order to minimize the costs to all parties.

Now I’m not sure who is going to win the battle between princesses and superheroes but no doubt a little mediation will be required on the part of my daughter to ensure everyone has lots of fun.  Next time before you leap directly to a Plaintiff’s Claim, make sure you are taking a moment to see if a discussion, with the assistance of your representative, can perhaps lead to a resolution of matters as after all it could be a simple matter of miscommunication or misunderstanding between you and the opposing party.

By Jason Botelho, Associate

Canada’s legal system has seen many fascinating developments over the years. The Quebec Act of 1774, provided us with two systems of law which makes us very unique to other nations. The Quebec Act established the “civil law” system used in Quebec and the common law system which is used in the rest of the provinces.  In the Quebec civil law system, a written Civil Code sets out standards of acceptable behaviour or conduct in private legal relationships. The Civil Law system then uses court decisions to interpret the intentions of lawmakers. Conversely, the common law system of justice relies on the historical record of court interpretations of laws over the years.

Additionally, in 1982, the Charter of Rights of Freedoms, was entrenched in our Constitution and provides each of us various individual rights and limits the ability of governments to infringe these rights. Included in our rights are the right to liberty, equality, freedom of religion, freedom of expression, freedom to associate with a group and to be presumed innocent until proven guilty.

Along with these fascinating developments are, what I would classify, some peculiar entries to the Canadian legal frame work.

The following are some of the most interesting laws I could find, courtesy of Google, in Ontario and the whole of Canada:

Nation wide

•  30% of a radio stations content must be "Canadian Content"
•  You may not pay for a fifty-cent item with only pennies.
•  Citizens may not publicly remove bandages.
•  It is illegal for clear or non-dark sodas to contain caffeine.

Ontario Provincial Laws

• The speed limit is 80 km per hour for cars, but bicyclists have the right of way.

City Laws

Etobicoke

• Bylaw states that no more than 3.5 inches of water is allowed in a bathtub.

Cobourg

• If you have a water trough in your front yard it must be filled by 5:00 a.m.

Gananoque

• Homeowners are responsible for clearing snow off of municipal sidewalks.

Guelph

• The city is classified as a no-pee zone.

Kanata

• The colour of house and garage doors is regulated by city bylaws (a purple door get you a fine). It is also illegal to have a clothes line in your backyard.
• You can't work on your car in the street.

Oshawa

• It's illegal to climb trees.
• Homeowners are responsible for clearing snow off of municipal sidewalks. If sidewalks is not cleaned within 24 hours after a snowfall, city workers will clean it and the cost will be placed on the homeowners tax bill.

Ottawa

• It is illegal to eat ice-cream on Bank Street on a Sunday.

Toronto

• You can't drag a dead horse down Yonge St. on a Sunday.

Uxbridge

• Residents are not allowed to have an Internet connection faster than 56k.

Wawa

• You may not paint a ladder as it will be slippery when wet.
• It is illegal to show public affection on Sunday.

BOUNDARY DISPUTE RESOLUTION: A COMPARISON OF ONTARIO’S BOUNDARIES ACT AND SURVEYS ACT AS SOLUTIONS FOR MUNICIPAL ROADS

By John Barzo, Associate

Yours truly is now a published author!

I often tell people that before I became a lawyer, I was normal. 

I don’t think I will ever be able to convince anyone who reads this.

By Catherine Hyde, Paralegal

There is an old adage that says “Never Loan Money to your Family or Friends”.  Something you should try to remember but sometimes you just can’t say no and you decide to loan some money.  Maybe the shoe is on the other foot and you have convinced one of your friends or family to loan you money.  How can each of you protect your interests?

It is all too easy to give money to a friend and say “I know you will pay me back”.  But what happens when something goes wrong in the friendship and you part ways? Without something in writing or proof that you loaned your friend the money, you do not have anything to substantiate that in fact you loaned him the money.  It is your word against theirs.

To protect yourself, you should prepare a document (can be handwritten) setting out the terms of the loan i.e. the amount loaned, how much the payments are to be, when are the payments to be made, what interest rate, how is interest calculated, are the payments interest only or principal and interest, what will happen in the event of default.  If it is a large sum of money you will want to determine if there is collateral to secure the loan.  In this event you may wish to seek advice from a lawyer concerning security for your loan, and a more formal loan agreement.

Once the document is prepared, signed and dated by all parties, if possible it should be witnessed by a neutral third party.  Both parties should receive a copy of the document.

If you are the lender and the borrower defaults, i.e. does not comply with the terms of the loan arrived at by the two you as stated in the document, you can then seek to enforce the terms of payment.  You may wish to seek the advice of a lawyer or paralegal (depending on the amount owed) with respect to what the limitation period is i.e. based on the terms of your document, is there a time limit within which you can pursue payment.  If you are within the specified limitation period, the next step may be to write a demand letter for payment.  You will need to provide a copy of the agreement relating to the debt, record of any payments which you received, and your calculation of what is owed.  If the demand letter does not bring a satisfactory resolution, depending on the amount of monies owed to you, you can then decide to proceed with a claim for payment of the monies.  You must factor in the cost of pursuing the claim against the amount of money owed to you.

If you are the borrower and the lender has demanded payment, you need to calculate what you still owe, if anything.  Refer to the document signed by both of you as to the terms.  Ensure that throughout the loan period you have kept a copy of the cheque to the lender making a payment, or a copy of the bank statement showing the electronic payment and proof of who the payment was made. If it is cash, you will need to get a receipt signed by the lender acknowledging receipt of the payment.  Keep all your records and a tally each month as to the balance owing including interest, if any, less the payment.  In the event the lender makes a demand for payment, you will have records to verify that in fact you have made the payments and you can clearly prove the amount of money owing.  If in fact monies are still owed, you should consider making the payment within a specified time frame.  It will then be up to the lender to determine if they wish to pursue the further monies they believe to be owed or accept your calculation of the debt.   Once paid, you should have the lender write on your loan document that they have been paid in full.

If you have determined that you do still owe monies but you do not have the funds to make the payment in full immediately, discuss a payment plan with the lender i.e. post-dated cheques with   terms in the event of further default.

As always it is best to obtain advice from a paralegal (if the amount of the debt is less than $25,000.00) or a lawyer (particularly if the amount is in excess of $25,000.00) in order to determine what your rights are and how to proceed.

Of course, you could also follow that old adage and not loan the money.

