I hate bullies. I hate bullies who bluster and take positions and threaten people they perceive to be vulnerable. I like when those same bullies fold like a house of cards when I step up to protect the victims of the bullies.
Lately there are a lot of unrepresented litigants on our Business Law files. In Ontario, companies cannot represent themselves without permission from the Court. That permission will be denied if the proposed corporate representatives display bad behaviour. Sadly, bullies can’t help themselves.
Bullies love to leave lengthy voicemails for me, telling me exactly what they think of me and using “colourful” language – see you next Tuesday language, if you know what I mean. It’s delightful. Not. It’s also helpful, because it means those bullies have to either pay for a lawyer or confront the reality of their situation. It’s in that moment, they cave.
Bullies never have the law on their side. Bullies never pause to consider that what they see as a threat is merely pointing out the law. Bullies need to be shut down and stopped.
I’m a Raptors fan and once of my favourite moments this year was early in the fall when veteran Fred Van Vleet told second year player Precious Achiuwa in a huddle near the end of a game “be a wall, be a f’ing wall.”
When it comes to bullies, I’m a wall. I’m an f’ing wall and will stop them from coming at my clients.
When you’re young, everyone’s favourite question is “what do you want to be when you grow up”, and, as you get older, that question is slowly replaced with the expectation of a progress update on your chosen career path.
For me, the answer was always simple; I wanted to be a physician, just like my father. This became an expectation for me to follow his steps. However, I also had it in the back of my mind that I wanted to be a lawyer.
So, I did the thing that most Middle Eastern kids do; I went to undergrad and studied science, rather than considering all of my options and passions carefully. I began to pursue the career that was the “thing to do”, all the while not fully convinced that it was what I was cut out for. I worked in healthcare for some time before coming to the conclusion that a career in healthcare wasn’t the right fit.
It took some soul searching, some volunteer work, and seeing my lawyer sister in action, but here we are. I decided to attend law school in the United Kingdom, and it was the best decision I made for myself.
Almost one year into my role at A&A, I still learn something new almost every day that reignites my passion for law.
Now, I often hear my mom proudly say (in Arabic) “nothing in this country moves without a lawyer!”
The moral of the story is: knock it, but also try it!
You can spend years of your life planning, investing, and working towards a goal. However, you won’t know if a career is right for you until you give it a try. The only thing you can do when you realize you misunderstood your path is to try again.
Meriam Noori, B.Sc., LL.B, Legal Assistant (soon to be Ontario Lawyer)
Recently we have noticed an influx of clients coming to us after they sign a contract, asking us what their rights are.
We’re always polite and helpful, but internally we shake our heads. Help us, help you!
We then have the hard task of telling those clients that they have signed certain rights away that they did not even realize, and we are left negotiating from a disadvantage.
While yes, we are here to help you get out of a jam, we are also here to help avoid issues you may not even foresee.
If you receive a contract from another party, don’t be suckered in by the legalese and fancy formatting. The Agreement may appear ready for your signature, but you shouldn’t just sign it and accept the terms as-is. Chances are that the agreement is written to provide the greatest benefit to the party providing the contract. By signing, you could be agreeing to terms that are extremely unfair and unreasonable for your business or even you personally.
We look out for all your exit strategies, should relations between the parties sour. We also point out what rights you have if the other party fails to uphold their end of the bargain. Then the fun part – we negotiate the terms.
In our practice, we often see two types of clients – those that are overly optimistic regarding their business relations with another party, and those that have been burned and turned into skeptics.
We help you stay optimistic by weeding out all the possible landmines laid out silently in a contract. We help you avoid being blindsided.
So say it with me… “Before I sign, I’m going to have my lawyer take a look at this first.”
Recently a client was notified of liens registered under the Personal Property Security Act (“PPSA”) registered against equipment it owns.
The circumstances of the registrations are quite bizarre and very interesting. Our client was approached by individuals to purchase the equipment. The individuals attempted to use some form of doctored government document as payment. Our clients advised the so-called purchasers that there was no deal.
Several days later, our client was served with some form of “Notice of Lien” for trillions of dollars (you read that right). The PPSA registrations claim they would accept trillions of dollars of gold ounces. We are not kidding.
The PPSA registrations can be discharged by the Registrar, because on December 8, 2020 the Ontario Government amended the PPSA to give the Registrar the power to discharge a vexatious registration or to reject a document if it leads to a vexatious registration.
Section 66.1 (1) of the PPSA defines a vexatious registration as the registration of a document that (a) the registrar considers to have been tendered for the purpose of annoying or harassing the person named as the debtor in the document or for other improper purpose and (b) that has been tendered by or on behalf of a person who does not hold the security interest referred to in the document, or is claiming an interest that is not registerable under the PPSA.
The liens against our client’s equipment are vexatious registrations, because they were issued to clearly annoy or harass our client in a fraudulent manner, and the party registering the liens holds no security interest in the equipment. To proceed with a PPSA registration, a Security Agreement must exist to be able to register the Lien. A security agreement is defined in the PPSA as an agreement that creates or provides for a security interest and includes a document evidencing a security interest.
