February 2017
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Roses are red,
Violets are blue,
If you’re in a law suit,
Don’t represent you.

Ah, Valentine’s Day. A day to celebrate love and the emotion that comes with it.

While being in touch with your emotions is good for your personal relationships, being emotional is not a good quality when representing yourself or your business in front of a Judge.

In Ontario, businesses do not have the right to represent themselves, they must obtain Leave, which is a fancy way of saying, permission, from the Court. Permission is not automatic. Courts have the right to refuse and will do so, particularly in situations where the representative is being uncooperative with counsel.

Many years ago I successfully argued that the owner of a company could not represent the company in the lawsuit I brought on behalf of my client. The fact that the individual had called me “ignorant and ugly” in writing helped show the Court that they were not able to conduct themselves appropriately in the law suit.

Even if you are confident you’ll be able to avoid calling the opposing counsel names, representing your company in Court is still not a good idea. Ultimately, this is your business and your money that is on the line. You will not be able to evaluate the strength of the other party’s position as you will be convinced yours is correct. You will also not have the benefit of legal research and arguments. You want to avoid that.

Lawyers are usually not free and the cost to hire one to defend a business in a law suit can be overwhelming. However, there are law firms available who will work with businesses on payment terms. It is worth looking into, because ultimately, you don’t want to be the one representing your company in Court.

Inga B. Andriessen JD

Starting a new business is an exciting time for a business owner. Many times the idea to start a business comes up quickly and spontaneously. While the desire to move quickly is understandable, moving without a plan in place is likely to see that business fail just as quickly.

The starting point for a new business should be a business plan. Where are you getting your customers? Do you need to borrow money to buy inventory, pay employees, etc? How long will it take to be profitable?

Once you’ve crunched the basic data, it’s time to decide which professional advisers you’re going to use. Speaking to a lawyer and/or accountant might seem like a big expense at this point in the business, however, spending $ 500.00 to get professional advice early on will save you literally tens of thousands of dollars in litigation later. It’s worth the expense to talk through your options for carrying on business, both from a liability and tax perspective.

If the business carries on business through a corporation with more than one shareholder, a shareholder’s agreement is important. This can set out the responsibilities of shareholders to each other as well as set out how to deal with shareholders leaving the company.

If the business involves being paid over time by customers, ensuring you have written contacts that includes terms Courts will uphold is important. The days of business by handshake are over: if it matters, write it down.

If the business is hiring employees, using an employment agreement is very important so that you are able to control the amount of notice you need to give employees before terminating them without cause. Don’t wait until you have “the money” for this: hiring an employee without a contract means they could be entitled to one month per year of service as notice (or more) and that is incredibly expensive.

Our firm enjoys working with new businesses and is sensitive to the costs associated with giving that advice. If you have a new business idea and would like to plan it out, reach out to us: we’re here to help you succeed.

Inga B. Andriessen JD

We’ve just celebrated the Lunar New Year, which maybe means it’s a good time to reflect on an old curse: “may you live in interesting times.” Oh boy. We’re certainly doing that right now, aren’t we?

The political upheaval in the USA that has been felt world wide. What does that mean for business in Ontario and what legal issues should you be aware of while running a business right now?

Before I dive into the business issues, I note I wrote this Blog prior to the attack on the Mosque in Quebec. Our firm’s condolences go out to everyone impacted by the attack. We are a firm of inclusion, not hatred.

The first business issue that springs to mind is with respect to employment law issues. The Trump Presidency has spawned, in the words of Aziz Ansari, some “lower case kkk” behaviour. Many people believe they no longer need to be respectful of others beliefs, origins and sexual orientation: they are wrong. The Ontario Human Rights Code still applies. Damages will be awarded against employers who discriminate and they will not be small. Employers must continue to ensure their workplaces are free of discrimination.

The Ontario Occupational Health and Safety Act, as it deals with workplace harassment, is also still very much in force. If you allow one political view to bully another, there are expensive consequences to the employer. Employers must continue to ensure their workplaces are free of workplace violence and bullying.

The second issue that jumps out at me is the issue of managing your business’ social media. Ensure you have a social media policy. Ensure it is enforced. Ensure the person responsible for posting to your social media feed is clear on what your business wants to contribute to the current online debate, if anything. You want to come out of this like @Lyft, not like @Uber. That is not to say either company is correct, it is to say, you don’t want to drive away business.

Consider having a mandatory “cooling off” period before responding to social media posts: if possible, have more than one person work on crafting responses to ensure they’re consistent with your brand.

These are interesting times. They don’t need to have devastating financial consequences if you take a moment, take a breath and act with purpose, not with “reaction”.

Inga B. Andriessen JD

I recently reviewed a Statement of Claim that was served on one of our clients. The document had many typos and included this gem:

“no fair hearing prior to overkill termination undeserved.”