By Samantha Hicks, Paralegal

You are owed money for services rendered; the invoices are beyond due and all attempts to contact the customer have failed.

You are ready to throw in the proverbial towel and write-off the amount outstanding; however, you are worried about the precedent that you are setting.

It has been suggested that you commence a Small Claims Court action to collect the amount owing, but you are hesitant…this isn’t something you want to navigate on your own nor do you want to spend more money on legal/representation fees than you are looking to collect.

You recall watching a movie (or was it a television show?) in which the loser was ordered to pay the winner’s legal/representation fees and wonder whether this 'loser pays' principle applies to the Small Claims Court?

The answer is 'yes' – the 'loser pays' principle does apply to the Ontario Small Claims Court. However, like all good things, section 29 of the Courts of Justice Act provides the maximum amount awarded to the winner for legal/representation fees is, generally, capped at 15% of the value/amount being claimed. 

For example:

•   $15,000.00 due and owing for invoices rendered (value/amount being claimed from customer)

            x 15%    =

•   $ 2,250.00 being the maximum amount awarded for legal/representation fees in the within example  

It is quite possible that, as the winner, you will spend more on legal/representation fees than the amount awarded by the Court…in which case, you need to look on the bright side – not only have you won, but you were also able to recover at least some of your legal/representation fees.

By Eric Finn, Associate

Section 14(4)(b) of the Ontario Expropriations Act provides that in determining the market value of expropriated land no account shall be taken of “any increase or decrease in the value of the land resulting from the development or the imminence of the development in respect of which the expropriation is made or from any expropriation or imminent prospect of expropriation.”  This concept is derived from common law principles intended to screen out the impact of the proposed development giving rise to the expropriation on the market value of the property.  Implicit in the application of the section is the existence of a “scheme” of development leading to the expropriation and a determination of when such “scheme” arose.

Full paper at the link below

By William Brennan, Associate

With the start of the New Year many people sit down to look at how they did financially in the previous year.  One thing that many people discover is that while they have spent a lot of time working they haven’t necessarily been paid for all of their work.  These outstanding accounts can make what should have been a great year into a poor year.  The following are a few tips on ways to help collect those hard earned dollars.

•  Make sure that all of your invoices are up to date

People only pay their bills after they receive them.  Many hardworking people focus all of their effort on putting in long hours and doing excellent work, they unfortunately do not take the time to promptly send bills to their customers.  Keeping up with billing for the work you do is just as important as completing the work in the first place.

• Send a reminder letter

A politely worded reminder letter to a customer with an outstanding account will often encourage them to pay their outstanding account.  The New Year is an excellent opportunity for this, a polite letter wishing your customers a happy New Year, thanking them for their business and finally reminding them about the outstanding account can be a simple yet effective way of collecting on outstanding accounts.

• Have a lawyer send a letter on your behalf

Unfortunately, a polite reminder letter does not always work.  When a customer is either ignoring or refusing your requests for payment you may consider asking a lawyer to write a demand letter on your behalf.  A firmly worded demand letter from a lawyer is sometimes enough to prompt a customer to either pay the outstanding account in full or start a conversation on how to resolve the outstanding account.

• Start a lawsuit

Finally if all options have failed you could consider starting a lawsuit seeking payment of your outstanding account.  This is not a step to be taken lightly; you can generally assume that every lawsuit that you are involved with will cost you both time and money. These costs must be balanced against any amounts that you may potentially recover if your lawsuit is successful.

By John Barzo, Associate 

Litigation is a process.  Often the process follows a pre-determined script.  Sometimes you have to think outside of the box.

I recently had a situation where a client found out about a judgment against him.  He claimed not to have any knowledge of the lawsuit, let alone the judgment.  More importantly, the judgment led to a writ being filed against his property.  When trying to refinance, it stopped him in his tracks.

So run to the lawyer!

The usual script is that one has to show a reason why one did not defend, that once you found out,  you moved quickly, and that you have at least an arguable defence.  The reason for this test is that more often than not, someone is just trying to delay.

His reasons for not defending were a tad weak.  He did move quickly.  So we focused on the defence.

The claim against him was on the basis that he personally guaranteed a debt of his now defunct company.  At least that was what the claim suggested.  On being retained, we sought the information from the other lawyer.  It turns out there was no guarantee.  The only thing he signed was an authorization to have the payments processed on his credit card.

So I decided to try an aggressive move.  Not only did I bring a motion to set aside the default judgment, to allow my client to defend, I also simultaneously brought a motion for summary judgment to dismiss the action as against him.  Technically, one can’t bring such a motion until the defence is filed.

I successfully argued that the stronger the defence, the less important the first two factors were in determining whether the default should be set aside.  I suspect that the fact that I also moved to summarily dismiss the action underscored the point to the Judge, and gave the Judge the ability to decide right there and then so the file was not languishing in the courts.

by Scott Fairley, Partner 

In most cases it is necessary to register a construction lien against each individual property to which materials or services were supplied, within 45 days after the date of last supply or completion.  A lien will attach to the property or the holdback funds in relation to the supply to each lot.  This is not a simple task if a contractor or subcontractor supplies services or materials to multiple lots within a project, as is usually the case in residential subdivision projects.  The Construction Lien Act addresses this problem through the concept of a general lien.  

A general lien is essentially a blanket lien that covers all the lots in a subdivision to which a contactor or subcontractor supplied, for the entire value of the supply to all lots.  Rather than choosing to lien for the value of each supply to each individual lot, within 45 days of the last supply to each lot, a contractor or subcontractor can register a general lien for the total outstanding account.  This allows the lien claimant to register within 45 days of the supply to the last lot, without losing the right to lien for the value supplied to lots earlier in the project.  If a lot has been transferred to a homebuyer, it can no longer been the subject of a lien, but the amount supplied to that lot can be added to the lien against other lots if a general lien is available.  For example, if an unpaid subcontractor supplied $5,000 worth of material to each of lots 1 through 10, and all but Lot 10 are sold to homeowners, the lien must be registered against the remaining lot, being Lot 10.  However, the lien against Lot 10 will be for the full $50,000.00, although the actual supply to Lot 10 was only $5,000.00.  Of course, there must be sufficient equity in the remaining lot for the lien to have full value.  

For a general lien to be available the following conditions must be met: 

1. All of the premises for which the lien claimant seeks payment must be owned by the same owner; 
2. All of the work must be performed under a single contract between the owner and the general contractor; 
3. The contract between the owner and the general contractor must not include a provision that liens will expire on a lot by lot basis.  