The change in allowing the registrar to discharge these liens rather than bringing court actions frees up valuable Court time for other matters, and it not only reduces the legal fees of the party named as the debtor, but the time it takes to get the lien discharged is significantly less than going to Court.
We often get push back from clients when we remind them they have an annual obligation to update their Minute Books. Many of those companies have husband and wives as shareholders and some of them just don’t understand why.
Well, the Ontario Superior Court just released a 2021 decision in Hrvoic v. Hrvoic (see the case here https://tinyurl.com/2p8d4ycs ) which very clearly illustrates why you need to make sure the Minute Books are accurate.
In the decision and husband and wife were both shareholders in a holding company. All was well and then it wasn’t and the couple divorced.
The husband took the position the wife owned 30% of the shares. However, the company paid annual dividends to them equally (they both had the same class of shares) rather than on a 70-30 basis. The Judge noted in the decision that “there was no question that the corporate records were deficient.”
The fair market value of the holding company was $ 10.8 million. Due, in part, to a failure to properly document the shareholdings as he understood them, the husband is $2.16 million poorer than he should have been.
So. Now do you think making sure your corporate records are accurate matters?
It has been six months with the new Ministry of Consumer & Business Services online filing system and there have been many issues with it. That said, there have been many positives that came from it. We can now file online Amendments, Dissolutions and other corporate documents that we previously were not able to file online.
What you may not know is a change happened on May 15, 2021 whereby Annual Returns were no longer included in the filing of a Corporation’s T2 Income Tax Return, which usually was filed by Accountants. The new online Business Registry now allows for businesses to do this filing with ease.
What is an Annual Return? This is a requirement of the Ontario government and it is essentially a snapshot of certain information, such as confirming the registered head office and directors.
It is important to note that if there are changes to addresses or directors, the Annual Return is not the place to record those changes. A Notice of Change must be filed for this information to be captured. It is always best that when changes are made to a corporation in addresses, directors or officers that they are updated as soon as possible.
What happens if you don’t file the Annual Return? It could be the assumed that the company is inactive and could result in financial penalties, and even the dissolution of your Corporation.
What do you need to do? You need to either confirm with your accountant that they will be taking the necessary step in order to file your Annual Return, and if they are not, makes sure that this happens.
As part of our yearly check in’s with our corporate clients, we ask that they confirm with their accountant that this has not been filed, and if not, offer up our assistance in filing this document on their behalf.
Whatever you do, just make sure this Annual Return is filed. The last thing you want is having your corporation dissolved and having to retain our firm to get you back into good standing.
Did you know that even in death, we cannot escape the tax collector?
When we die, estate administration tax becomes payable under the process of probate. “Probate” is a court process where your estate is assessed as to value and content for the purpose of calculating estate administration tax. This tax must be paid before any beneficiaries can be paid from your estate.
These fees, which are approximately 1.5% of the value of your estate, are calculated as follows:
$1,000 or less
Over $1,000 but less than $50,000
$5 for each $1,000 comprising your estate
$15 for each $1,000 comprising your estate
When probate is required, it can lead to delays and increased legal fees in administrating your estate. However, there are ways to not only limit the amount of tax your estate has to pay, but also to avoid the probate process all together.
For example, when real estate transfers to a beneficiary are involved in the administration of an estate, then probate is always required. There are tips and tricks for getting around this, such as joint ownership of property.
You can also consider separating your personal and corporate assets under two separate Wills. This way, assets that would attract probate tax, such as your home, will only apply to your personal Will and not include your corporate assets.
In situations where probate tax is unavoidable, then the focus should be on limiting the taxable amount as much as possible. This can be achieved by designating beneficiaries directly through your bank and life insurance providers. These funds then flow directly to your beneficiaries as designated outside your Will and do not attract estate tax.
Remember, careful estate planning can save you (or your estate) a hefty tax bill!
A client recently repossessed several vehicles due to multiple lease defaults and discovered that liens had been registered on title under the Repair and Storage Liens Act (the “RSLA”) and the Personal Property Security Act (the “PPSA”) by an organization that finances vehicle repairs.
It was quite concerning when reviewing the Agreements that the lessees signed. The predatory rate of interest on these Agreements ranged from 30% to 40% per annum. Good luck trying to convince a Court that you’re entitled to that!
These Agreements are entered into when someone takes out a loan for vehicle repairs that they can’t afford. It appears that no due diligence on the part of the lender is conducted when entering into these agreements.
The repairer (in the same Agreement) then transfers their non-possessory lien rights under the RSLA to the lender financing the repair. The lender then takes it one step further and registers liens under the PPSA.
The lender will then attempt to repossess the vehicle if there is a default on the Agreement. In our case, our defaults occurred first, and our client go the vehicles first.
The Court of Appeal has made it clear that these types of lenders are not lien claimants, and that a repairer’s lien rights cannot be transferred to them or at all.
