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INSIDE THIS ISSUE: Featured Cases: 3

Civil Procedure; Associations; Public Interest Standing - with 1 Counsel Comment

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Constitutional Law; Freedom of Expression; Elections- with 3 Counsel Comments

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Corporate Law; Meetings of Shareholders; Notice- with 1 Counsel Comment

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Workers’ Compensation; Psychological Injuries; Compensability of Injuries - with 2 Counsel Comments

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Punitive Damages; Real Property; Leasing

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Fédération des parents francophones de ColumbieBritannique v. British Columbia (Attorney General), 2012 BCCA 422 Areas of Law: Civil Procedure; Associations; Public Interest Standing Description: Public interest plaintiff standing granted where intervenor status would increase burden on Court. CLICK HERE TO ACCESS THE JUDGMENT

BACKGROUND

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he appellant was the Fédération des parents francophones de Colombie-Britannique (the “Fédération”), an organisation representing parents of children in francophone schools in British Columbia. The respondents were Her Majesty the Queen in Right of the Province of British Columbia and The Minister of Education of the Province of British Columbia (collectively, the “Province”). Other plaintiffs in the main action were a group of francophone parents, and the Conseil scolaire francophone de la Colombie-Britannique (the “Conseil”), the francophone education authority continued under section 166.12(4) of the School Act,

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R.S.B.C. 1996, c. 412. The other plaintiffs took no part in this hearing. The basis of this litigation was an action by the plaintiffs alleging that the Province had failed to meet its obligations to provide minority language education, as recognised in the Canadian Charter of Rights and Freedoms, and which sought orders regarding infrastructure and funding for French-language schools in British Columbia. The Province applied for an order striking both the Conseil and the Fédération as parties to the action on the basis that Charter rights are held by individuals, and therefore the organisations had no interest in the proceeding. The chambers judge confirmed that although Charter rights are held by individuals, minority language education rights have a collective aspect, due to the fact that they apply only if numbers warrant: Doucet-Boudreau v. Nova Scotia (Minister of Education), 2003 SCC 62. Furthermore, the Conseil held responsibilities to provide education under the School Act, and therefore had a direct interest in the proceedings. The Fédération had no such direct interest. The chambers judge considered whether the Fédération qualified for public interest standing to represent the collective interests of rights-holders. The chambers judge found that public interest standing required that the Fédération show that there was no other reasonable or effective way to place the issues before the Court. In this case, litigation was being pursued by the parents and the Conseil, so the Fédération did not qualify for public interest standing.

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604.879.4280 | info@onpointlaw.com Fédération des parents francophones de Columbie-Britannique v. British Columbia (Attorney General), cont. APPELLATE DECISION

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he appeal was allowed and the Fédération was granted standing as a plaintiff. The Court reviewed the criteria for public interest standing set out in Canadian Council of Churches v Canada (Minister of Employment and Immigration), [1992] 1 S.C.R. 236 (“CCC”): whether a serious issue was raised; whether the plaintiff has a genuine interest in the issue; and whether there was another reasonable and effective way to bring the issue to court. The Court noted that since the chambers decision had been handed down, the Supreme Court of Canada had delivered the decision in Canada (Attorney

General) v. Downtown Eastside Sex Workers United Against Violence Society, 2012 SCC 45 (“SWAV”). SWAV set out a flexible, discretionary and purposive approach to public interest standing which made obsolete the strict approach to these criteria as applied by the chambers judge. Instead, the Court should consider whether the suit was a reasonable and effective means to bring the action. In particular, the Court noted the need to balance judicial resources by avoiding multiplication of plaintiffs against the benefits of a full hearing of the issues. In this case, the Court held that denying the Fédération public interest standing was unlikely to conserve judicial resources since it would likely apply for and receive status as an intervenor in the case. Separate representation as an intervenor would in fact increase the burden on the Court and create inefficiencies. Therefore, and because the Fédération met the other aspects of the test in CCC, the Court granted public interest standing to the Fédération.