That was a stand alone sentence, in case you thought that I only used part of a sentence. Yes, I know it doesn’t start with a capital letter. Evidently the lawyer didn’t realize it should have.

This lawyer is no doubt charging hundreds of dollars per hour to draft this poorly. This is not right. Clients deserve better. Clients deserve lawyers who are able to draft grammatically correct pleadings and letters. Pleadings (Statements of Claim, Defence, etc.) are the first introduction of the case to a Judge. You always want to make a good first impression. You don’t want the Judge wondering what your lawyer is trying to say. You want to persuade the Judge, not confuse the Judge.

This is why grammar matters. This is why, as part of my role as a Mentor in the Law Practice Program, I emphasize with Candidates, you must write English at a professional level in order to be a professional in this Province.

Given we live in the digital age where proofreading can be accomplished by the click of a button, it is shocking to see the amount of poorly written documents by legal professionals.

Grammar matters. Grammar matters a lot when you’re paid to persuade people using the written word.

Inga B. Andriessen JD

One of the best reasons to incorporate is so that your business becomes an asset that you can transfer to the next generation.  A well-organized corporation can be the primary source of wealth for families.  Yet many small business owners don’t take the necessary step of following up their incorporation with succession planning for the business.

If you are the sole shareholder of a corporation, or the primary directing mind behind a corporation, then you need to have a plan in place.  In addition to your own Will and the selection of an Estate Trustee, you need to have written documentation that sets out your directions so that your business does not lose value in the days following your death.

Those plans may include a separate Will for the corporation, key-person or business continuation insurance, powers of attorney and management or sale instructions.  This planning will ensure that the business that has taken so much of your time and energy becomes something of value to those you leave behind, instead of a burden.

Businesses that don’t have a succession plan in place tend to devalue quickly upon the death of a principal.  Instead of doing business during this critical time, companies stagnate, while friends, family and employees struggle to decide what happens next and try to figure out how to run things.  In the event that the business is to be sold, by this point it will have lost much of its value.  If the business is to continue to operate, it may have suffered a significant hiccup in operations that could jeopardize its continued existence.

Putting together a solid business succession plan will require a good partnership between you and your legal counsel.  It will require some frank discussion about your intentions, your appetite for risk and some detailed planning regarding the inner-workings of your corporation.  It will take some time and some money, but it is vitally important if your business is to have value after you pass away.

We’re here to help with this, feel free to reach out for more information.

Inga B. Andriessen JD

Many people think they know a lot about employment law. Many people do. Many people know a little about employment law and get confused about its’ application to certain issues. One of the most common issues that arises in is the “probationary period”.

Part of the reason this area is confusing is because it is an area where the Ontario Employment Standards Act and the Common Law run directly into each other. The Employment Standards Act sets out the minimum requirements for non-unionized employees in Ontario. This Act says that you do not have to provide notice of termination (or payment in lieu of the notice) to employees who have worked for you the employer for three months or less.

However, unless the employee has signed an employment contract that sets out a specific probationary period, the Common Law may still award damages for wrongful dismissal to employees terminated within the first three months of their employment.

This issue was recently revisited again by the Ontario Divisional Court, hearing an Appeal from a Small Claims Court Deputy Judge (lawyer who sits as a Judge part time) in the decision of Nagribianko v Select Wine Merchants Ltd., 2016 ONSC 490 (CanLII). The employee had signed a contract before starting work, which set out specifically that his employment was subject to a six month probationary period. The employee was terminated during the first six months because he was “unsuitable for regular employment.”

In finding that the Deputy Judge was wrong in concluding that the meaning of “probation” was not clear in the employment contract, the Divisional Court Judge held:

“Probation is a testing period for the employer to assess a probationary employee’s suitability. It offers the employer an opportunity to determine if the employee will work in harmony with the organization, if hired permanently. Suitability includes considerations of the probationary employee’s character, ability to work with others, and ability to meet the employer’s present and future standards.”

As long as the employment contract, signed before the employee starts working, clearly sets out the length of the probationary period, then the test for awarding damages for “wrongful dismissal” to an employee terminated during their probationary period requires them to show the employer did not act fairly in determining whether they were suitable and did not give them a fair opportunity to demonstrate their ability.

This is different than termination after the probationary period where the employer must prove “just cause” or pay damages in lieu of notice.

Still confused? Talk to a lawyer who practices employment law. We can help guide you through this issue and avoid expensive wrongful dismissal law suits.

Inga B. Andriessen JD

Remember a few years ago there was a lot of noise in the media about the Canadian Anti-Spam Legislation, a.k.a. CASL.

If you’re a small to medium business owner, you may be thinking, well that was a lot of noise about nothing. You would be wrong and you may be about to find that out in a very personal and expensive way.

In July of this year the “right of private prosecution” part of CASL comes into force. Until then, enforcement of CASL is left to the Government and while there have been some big fines (over $ 1 million) mostly, there have been a lot of requests to fix your email policies.