This last condition can present difficulties for subcontractors.  An owner and a general contractor can include in their contract a provision that liens expire on a lot by lot basis, and the general contractor cannot rely on a general lien.  Similarly, any subcontractor under that general contract cannot rely on the general lien.  The difficulty is that the subcontractor is not a party to the general contract and did not agree that liens will expire on a lot by lot basis.  The subcontractor may be considering a general lien but will not know if liens expire on a lot by lot basis, which eliminates the possibility of a general lien.  It is advisable for a subcontractor on a subdivision project to find out before the first supply if the contract between the owner and contractor provides that liens expire on a lot by lot basis.  If it does, that subcontactor will have to consider its lien rights for each individual lot and lien rights will expire 45 days after the supply to each individual lot.  

By Eric R. Finn, Associate

Those who analyze dispute resolution methodologies often refer to a continuum of approaches ranging from a form of “struggle”, where the parties wage war on each other with the intent that might will eventually win out, to negotiation, where the parties by themselves or with the assistance of consultants resolve the issues involved in the dispute.  In between the two extremes on the continuum, three other approaches, involving a third party, are generally referred to as adjudication, arbitration and mediation.  A brief description and discussion of these five dispute resolution mechanisms follows.

Struggle

Authors have defined struggle as process or procedure that “can take the form of physical combat (military battles, strikes), wars of words (shouting matches), political contest (vying for allies) or taking unilateral advantage (theft).”  In the international arena and throughout history, wars, including civil wars, have been used as a means of resolving disputes.  Domestic examples of struggle include strikes, gang warfare, family arguments and commercial disputes, involving parties with unequal bargaining power. 

Being on the continuum of dispute resolution, can “struggle” be seen as producing an agreement.  Again, authors, believe that the result of a struggle is an “agreement”.  A war, upon its conclusion, will lead to a victor and peace.  A strike or lockout can eventually lead to an agreement once the parties have felt the impacts of the withdrawal of the work force. 

More commonly, the presence of a “struggle” may lead to an agreement because of the knowledge that third parties may intervene.  Police forces may intervene to stop violence.  Those involved in a labour dispute may be aware that a government may intervene to impose binding arbitration or back to work legislation.  Governments have already intervened with consumer legislation and class action remedies to balance the bargaining positions between consumers and those provided goods and services.  Courts are becoming more and more involved in resolving family disputes and domestic violence.  The greater the possibility of a third party intervening, the greater the likelihood the parties will be able to reach an agreement to end the struggle.

Negotiation

While struggle may eventually result in an agreement, the terms may not be conducive to a durable settlement.  We have all seen that unilateral action by one party, such as the seizing of land, may result in peace for some time but often the seizure will result in further conflict at a later date when interests shift.  Where the consequences of  a struggle are unacceptable and  the parties do not want to involve a third party, negotiation is the favoured dispute resolution remedy.  Negotiation is often chosen when both parties:

• Believe they cannot get what they want unilaterally
• Have some conflicting and some shared interests
• Are in a stalemate that harms them both, and
• Perceive negotiation to be the best way of attempting to end the conflict.

Negotiating techniques can take the form of positional bargaining or principled negotiation.  In the former, the primary goal of each party is to reach an agreement but the technique invariably favours the more powerful party.  The process involves a successive taking on and then giving up on a sequence of positions.  Consider the type of haggling that goes on at international bazaars as an example.

Principled negotiation, while also aimed at reaching an agreement, is intended to reconcile interests, avoid damaging and perhaps improve relationships and have relatively low transaction costs such as time, stress and money.  The four principles of this technique are:

1. Separate the person from the problem.
2. Reconcile interests, not positions.
3. Create options for mutual, not personal, gain.
4. Use objective standards.

As will be seen, when parties decide to involve a third party mediator to resolve disputes, they will find that most mediators today are trained in the art of principled negotiation.

Adjudication

Moving along the continuum away from struggle, to those options for dispute resolution involving third parties, the approach where the parties have least input into the dispute resolution process is adjudication.  Adjudication or litigation is a process in which a third-party judge, authorized by legislation, compares the parties information (evidence) presented in court or in a tribunal, according to the procedures of those bodies, and then renders a binding judgment that favours one party over the other.  There is a winner and a loser and the decision is binding.

The strengths of adjudication include the ability to predict an outcome where specific legislation or precedents are involved, the process results in a binding enforceable decision and the proceedings are transparent and, generally, open to the public.  The weaknesses include that fact that there is always a winner and a loser and therefore fewer satisfied participants than may result from mediation or prini9cpled negotiation, decisions have lower compliance rates than mediation and the oprocess offers the participants minimal control.

The issue of costs raises some debate.  Adjudication because of time involved from commencement to conclusion and the  procedural steps along the way, general leads to higher transactional costs even.  In mediation or arbitration, the procedures are general designed to reduce costs.  The variable in the debate is the cost of the mediator or arbitrator as compared to a government funded court.  Where a lengthy hearing before an arbitrator is required the cost of the private arbitration weigh the scale of costs in favour of adjudication.

Arbitration

With arbitration, the parties still present evidence and arguments to a neutral third party who makes a binding decision.  Unlike adjudication, however, the parties choose the private arbitrator and decide on the procedure to be used.  Arbitration also provides decisions based on objective standards .  If the parties agree, arbitration could be non-binding but by far the most preferable result is to have a binding decision which can be enforced pursuant to the parties’ agreement or government regulation.  As noted above, the parties pay for the services of the arbitrator.

Mediation

The form of dispute resolution closest to the negotiation end of the continuum is mediation.  Where mediation is used to resolve a dispute, a third party is involved to facilitate an agreement but the parties formulate the terms.  As with arbitration, the parties choose and pay the mediator and agree on the procedures to be used.  Because the aim of mediation is a consensual agreement, there is no binding effect on what takes place at a mediation or the views expressed by the mediator.  If an agreement is reached, the parties have contractual remedies of enforcement.

Two types of mediation have developed – rights based mediation and interest based mediation.  In the former process, the mediator is concerned with whether the rights of a party has been infringed and will generally result in the mediator expressing an opinion as to such infringement.  This type of mediation is primarily found in statute based mediation, for example, human rights disputes or motor vehicle accident benefits cases.

More commonly, mediation is interest based which is “a process whereby a third party facilitates understanding and mutual decision making on outcomes by parties involved in conflicts of interest.”  From this definition, it can be seen how interest based mediation will have significant success where the parties are involved in principled negotiation.  Mediators are trained to apply the four principles of principled negotiation to achieve an agreement which is in the interest of all parties.