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COUNSEL COMMENTS Fédération des parents francophones de Columbie-Britannique v. British Columbia (Attorney General)

Comments provided by Rob Grant, Mark Power and Lauren Wihak, Counsel for the Appellant

Rob Grant

Mark Power

Lauren Wihak

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he British Columbia Court of Appeal’s (BCCA) decision to re-instate the Fédération des parents francophones de ColombieBritannique (Fédération) was one of the first in Canada to apply the Supreme Court of Canada’s modification of the test for granting public interest standing, made much more flexible and purposive, in SWAV. It is interesting to observe that the facts of this appeal are somewhat atypical from the kinds of cases that have made their way to the highest courts on the issue of public interest standing (see, e.g., CCC, Borowski v. Canada (Attorney General), [1989] 1 SCR 342). In the majority of cases where public interest standing was sought, there were no other parties who otherwise had direct standing in the action. There was concern expressed by courts that the applicant for public interest standing was something of a “busy body”, creating litigation where it might not otherwise exist. As such, in those cases, the importance of having the case heard, and the likelihood that it would not otherwise be heard, and on the other hand a concern over the waste of judicial resources, become more important factors for the court’s consideration. However,

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COUNSEL COMMENTS in this case, there were already a number of parents with rights under section 23 of the Charter, as well as the Conseil scolaire francophone de la Colombie-Britannique (Conseil), a publicly funded school district, who had direct interest standing in the case in any event. Put another way, regardless of whether the Fédération was permitted to participate in the action as a party, the action was going to continue. As such, and as Justice Groberman recognized, many of the typical concerns that arise in the determination of whether to grant public interest standing simply did not arise in this case. In fact, permitting the Fédération to participate as a party, as opposed to an intervener, represented by the same counsel as the Conseil and the individual parent plaintiffs, would in fact save scarce judicial resources. Justice Groberman’s decision made good practical sense. Justice Groberman decided the case solely on the basis that the chambers judge did not have the benefit of the Supreme Court of Canada’s decision in SWAV, and, if he had, he would have granted the Fédération public interest standing in this case. However the Fédération had made a broader argument that, because of the approach he adopted, Justice Groberman did not need to consider. The Fédération had advanced the argument that, in addition to being entitled to public interest standing, it also had direct interest standing in this case. The Supreme Court of Canada has, on many occasions, recognized that section 23 of the Charter has both collective and individual aspects (see, e.g., Doucet-Boudreau v. Nova Scotia (Minister of Education), 2003 SCC 62). The Conseil is the body designated to take care of the management and control of the francophone school system in British Columbia, on behalf of parent right-holders. However, individual parents with rights under section 23 of the Charter can normally speak only with reference to their particular situations and circumstances, in their particular communities (but see e.g. L’Association des parents de l’école Rose-des-Vents v. Conseil scolaire francophone de la Colombie-Britannique, 2011 BCSC 1495). The Fédération, by contrast, represents the collective aspect of the right under section 23 of the Charter, bringing together all parents from across British Columbia who have rights under section 23 of the Charter and representing their collective interest.

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COUNSEL COMMENTS To the extent that the collective aspect is a key part of the right under section 23 of the Charter, the Fédération, as representative of the collective of parent right holders in British Columbia, arguably has direct interest and, therefore standing, in a case that squarely addresses the Government of British Columbia’s obligations to that collective under section 23 of the Charter. Justice Groberman did not engage with this argument, and it remains to be decided in another case. One final point worth noting is that in order to succeed in this appeal, the Fédération had to convince the BCCA that it ought to overturn the decision of a chambers judge not to exercise his discretion and grant the relief sought. Discretionary decisions, be they in the area of public interest standing or otherwise, are very difficult to overturn, and this difficulty is only increased when the judge at first instance refuses to grant relief. Despite the high hurdle that the applicable standard of review posed to the Fédération, the Fédération was able to convince the Court that an error in principle had been made. Indeed, Justice Groberman described the basis of the BCCA’s intervention as being the chambers judge’s error in removing the Fédération as a plaintiff, not any incorrect basis upon which he exercised or failed to exercise his discretion. Although appellate courts rarely overturn a discretionary decision, this case stands as an example to show that these kinds of arguments can sometimes succeed.”