The Court of Appeal in the decision of Connolly v. AdvantageWon Inc., 2015 ONCA 709, found that:
“A lien under Parts I and II of the RSLA arises by operation of statute, not by contract. For a valid lien to arise, a lien claimant must satisfy the requirements of the RSLA.”
Additionally, the Court of Appeal in the matter of SG Air Leasing Ltd. v. Inchatsavane Company (Proprietary) Ltd., 2015 ONCA 440 found that the Appellant (the lender) was not entitled to a repairer’s non-possessory lien under the RSLA solely on the basis that it advanced funds to finance the costs of aircraft repairs carried out by third parties.
Section 12(1) of the RSLA states:
A non-possessory lien is discharged and cannot be revived as an interest in the article,
upon payment to the lien claimant of the amount of the lien claimed.
A repairer cannot transfer or assign its non-possessory lien rights to a lender because there are no rights to transfer or assign because their lien is discharged upon the payment by the lender to the repairer.
These vehicles in question are leased. The lessees sign these Agreements with the lender claiming that they have the vehicle owner’s consent to enter into these Agreements. Obviously, they do not, and be entering into these types of Agreements, constitutes a breach of the Lease Agreements with our client.
As a result of the above, not only does this lender have no rights to register liens under the RSLA, but it also means that they do not have the right to register liens under the PPSA either, because the lessees signed claiming they had the consent of the owners, which they did not.
The only option for the lender appears to be pursuing the lessee for breach of contract, and nothing more.
A repairer cannot transfer its lien rights under the RSLA to a lender who pays for those repairs, because no lien rights exist, because they have been discharged upon payment by the lender and cannot be revived for any reason.
Last week I wrote about changes to the virtual rules of etiquette for the Ontario Courts. Virtual is better for many things, travel costs for clients, time involved waiting in person, etc., however, we’re going to lose out on some very important things we may not have considered as a profession.
Don’t get me wrong, I do not hate doing mediations virtually – all that downtime while the mediator explains to the other side why my position is correct (because, why wouldn’t it be) is now spent working productively and our clients appreciate it.
However, a common theme I’m starting to notice when dealing with junior lawyers who started practicing during the pandemic is many have no idea what they are doing. A lot of this is because of virtual court. Before the pandemic, you would be able to sit in motion’s court and watch people go ahead of you. You would learn what worked and what didn’t. It was important. These days, motions courts are virtual and there is not much opportunity to observe. It’s going to become a big problem.
Similarly, the networking opportunities to meet lawyers outside your area of law are limited. Meeting others in the lawyer’s lounge on breaks from Court is one of the ways I made many friends of mine who practice in different areas of law. This means it’s harder to create a referral network if you’re starting on your own and once again, it’s going to become a big problem.
While interviewing for an associate to join our firm I learned that many law firms are still operating virtually. I appreciate the cost savings. I understand that some may see this as a positive. But what I heard from every young lawyer in that situation is that they aren’t learning how to be lawyers because they’re not in the office, observing, talking about cases with others, and generally being social about the law.
Our firm has had its virtual-only times, but now, we’re firmly hybrid, with most of us being in the office four days a week. This is important for all of us – it makes us better lawyers.
I urge other firms who think virtual is key to their success to really think about a newly called lawyer, litigating from their bedroom, in sweat pants and ask: is that the best way to develop a lawyer?
The Ontario Superior Court has released Virtual Courtroom Etiquette Rules. These Rules come into effect April 19, 2022. Most of them make sense. For example, be on mute until your matter is called. Dress as if you were attending Court.
There is one Rule however that needs to be changed:
(v) When appearing via video, the only beverage permitted is water and it must be in a clear glass or container.
Look, I’m fine with wearing my Court shirt, wool vest and robes to litigate virtually. I’m fine with the no sunglasses on (who does that?) and no feet up on the desk rules. However, I’m not fine with rules that make no sense.
When litigating in “real Court” I was told that the reason we are only permitted water is to ensure there is no sticky mess if other types of beverages are brought in and spilled. That makes sense.
If the issue is “decorum” then this can be solved by requiring that any mugs not have logos or words on them. I completely expect that some counsel used mugs that raised a few eyebrows during virtual hearings – a criminal lawyer friend of mine had one that said “not guilty” which I don’t think they used on screen but appreciate would have been inappropriate if they had.
If the issue, as some have suggested, is people drinking alcohol during virtual Court, then I’m going to point out, straight vodka is rumoured to be the beverage of choice of alcoholics and it will pass the clear glass test no problem.
Also, if we’re sticking to the “water in a clear glass” rule – I need clarification. I like sparkling water: is that permitted or must it be still? Must it be room temperature or is chilled with ice permitted? Can the water be from a bottled source or must it be from a tap.
I’m not going to suggest lawyers surround Osgoode Hall in Toronto, sipping coffee loudly from travel mugs until the powers that be cannot take it anymore and give in to letting us sip coffee from virtual hearings. Mostly because I don’t think the powers that be are actually there and well, we don’t need law firms having their accounts frozen over a blockade, but still.
This is a rule that needs to be revisited.
Literally, the only good thing from the pandemic was being able to sip coffee during court – I don’t want to lose that.