(picture from Court of Appeal Website)

By Jason Botelho, Associate

In December 2011, the Ontario Court of Appeal rendered a landmark decision in Combined Air Mechanical v. Flesch which sought to provide greater clarity on the recently amended Summary Judgment rule (Rule 20) of the Rules of Civil Procedure. Although the test for summary judgment was similar to the previous one (the test was changed from “no genuine issue for trial” to “no genuine issue requiring a trial”), judges are now allowed to weigh the evidence, evaluate credibility and draw reasonable inferences from the evidence.

The Court of Appeal provided three types of cases that lend themselves to summary judgement motions. They are:

• the parties agree to use summary judgment;
• the claims or defences are without merit; or,
• the motion judge can “fully appreciate” all of the evidence and issues required to make dispositive finding without a trial.

As part of their decision the Court of Appeal established the ‘Full Appreciation Test’ which allows use of the Rule in cases where the judge can fully appreciate the evidence without a trial.

If a judge finds that that they are able to have a full appreciation of the evidence without the necessity of hearing and observing witnesses and having the full experience of the fact-finding process first hand, then the Summary Judgment motion will be appropriate in these instances. The Court of Appeal cautioned motion judges to only use the rule if the judge can fully appreciate the evidence without a trial. Cases which are more reliant on documents than witness testimony would seem to lend themselves more appropriately to this motion.

Remember not all cases are appropriate for the summary judgment motion. It is best to speak with one of the fine lawyers on our litigation team to help clarify all the nuances involved in this and other legal issues.

With a few magic words at a ceremony in June this year I was transformed from a mere Student-at-Law into a Lawyer, with all the powers, privileges and responsibilities that come as part of the profession.  It was a great feeling to be leaving behind my life as a student, all that learning, tests, and constant evaluation and joining the world of the professional, no more evaluations, no more tests, and having the answers for all of the questions.

Well not really, just like every transformation I had experienced previously, child to teenager, teenager to adult, elementary school student to high school student, high school to University there was no abrupt change from before and after a ceremony, aside from having a socially acceptable excuse for wearing robes in public of course.  It turns out that those magic words did not give me all the knowledge and wisdom to be able to answer any question, and there still are evaluations and tests; every time you interact with a client or stand before a judge you most certainly are being tested and evaluated. 

The most important thing that I have learned from the transition from Student-at-Law to Lawyer is that change, personal growth and learning is fundamental to our profession and never ending, each day you should be building on the last, becoming a better lawyer by improving our skills, learning about and keeping up with advances in the law, and providing more efficient and effective service to our clients.   This is not something that ends at the Call to the Bar, but continues right on through a lawyer’s entire career.

By John Barzo, Associate

We hear a lot about environmental issues these days: Climate Change is a very current topic of conversation.  The focus used to be smog.  Anyone remember acid rain?

Anyhow, there are also day to day issues that come up that can present sticky (sorry, couldn’t resist) legal problems.  True, these are not the ‘big’ issues of national or global importance, but they are important nonetheless.

The most common issues relate to property.  Owner ‘A’ runs a business using chemicals that spill onto Owner ‘B’s’ land.  There is now a maze of regulatory issues, statutory claims, and claims arising pursuant to the common law.  Not to mention the insurance coverage issues.  In many cases there are leasing issues as well.  Let’s talk about that.

For example, owner of commercial lands leases to a business that utilizes chemical processes, or operates a gas bar, or pretty much anything else.

Leases will have (or should have) provisions dealing with contamination.  In certain circumstances, based upon the wording of the lease, the risk of damage to the property as a result of environmental contamination can be deemed to be allocated to the landlord/owner.  For example, if in the provisions dealing with which party is to obtain insurance for such an event, and if it calls for the landlord to do so, a court could conclude that the parties agreed that the risk of loss falls on the landlord, and therefore cannot sue the tenant for the tenants negligence.

The more common situation are provisions that make it clear that the tenant is responsible.  Of course that is of little use unless there is insurance to back it up.  In these cases, the lease will call for the tenant to obtain insurance, and that such insurance is to include coverage for environmental contamination.  Further, the lease will call for the tenant to produce a ‘certificate of insurance’ to confirm such coverage upon request by the landlord.  This is where things usually breaks down.

Landlords rarely, in my experience, ask for the certificate during the currency of the lease.  More importantly, in my view, a landlord should look at the specific policy in place at the time of entering the lease to ensure coverage is appropriate.  Even if there is coverage, the extent of exclusions and escape clauses for the insurance company to deny coverage are often vast and numerous.

Because insurance does not seem to be an issue until there is a problem, a landlord can find out too late that there is no adequate insurance available to address cleanup and damages. What’s worse, the statutory and regulatory requirements are such that the landlord is now on the hook for the cost of cleanup.  And heaven help the landlord if any of the contamination has migrated to a neighbour’s property!

By Scott Fairley, Partner

During the summer months construction projects are in full swing.  As the construction season progresses and projects near completion, the time comes when contractors and subcontractors start to review their accounts and start to ask questions such as: When can I expect to receive my final draw?  Am I going to get paid?  Do I need to register a construction lien?  While the hope is that full payment is made on all projects, it is worthwhile to take some time to be prepared to protect your interests as project move towards completion, in case funds don’t flow.  The following is an outline of various items to consider in determining if you are prepared for the possibility that you may have to take steps to get paid, with particular reference to Construction Lien Act issues:

• Has a certificate of substantial performance been published for the contract under which you are working.  If so, it can affect the deadline for registering a claim for lien.  The time to register a claim for lien runs from the last supply / completion date or the date of publication of a certificate of substantial performance, whichever is earlier.  It is up to you to keep track of whether certificates are published on your projects.  Refer to the following website to review published certificates:  http://www.dcnonl.com/csp/
• If you have contracted directly with the owner of the land, the 45 day time to register a lien begins to run on the date on which you completed or abandoned the project, unless a certificate of substantial performance was published prior to that date, in which case the date of publication governs.    
• If you are a subcontractor, the 45 day period begins to run on the date of last supply of services or materials, unless a certificate was published prior to that date, in which case the date of publication governs. 
• A lien exists once materials or labour are supplied to a project.  To keep a lien, it must be “preserved”  by registering it on title and “perfected”  by commencing a court action or sheltering under another perfected lien.  If a lien is lost it cannot be revived.
• Are you aware of the proper legal name of the party with whom you have contracted?
• Are you aware of the name of the owner of the project and the municipal address to allow title searches to be completed?
• If possible, you should obtain the proper legal description of the project to ensure that you are able to register your lien on the correct property. 
• Have you calculated the amount owing, and to be included in the lien, without interest?  The Construction Lien Act does not allow you to lien for interest, so it will be necessary to be able to separate the principal amount of the account.
• Is there a Labour and Material Payment Bond against which you could advance a claim

The above information will be useful in expediting your claim and ensuring that you do not run out of time before a claim for lien is registered. 

by John Barzo, Associate

I previously wrote on this issue at: INFIDELITY, MATRIMONIAL HOME AND MORTGAGES.