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Reference re Election Act (BC), 2012 BCCA 394

Areas of Law: Constitutional Law; Freedom of Expression; Elections Description: Limits on election advertising before the campaign period were unconstitutional. CLICK HERE TO ACCESS THE JUDGMENT

BACKGROUND

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his matter was a reference by the Lieutenant Governor in Council on the question of whether amendments to the Election Act, R.S.B.C. 1996, c. 106, regulating spending on pre-election advertising were constitutional. Amicus Curiae were represented, and the British Columbia Civil Liberties Association, the Freedom of Information and Privacy Association, Integrity BC, Gloria Laurence, and G.B. Nixon acted as Intervenors. British Columbia enacted provisions of the Election Act which governed the amount of money third parties could spend on “election advertising” during a period which included time prior to the

campaign period. “Election advertising” was defined very broadly, and included “an advertising message that takes a position on an issue with which a registered political party or candidate is associated”. Similar amendments promulgated in 2008 had been found to be unconstitutional in British Columbia Teachers’ Federation v. British Columbia (Attorney General), 2009 BCSC 436 because they limited political advertising for a period of 60 days prior to the campaign, which could include time when the legislature was still in session and a budget had not yet been enacted. The Court found that the legislation unjustifiably interfered with speech unrelated to elections and outside the campaign period, and therefore was in breach of the Canadian Charter of Rights and Freedoms (the “Charter”). The present amendments were essentially identical in effect and in their definition of election advertising, however, limited the period affected so that it started at the later of 40 days prior to the campaign period, or 21 days after the end of the sitting of the legislature prior to the campaign period.

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Reference re Election Act, APPELLATE DECISION

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he proposed legislation was unconstitutional. The Court noted that the new provisions did not alter the limitations on third-party spending or the breadth of “election advertising” from the previously considered provisions. The only substantive difference was that instead of applying for 88 days prior to an election, the limitations applied, depending on circumstances, between 28 to 68 days prior to an election, with up to 40 of those days outside the campaign period. The Court also noted that the definition of “election advertising” encompassed “virtually any issue that may be the subject of political expression”, and captured “a seemingly limitless range of activities in which the government may be engaged, or some may consider it should be engaged.” The Court held that freedom of expression, and particularly political expression, lay at the very foundation of democracy: Edmonton Journal v. Alberta (Attorney General), [1989] 2 S.C.R 1326, and

(cont.)

Harper v. Canada (Attorney General), 2004 SCC 33 (“Harper”). Accordingly, interfering with political expression could be justified only by the clearest and most compelling reasons. The Court considered the test for justification of an infringement of Charter rights, set out in1 R. v. Oakes, 1 S.C.R. 103, vanE_Take5_FIN_Layout 12-10-24 1:05 PM [1986] Page 1

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604.879.4280 | info@onpointlaw.com and found that the limitations were directed to a pressing and substantial objective, and were rationally connected to that objective. However, they did not impair Charter rights as little as possible to achieve the objective, nor was there proportionality between their salutary and deleterious effects. The Court recognised that the concerns in the previous proceedings had focussed on limitations to expression while the legislature was sitting. However, it identified the underlying concern as: an overbreadth or overreaching of the definition of election advertising that

could not be said to be minimally impairing because it captured political expression well beyond what could be said to have as its purpose the influencing of an election in the pre-campaign period. The Court recognised that similar legislation, applying only during the campaign period, had been approved in Harper, but found that in that case, significant social science evidence had been presented which addressed the effects of thirdparty advertising during the campaign period. Furthermore, the limitations in that case were justified in part because they were limited to the campaign period. In this case, the Province had provided no evidence whatsoever of the effect of advertising prior to the campaign. In this case, there was no basis to find that the amendments minimally impaired freedom of political expression, and therefore they unjustly interfered with the rights guaranteed by section 2(b) of the Charter.