In July, individuals can sue for $ 200/email to a maximum of $1 million for individuals to $ 10 million for corporation. Officers and Directors are personally liable for these amounts.

I have no doubt there are more than a few individuals in our province who have quietly sat back, compiling emails for the past two years that are not CASL compliant and are waiting to issue their lawsuits and collect their “pot of gold”.

Thankfully, there is a due diligence defense to CASL. If you can show you have processes in place that are complaint with the Act, you likely will not have damages awarded against you.

So. The time to do a CASL audit is now: or you could wait until you’re sued, you know, if you would like to fund your lawyer’s Porsche fund. You decide.

Inga B. Andriessen JD

I’m feeling in a “Festivus” mood – if you didn’t watch Seinfeld, Google it, then come back. The specific part of Festivus I’m in the mood for is the airing of grievances, so let’s all gather around the Festivus pole, tired after the feats of strength and begin: “I gotta problem with you people” …..

1. The overly sensitive nature of our society. Christie Blatchford, excellent columnist and sensible woman, said it best in this column: http://tinyurl.com/gljoxe9

2. Lawyers who don’t put the client first: this is particularly true for many lawyers looking for work/life balance. Never forget that there is “work” in that equation and if you are too busy for a file turn it away: you must put the client first.

3. Those who believe Trump’s election is a licence to be racist, chauvinistic and homophobic. It’s not.

Three grievances seems like the right place to stop.

Happy week between Christmas & New Years !

Inga B. Andriessen JD

Occasionally this Blog draws on recent cases in the firm and this Blog is one of them.

A fraudster provided a fake cheque as form of payment for a piece of equipment and the company selling the piece of equipment (XYZ Co.) gave title to the fraudster. The fraudster then sold the equipment to ABC Company (a company whose business is to buy and sell that type of equipment) after ABC Company searched title and confirmed that fraudster had legal ownership of the equipment. ABC Company sold the equipment to John Doe. The day after the equipment was sold to John Doe, XYZ Co. advised the police the equipment had been obtained by fraud and registered a lien against the equipment.

The legal issue was: when there are three innocent victims of a fraud, who is the party who bears the loss? Thankfully, this is a settled area of law and the quick answer to the above fact situation is XYZ Co.

The legal answer is a bit more complicated, but an important one as in our case, the police didn’t know the correct answer and returned the equipment to XYZ Co. before we got involved and had it returned back to John Doe.

The first legal concept to understand is that the above fact situation is not a situation of “theft”, rather it is a situation where title was obtained fraudulently. If the equipment had been stolen (say by putting it on a truck and driving away with it after hours) John Doe would be out of luck.

However, because XYZ Co., gave title to the fraudster, then that title is valid to be passed on, until such time XYZ Co. declares that it no longer want to be bound by that agreement – which in our case was the day after the sale to John Doe.

The second legal concept to understand is “bona fide purchaser without notice”. This requires ABC Co and John Doe to both have done the types of title searches that are normal for this type of transaction. Because they did, they are truly without notice of the fraud and able to pass title legally.

Why does this matter? The simple answer in our case is that because the police got it wrong, John Doe was without the equipment for over 10 days, potentially in default of a financing agreement to purchase the equipment and incurred legal fees to get back equipment he was the lawful owner of.

Sometimes the law is complicated, this is why it’s important to understand all of the facts before acting, particularly when the impact on others can be significant.

Inga B. Andriessen JD

Effective December 10, 2016, Ontario corporations that hold legal or beneficial interests in land that is located in Ontario, must prepare and maintain a register of these ownership interests pursuant to new record-keeping requirements under the Ontario Business Corporations Act (OBCA).

So what does this mean for an Ontario corporate land owner who currently holds any ownership interest in Ontario real property? It means that you have two years from December 10, 2016 to ensure that you have a real property register in place that sets out specific information about each ownership interest.

If you’re wondering why this has to be done, the answer is that these changes are an attempt by the government to reduce the amount of corporate property that may be forfeited to the government when Ontario corporations dissolve and leave residual corporate property. Whether or not these changes will achieve the government’s objective is yet to be seen, but unfortunately for Ontario corporate land owners, it does impose some rather onerous record-keeping requirements.

Failure to comply with these new requirements may result in a fine to the Corporation of not more than $25,000.00, so the government is serious about this. Furthermore, if a Corporation is found guilty, every director or officer who authorized, permitted or acquiesced in the offence is also liable to a fine of not more than $2,000.00 and/or imprisonment for a term of not more than one year.

At our firm, we prepare Annual Corporate Resolutions for a flat fee (currently $ 275.00 per year) which includes a phone call with a lawyer to discuss changes in the law (such as this one) and to ensure you’re compliant.

Please feel free to contact us if you have any questions regarding these corporate legislative changes or if we can be of assistance.

Michelle Eames LL.B., LL.M