In order to stop the lender from selling the property via Power of Sale, we had to argue a hard fought motion in court. Victory!

A redacted copy of the decision can be found below.  What is clear is that the lender's multimillion dollar mortgage is seriously at risk.

By Eric Finn, Associate

Rarely do expropriation cases get leave to appeal to the Supreme Court of Canada; so, it is interesting to see that the claim for compensation for injurious affection by Antrim Truck Centre Ltd. against the Province of Ontario, as represented by the Minister of Transportation, will be given consideration by Canada’s highest court.  The Supreme Court will be called upon to give consideration not only to the injurious affection provisions of the Ontario Expropriations Act but also, because of the nature of the claim, to the principles relating to the application of the tort of nuisance.

Antrim owned a property which it operated as a truck stop on Highway 17 in the vicinity of Ottawa.  As a result of concerns for traffic safety, the Ministry of Transportation decided to design and construct a new four-lane section of Highway 417 which bypassed the site of the truck stop.  Prior to the construction, motorists could access the site directly from Highway 17; subsequently, access from Highway 17 was by way of an exit and a route of approximately two kilometres.  As a result of the construction of the bypass, Antrim decided to relocate its truck stop business on a property in the Arnprior area.

The construction of the new highway did not require the expropriation of any land from Antrim but the Expropriations Act does provide that, even where no land has been expropriated, an owner may claim compensation for injurious affection in the nature of a reduction in the market value of the land and personal or business damages arising out of the “construction and not the use of the works”.  The provision goes on to state that the claims must be such that “the statutory authority would be liable if the construction were not under the authority of a statute.”  The requirement therefore has two key elements:

1.      The claim must arise from the construction, and

2.      The authority would have to be liable at common law, usually on the basis of nuisance.

Antrim decided to proceed to the Ontario Municipal Board, as provided for in the Expropriations Act, with an injurious affection claim.  The claim had several elements to it.  First, Antrim claimed that the value of its property on Highway 17 had been reduced by $335,000 as evidenced by the sale of the property shortly after the opening of the new site.  Second, there was a claim of $58,000 for loss of business at the original Antrim site.  Third, there was a large claim for the relocation costs involved with the move of the business.

The Board concluded that none of the relocation costs were compensable under the Expropriations Act in the absence of an expropriation.  As noted, a claim for injurious affection where no land is taken has to relate to a reduction in value of the affected land and personal or business damages arising out of the use of that land.

With regard to the claims for the loss in value to the land and the business loss arising out of the use of the land, the Board had to decide whether the two required elements had been met.   It was found that the claims did arise from the construction of the bypass as it effectively left the property fronting on what was left of the old Highway 17.  Determining whether the activities of the Ministry would have been actionable at common law was somewhat more difficult.  Reasonableness is normally a defence to nuisance and the Board had no difficulty in finding that the Ministry had been reasonable in its design of the new highway in light of the public interest in highway safety.  However, the Board found that where the construction resulted in a “serious impairment” to the claimant, a claim in nuisance could succeed.  The Board found that the Highway 17 access which the property had after the construction was “but a shadow of what it was before Highway 417”  and that was “serious impairment.”  As a result, the claims for the reduction in value and business loss were allowed.

The Province appealed the award to the Divisional Court and Antrim cross-appealed the disallowance of the claim for relocation costs.  The Court gave a substantial review of the applicable provision of the Expropriations Act and the law of nuisance but came to the same conclusion as the Board.  Both the appeal and the cross-appeal were dismissed.

Again the Province appealed to the Court of Appeal and Antrim cross-appealed.  The decision of the Court of Appeal is an in depth analysis of the law of nuisance.  The Court held that the Board and the Divisional Court had concluded reasonably that there had been substantial interference with the access to Antrim’s property.  However, the Court went on to decide that the interference was not unreasonable.

            “The interference was such that it fell within the boundaries of what the reasonable property owner in the area should be expected to tolerate and was the result of a project that served the public interest – more, was actually essential to public safety.”

The Court allowed the Province’s appeal and dismissed the cross-appeal of Antrim.  In the end result, the claim of Antrim was completely dismissed.

As noted above, Antrim sought, and was granted, leave to appeal to the Supreme Court of Canada.  The Supreme Court last dealt with a claim for injurious affection where no land was expropriated in 1987 in the case of  St. Pierre v. Ontario.  That case also involved claims for damages arising out of the construction of a highway and the Supreme Court denied the claim concluding that “highway construction will cause disruption” and “to fix the Minister with liability for damages to every landowner whose property interest is damaged … would place an intolerable burden on the public purse.”  The Court also concluded, however, that there is a “balancing process inherent in the law of nuisance” between the public good and the disruption and injury.  We will have to wait to see what the Supreme Court will conclude in the balancing of interests involved in the Antrim case.

By Jason Botelho, Associate

Ok, so you decided to commence a claim for monetary damages and after some hard work by either yourself or your lawyer, you win and you get judgment; congrats! Now, while you may think that the cheque will arrive any day, the truth of the matter is that you may be waiting quite some time before you receive a penny. Unless the person you sued has assets, or you are a secured creditor, it may be that the satisfaction of the judgment may never come to fruition. Don’t despair though, there are steps that you can take that may increase your recovery rate. 

One option in enforcing a judgment is to file a “Writ of Seizure and Sale of Land”. This is done at the local Sheriff’s Office in the region where the debtor owns land, most likely in the jurisdiction where the debtor lives. These executions then attach to any property owned by the debtor in that particular region. This writ will cause problems for the debtor should the debtor attempt to sell or mortgage the land as the writ will show up on an execution search. The writ is effective for 6 years and can be renewed for a further 6 years indefinitely and, yes, there are fees associated with these filings and renewals. 