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Left to Right: Vern Blai r, Cheryl Shearer, Robert D. Mackay, Kiu Ghanavizchian, Chad Rutquist, Gary M. W. Mynett, Chris Halsey-Brandt, Andy Shaw, Jeff P. Matthews, Farida Sukhia

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COUNSEL COMMENTS Reference re Election Act (BC) Comments provided by Robert D. Holmes, QC, Counsel for the Counsel for the Intervenor, British Columbia Civil Liberties Association “Freedom of expression is a fundamental freedom under the Charter of Rights and Freedoms. Yet governments don’t want to argue over whether a proposed restriction on expression infringes or denies that guaranteed right. It looks bad in public and it sounds bad as advocacy before the court. Instead, when challenged, governments commonly admit that impugned legislation infringes or denies the Charter right and then pivot to section 1 of the Charter. That is where the real legal battle is fought. Discussion ceases, for most purposes, on the right and instead focuses upon whether the proposed restriction sounds reasonable and is not overly burdensome.

Robert D. Holmes, QC

Such a tack allows the government to portray those who want the right protected as unreasonable absolutists. And the government’s own argument gets framed in terms of siren songs of reasonableness. The Oakes test which defines how section 1 of the Charter is to be applied is to blame for that. Instead of celebrating the protection of rights and freedoms and arguing how strongly the right should be protected, debate over section 1 often descends into how far government can go in eroding rights before being reined in by the courts. The recent contest concerning amendments to the Election Act (BC) passed by the Legislature at its spring 2012 sitting followed that pattern. The government conceded it was infringing and denying free expression. But it said it had a good purpose – it wanted to ensure that moneyed interests did not buy elections. The notion raises quaint caricatures of party bosses handing out bottles of whiskey in exchange for votes. But vote-buying and other corrupt election practices are prohibited by criminal laws. Political advertising is hardly on par with whiskey, cash or similar kinds of bribes. Perhaps the root of the concept is similar: some kinds of influences on voters are bad. But care must be taken not to carry that too far. Otherwise, efforts to persuade would be characterized as “bad”. When submissions made on behalf of the Attorney General appeared to suggest that advertising messages might persuade voters, Chief Justice Finch responded from the bench that the whole point of elections in a democracy is to have vigorous political debate and do just that. The Supreme Court of Canada in Harper v. Canada 2004 SCC 33 characterized the federal

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COUNSEL COMMENTS government’s purpose there as one of trying to ensure “electoral fairness”. That court traced fear that advertising could stampede voters to the Lortie Commission in the 1990’s. There, social scientists, smarting over the Mulroney government being re-elected in the free trade election in 1988, asserted that the influx of advertising by business interests in the last weeks of that campaign had affected the result. Common sense won’t support that notion: the idea that any voter in that election was mystified about who favored and who opposed the free trade deal with the U.S. is not on; the idea that the advantages and disadvantages of entering such a treaty were not threshed out with the usual mixture of hope and fear that goes with political debate similarly is without merit. Interestingly, in the years after the Lortie Commision, some of those social science experts recanted. The evidence did not support what they had originally opined about the effect of third party advertising in the free trade election. That came out in the Harper v. Canada litigation. The trial court found as fact that the evidence did not support the federal government’s pitch that such advertising had a significant effect on the election outcome and had to be reined in. Bastarache, J., for the Supreme Court majority in Harper would not accept that. Unusually, for an appeal court dealing with findings of fact, at paras. 95-100 he criticized the lower courts for treating factual issues as if they were still open for decision based upon evidence. He reverted to the Lortie Commission report findings. He said that was sufficient as a foundation for government having an apprehension that harm could result from allowing third parties to advertise to the extent they might choose. Even though there had not been an instance of actual harm, the possibility that some day someone might engage in an advertising blitz that went unanswered and stampeded voters to make an imprudent choice was a sufficient “factual” basis for deeming harm to exist. There is much to criticize in that agenda-driven approach to constitutional adjudication. Perhaps the Supreme Court of Canada will feel it appropriate to undertake a review of it in the near future. While laying down legal principles may be the work of an appellate court, laying down factual findings binding in other cases is not. That is particularly apt in this context. Social science literature has continued to address the effects of campaign spending restrictions. The primary effect of such laws is to enhance the position and power of incumbent parties and office holders. That is because incumbents, by definition, got elected at least once before, have been in the news repeatedly for a period of time and have developed a rapport, if not goodwill, with the public. They have lists of donors who have given to them in the past and benefitted from political tax credits for doing so. They have government-paid researchers and staff, both at the Legislature and in their constituency offices, who assist in providing services to voters and maintaining their profile. Challengers often lack that and require more advertising and promotion just to establish