What happens if the debtor has no property? Well that’s when things get a bit trickier and more costly. A judgment creditor does have the option of bringing the debtor to a judgment debtor exam in order to question them about his/her assets and find out where he/she works and banks. This information is useful as it leads to another option for a judgment creditor - garnishment. This form of enforcement allows the judgment creditor to garnish bank accounts and wages to satisfy a judgement. Please note that there are some exemptions; not all sources of monies are subject to garnishment and there are limitations on the percentage an employer can deduct from a debtor’s wages for garnishment. It is best to speak to a lawyer to find out what can be garnished and by how much. 

So, while you may think that obtaining judgment is the final chapter in your quest for recovery of money, the unfortunate reality is that it is not. The hard and fast truth is that a successful judgment is the end of one journey and the beginning of another.

One would assume, given that I’m highly allergic, I would avoid having egg on my face; however, as a litigator I recently learnt that, despite having thoroughly vetted my client, it is unfortunately part of my job description.

Although we’ve all experienced it at one point or another during our career - no one, least of all me, likes looking like a fool, especially in the presence of an adjudicator. There is nothing worse than walking into the Courtroom after hours of preparation only to discover that your client has fabricated his or her story (in whole or in part). Regardless of their reasoning, this can and will destroy the client’s creditability and their chance of success at trial. 

Knowledge is power - without it, my ability to review, assess and formulate an effective strategy is difficult, if not impossible. It is far easier to deal with/overcome the skeletons in one’s closet if I’m made aware of them in advance, rather than being blindsided in the Courtroom when it is usually too late to help the client recover from them. 

For those of you who think the truth will not come out, you are sadly mistaken. In civil litigation, it is always in your best interest to tell your legal representative the truth, the whole truth and nothing but the truth!

On May 24 and 25, 2012, the community of Paisley, Scotland, celebrated the 80^th anniversary of a landmark House of Lords legal decision that changed the law of negligence and paved the way for products liability cases of the present day.

On August 26, 1928, May Donoghue, a modest shop worker on a daytrip to Paisley from nearby Glasgow, stopped for refreshment at the Wellmeadow Café, where a friend bought her a bottle of Stevenson’s Ginger Beer. Unbeknownst to Mrs. Donoghue, according to the documents in a subsequent law suit, the opaque bottle hid its deep dark secret – a snail.  Imagine Mrs. Donoghue’s delight when she emptied the bottle of liquid refreshment to find the carcass of a snail.  This was not the proverbial worm in the tequila!!

No doubt Mrs. Donoghue had splendid legal advice for she immediately commenced a lawsuit to recover damages for the shock of coming across the surprise in her ginger beer.  There were a couple of hurdles, however.  First, the friend had purchased the ginger beer so Mrs. Donohue had no contract with the Café.  Second, the most obvious culprit was Stevenson, the manufacturer of the ginger beer but likewise she had no contract with that company.  Nevertheless, the action was commenced against Stevenson alleging that the company was negligent and owed a duty not to harm Mrs. Donoghue even though she had no contract.

As the position taken by Mrs. Donoghue in the lawsuit was novel, the lawyers for Stevenson brought a motion in court to strike out the action without having to proceed to a trial.  The legal issue raised by the motion eventually made its way to the House of Lords, where, in 1932, the decision was made that Mrs. Donoghue was entitled to proceed with her action against Stevenson in negligence even though there was no contractual relationship.

The decision in Donoghue v. Stevenson changed the law of negligence and products liability when Lord Atkins pronounced the following words:

“Love your neighbour becomes in law you must not injure your neighbour…You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour… a duty of reasonable care.”

 So Mrs. Donoghue’s lawsuit survived this attack on her right to sue and the case could proceed.  The unfortunate conclusion to the story is that there is no record of there ever being a trial.  There was, therefore, no proof in a court of law that the snail was in the bottle, that Mrs. Donoghue had drunk the ginger beer (or the snail) or what consequences Mrs. Donoghue suffered as a result of the presence of the creature.

Fast forward to 2008 and the decision of the Supreme Court of Canada in Mustapha v. Culligan of Canada Ltd.  This was a case where there literally was a fly in the ointment.  While in the course of replacing an empty bottle of drinking water with a full one, Mr. Mustapha saw a dead fly and part of another dead fly in the unopened replacement bottle.  Obsessed with the event and its “revolting implications” for the health of his family, he developed a major depressive disorder, phobia and anxiety.  He sued Culligan, the supplier of the bottle of water, for psychiatric injury.  The trial judge awarded him general and special damages, as well as damages for loss of business, but the Court of Appeal overturned the judgment on the basis that the injury was not reasonably foreseeable and hence did not give rise to a cause of action.

The Supreme Court of Canada held that Culligan had breached the duty of care which it owed to Mr. Mustapha.  However, the Court held that Mr. Mustapha had failed to show that it was foreseeable that a person of ordinary fortitude would suffer serious injury from seeing the flies in the bottle of water he was about to install.  In the end result, Mr. Mustapha received no compensation for the psychiatric injury.

When the celebrations in Paisley took place, I am sure that all participants examined their bottles, whether of water or other liquid refreshment, to make sure that no unusual creatures were present.  As summer approaches, we might all want to do the same! 

The trust provisions of the Construction Lien Act (“The Act”) can provide an effective way to pursue repayment of an account even after the time to register a lien has lapsed.  Essentially, the funds that are intended for the financing of an improvement are deemed to be trust funds that cannot be used for any purpose other than to fund the project.  The trust provisions can be used to avoid or minimize the impact of having the person who owes money on a construction project going bankrupt.  A breach of trust action can be allowed to continue against a person even if he or she has filed for bankruptcy prior to or during the lawsuit.     The trust provisions of the Act also allow a party to pursue payment from a director, officer or certain employees of a debtor company personally in appropriate circumstances.  These provisions can also provide a creditor with the right to trace the trust funds into other property that was purchased with trust funds.  In light of recent economic performance and the increasing number of bankruptcies, breach of trust is a potential remedy that should be considered. 

It is important to note the trust claim is an additional remedy to the lien on the land and the charge on the holdbacks.   Breach of trust must be pursued through a separate law suit and cannot be joined together in a lien action.  The separate action can be commenced against the debtor as well as the director, officers or employees having effective control of the company’s activities. 

Requirement of An Improvement 

To benefit from the trust provisions the plaintiff (the person bringing the law suit) must be someone who was entitled to a lien.  The claimant must prove that there was an improvement and that a supply of labour or material was made.  It is necessary to establish a link between the materials and an improvement, although it may not be necessary to prove that the supplier intended for a supply to be incorporated into a known and specific project.  It is a good practice for a supplier to ensure, to the extent possible, that purchase orders or other documents reflect the address and project to which the equipment or services are going to avoid uncertainty. 

It is the plaintiff’s onus to prove the existence of a trust. Once this is done, the onus shifts to the defendant to show that it applied funds in a manner that is consistent with the trust.  So, if a defendant can demonstrate that payments were made out of the trust funds to a proper beneficiary of the trust, there is no liability. Thus it is not a breach of trust to pay subcontractors and supplier on Project A with trust funds received on Project A, even if there is not enough to pay everyone.  However, it is a breach of trust for a trustee to pay itself, fund a personal expense, or pay its own overhead before making payments to the beneficiaries of the trust.  It is important that a trustee keep good records of the money flow on a project in order to be able to satisfy this onus if it is called upon to do so.

By John Barzo, Associate 

Sometimes a litigation file acts as a lightning rod for multiple areas of law that I am not otherwise regularly engaged in (in this case Family Law and Mortgage transactions).  A matter I am currently working on is just such an example.

Essentially, legal title to a very nice and significant cottage property was in the husband’s name.  It was and is a great family property on the water, used for the usual summer recreational activities, but also for holidays, including Thanksgiving, Easter and Christmas.

Husband was a co-owner of a land development business which needed funds for continued operations.  So he offered up the cottage property as collateral security.

Under the Family Law Act, a property that is ordinarily occupied by spouses as a family residence constitutes a “matrimonial home”.  This elevated status provides some protection to a spouse who does not have his or her name on the legal title.  The Act prohibits someone from selling or mortgaging such a property without obtaining the spouses consent.

More importantly, no buyer or lender will conclude a transaction without either a consent signed by the spouse, or a declaration by the title holder (in this case, the husband) confirming that it is not ordinarily occupied as a family residence.

What if the husband is….to put it gently, “incorrect” in his declaration?

If the Act is contravened, it could result in a transaction, or a mortgage in being completely set aside by the court.  What the law does however is to set out that the making of the declaration is sufficient proof that the property is not a matrimonial home.  Thus if the statement turns out to be incorrect, the transaction for either the lender or purchaser is still valid.

There is one exception however.  If the purchaser or lender had “notice to the contrary”.  What does that mean?  Firstly, it does not have to be “actual notice”.  It can also mean constructive and / or imputed notice.  Imputed notice is where your agent or representative (real estate agent, mortgage broker, lawyer) has such information.  This information would be deemed notice to you, even if no one told you.

Constructive notice is a bit trickier.  It is where you (or others acting on your behalf) are aware of facts or information that ought to put you to an inquiry.  It’s intent is to avoid the use the old “hear no evil, see no evil, speak no evil” approach, otherwise known as “willful blindness”.

What is probably not as clear as it should be (even to lawyers) is that the “declaration” indicating that the home is not a matrimonial home, is not a cure-all that will effectively insulate all transactions.  The lender or purchaser can only rely on the declaration if he or she had no information that would indicate that the true state of affairs was otherwise.

 By Eric Gionet, Partner 

On numerous occasions I have had employer clients being sued by a former employee for wrongful dismissal even though the employer complied with certain provisions of the Ontario Employment Standards Act, 2000 (“the ESA”).  Frequently, the employer client assumes that the lawsuit is completely without merit simply because the employer has complied with the statutory requirements of the ESA. Sometimes this is true, but many times it is not. 

What many employers fail to understand is that the ESA, in many situations, merely provides for the minimum obligations that an employer must meet. In many areas of employment law, the ESA does not establish the maximum or even a "reasonable" standard. Instead, it is critical that an employer first consult the employment contract, the hiring letter or established employment policies at the workplace before the employer take steps to terminate an employee’s employment, or even before the employer significantly modifies the duties or workplace conditions of an employee.  Simply consulting the ESA requirements will likely not be sufficient for the employer to understand its full legal obligations, which includes its contractual obligations, as opposed to its statutory obligations. 

Here is a good example of the above caution.  The ESA permits “temporary layoffs” as long as the conditions of layoff meet the requirements of the legislation. However, that does not necessarily mean an employer is contractually permitted to temporarily lay off an employee. Even though a temporary layoff may not contravene the ESA, in many situations in Ontario it may nonetheless be a breach of the employment agreement. Accordingly, in a situation where an employee’s employment contract or unwritten employment relationship does not specifically authorize a temporary layoff, the employee may have a valid legal claim for breach of contract (commonly referred to as “constructive dismissal” or “wrongful dismissal”) even though the employer has fully complied with the minimum statutory requirements for temporary layoffs under the ESA. 

The above comments are intended as a generalized, but blunt, word of caution:  just because an employer complies with the ESA, does not mean the employer is shielded from a potential lawsuit in Court for breach of the employment contract. It is important for employers in Ontario to understand the distinction between the statutory minimum requirements of the ESA versus the contractual terms and conditions of employment. In any given situation, if employer has any uncertainty, it is recommended the employer obtain professional legal advice before taking any hasty steps which could lead to an unexpected lawsuit.

By Jason Botelho, Associate

I hear these words almost daily. People get so caught up in emotion that they do not care what the cost consequences of pursuing a claim are. Instead they are bent on achieving their own sense of justice. When I hear those infamous words I am brought back to my first day of law school where my professor warned the entire class to “beware of the client who wants to sue based on principle”. You see, no matter what a client says about principle it almost ALWAYS comes back to the money. I have seen cases where the amount spent on legal fees exceeds the amount being claimed! This is especially evident in Small Claims Court where emotions run extremely high.

Litigation is not a cake walk. It is a slow moving machine that, once started, cannot be stopped with a flick of a switch. It is a multi-party process that no one party has full control over. It is for this reason that the system (see the Rules of Civil Procedure) allows the parties multiple opportunities for settlement.

Make no mistake, litigation is expensive. It is usually charged based on an hourly rate multiplied by time spent. First there is the pleadings stage, (i.e. Statement of Claim, Statement of Defence, Reply). These are then usually followed by Discoveries, then pre-trial conferences, then trial. While the Rules do provide some expedience for claims under a certain monetary amount, it still takes time to go through these steps. And remember time equals money!

Invariably, it can be months or years before a resolution is achieved and there is no guarantee that it will be the result you are expecting. What is certain however is that it took a great deal of money spent to get there.

Now, there may be legitimate reasons to commence an action i.e., breach of contract, negligence, etc. Regardless, in most cases it is worth balancing the costs of proceeding with a claim with the amount being sought. I always advise my clients to do this from the outset. This way they can fully judge for themselves whether the “principle” is worth it. 

So, the next time you hear someone say, “it is not the money it’s the principle!”, be a friend and explain this process to them. Maybe the money saved could be used to treat you out for dinner or a drink.

by Samantha Hicks, Paralegal

Despite being licensed and regulated by the Law Society of Upper Canada, many people still consider paralegals subservient to lawyers - glorified secretaries, who greet clients, answer telephone inquiries and type letters. The ability to provide legal services, at a cost-effective rate, is often overlooked and/or ignored.

“Why”, you ask? Because people have this preconceived misconception that a higher price signifies better quality. I confess, that as a consumer, I too have fallen victim to this social marketing scheme – paying more for a brand name product when a generic one is available for less.

Having graduated with Honours from an accredited paralegal education program, I wrote and successfully passed the Paralegal Licensing Examination, thereby qualifying for a license and earning the right to practice law in Ontario.

As a paralegal, with valid professional liability insurance, I am permitted to give legal advice and represent clients:     

·        in the Ontario Small Claims Court;

·        in the Ontario Court of Justice under the Provincial Offences Act;         

·        on summary conviction offenses where the maximum penalty does not exceed six months’ imprisonment; and

·        before administrative tribunals, including the Landlord and Tenant Board.

Isn’t it nice knowing you have options?

The application of the principles of solicitor-client privilege to the position of in-house counsel has given rise to some debate in the courts and the literature.  The debate relates to both types of privilege, namely, the privilege arising directly from solicitor and client communications and that arising from the “solicitor’s work product” approach.  The genesis of the debate over whether solicitor client privilege should apply to an in-house counsel, however, arises from the role of the in-house counsel as both an employee of the client and  an internal adviser of the organization on matters not restricted to legal opinions.

The most recent statement from the Supreme Court of Canada on the issue of solicitor-client privilege for an in-house counsel came in an appeal which had made its way through the Ontario courts and related to a legal opinion provided by an in-house counsel to the Ontario Human Rights Commission. The appellant had filed a complaint with the Commission against her former employer.  The Commission refused to deal with the complaint and the appellant sought judicial review.  In this proceeding, she brought a motion for production of the Commission’s file, including the legal opinion.  The motion’s judge granted the motion and on appeal to the Divisional Court the decision was upheld.  On appeal to the Court of Appeal, the legal opinion was held to be privileged.  A further appeal to the Supreme Court of Canada was unsuccessful as it was held that the privilege applied to communications between an in-house solicitor and the client organization in the same manner as it applied to retained solicitors.

(please download the .pdf for the full paper, with citations)

For those of us who are not natural writers, the category in which I belong, it is not the easiest thing to write something interesting on a regular basis (no debates on the “interesting” self categorization please).  But with the merger we now have many more that can contribute to this blog.  Not only will you see contributions from yours truly, but others (see photo above), including Eric Finn, Scott Fairley, Eric Gionet, Jason Botelho, Samantha Hicks and William Brennan.

Collectively we hope to give you tales from “the trenches” which will both inform and at times entertain.  It is our experience that legal issues do not truly take their form unless tested by the reality of every day experience.  You can expect to hear about issues involving land, contract, employment, debt collection and everything else we run across.

We expect to be rolling out the blogs starting May 1.

We hope you enjoy this effort and look forward to hearing from you!

Regards, John Barzo

In Part 1, I gave a general background as to the types of issues that invariably get raised when this form of war breaks out.

If we are at the stage of “forcing” the sale, let’s assume that common senses has been pushed aside by emotion, anger and perhaps greed (it usually does in my experience).

This will usually take us down the path of the argument over who used the cottage more and should there be an adjustment for that.  This is what we call “Occupation Rent”.  Pretty simple concept.  He who occupies the jointly owned land pays for its use. 

Funny how simple concepts get real complicated real fast.

The worst is when both co-owners use the cottage, but not necessarily in equal amounts.  The reason why that is the worst is that no one ever agrees as to the proportion of actual usage, assuming allocating percentages is the right way to go.  So now there is the need to develop evidence.

I recently had an easy one.  It was easy because one co-owner unilaterally abandoned any use of the property years ago.  But we needed to force a sale.  The occupying co-owner started squawking about my client’s share of the mortgage, insurance and taxes over the years, and tried to negotiate on the basis that my client should share in those expenses.

The interesting part is that when  one co-owner voluntarily abandons use of the property, he/she cannot claim “occupation rent” from the occupying co-owner.  That is, unless, the occupying co-owner (as in this case) started demanding recognition of such expenses.  In that case, occupation rent can be claimed back.

Pointing that out (firmly I might add) finally allowed me to convince the other party to abandon the claim for expenses since once we took into account the notion of occupation rent, it would likely be a wash.

So common sense was restored, and the occupying co-owner finally agreed to simply buy my client out.

Cottages often get passed down to the “kids”.  More often than not, these “kids” are in fact adults, and usually no spring chickens by time a long simmering feud blows up into open warfare.  There are long held grudges, personality conflicts, real or perceived injustices, and always a misplaced sense of entitlement.

The Partition Act is the legislation that can solve the problem.   This is a long standing statute that allows for a co-owner of property (land, buildings) to force a judicial sale of jointly owned property where the other owner neither wants to sell, nor buy out the other co-owner’s interest.

As legal proceedings go, they are usually fairly straight forward.  Part of the reason for that is, absent rare circumstances, the right for an order of sale is absolute.  Thus the reluctant, or delaying co-owner, is quickly brought to the reality that he/she is going to have to deal with the situation by either buying out the other co-owner or watch the cottage get sold on the open market.

The sale part is easy.  It gets tricky when it comes time to divvying up the money.  Who paid what expenses?  Who maintained the property?  What is that worth?  What if one person used it more than the other? 

All these issues are usually never addressed while everyone is co-existing.  But when open warfare erupts, these are the issues that end up draining the resources of all, and that lovely cottage on Lake Paradise that Mom and Dad created such beautiful memories with children and grandchildren alike ends up being the fuel that keeps the fires of your own personal hell going for an eternity.

….hope I am not ruining anyone’s vacation…..

More to follow.