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COUNSEL COMMENTS name and face recognition and what their message is. Studies have shown that incremental expenditures by challengers are more worthwhile in terms of gaining votes than they are for incumbents. Third party groups face similar difficulties – those that are formed ad hoc for a specific issue lack a track record and require substantial advertising and promotion to be recognized and heard; those that are ongoing interest groups usually focus on political matters intermittently. Further, issue advocacy groups that are charities must be wary of losing that status if they are characterized as being too political. The effect of having to register to engage in what the Election Act defines as political advertising chills some groups from speaking out at all. So what started out as a thesis about enhancing equality and political participation ends up serving as a tool for squelching both. That is underscored by the restrictions on how much spending can be done by third party advertisers. B.C. vaunted that it put the same monetary limits in place for provincial elections as the federal government had imposed for federal election campaigns. A third party advertiser could spend $150,000 across the province, or $3,000 focusing on one riding. Again, that ran into evidentiary difficulties. The fact is that for that kind of money one can run, at best, what is termed a “modest, informational campaign” of brief duration and that is unlikely to actually reach more than a few of the voters in the province. Advertising depends upon repetition and continuation to be effective. Voters, for the most part, simply don’t pay much attention to politics; they are not like judges in a courtroom who have to sit and listen carefully while each side makes an argument. Political consultants, social science experts and business marketing studies all converge in this: without repetition and continuity, advertising messages don’t reach the whole audience and they decay rapidly in terms of public awareness and any effectiveness. If the limits on how much can be spent are so severe that most of the audience never hears the message, then the rapidity of decay is greater. All of that, of course, plays into the hands of those who have an established presence in the public’s mind – i.e., incumbents. It is thus not perhaps surprising that around 1999, the B.C. government (then a different political stripe) introduced third party advertising limits. Those were struck down by Brenner, C.J.S.C., in Pacific Press v. British Columbia (Attorney General), [2000] 5 W.W.R. 219, 2000 BCSC 248. Similarly, about a decade later, when facing a difficult re-election, the B.C. government tried such limits on again. Given that the Harper case had taken place between those two dates, there was little or no contest in the BCTF litigation about limits within the 28 day election campaign period. The focus was on the B.C. government’s attempt to restrict speech prior to the campaign. There is, necessarily, a paternalistic element to any effort to regulate political participation,

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COUNSEL COMMENTS whether by limiting who can advertise and when as in this case, or in earlier efforts in political history, including defining voter eligibility to exclude women, minorities, nonproperty owners, persons who fail literacy tests or persons who fail to pay poll taxes. In back of such laws there is always a notion that someone else “knows best” and that the political system will work better if we screen out the noise that would come from allowing just anyone to participate. Of course, the courts were not in a position to say that, whether in the Harper litigation or the recent B.C. litigation on third party election advertising. Although the Emperor may have no clothes on, pointing that out is not proper. So instead, the purposes of the government are framed in more benign terms. Bastarache, J., put it thus: “The overarching objective of the regime is to promote electoral fairness by creating equality in the political discourse.” If everyone has an equal voice, then no voice gets drowned out, everyone gets heard and voters decide. What is ignored in this recitation of purpose is acknowledgement of the impact such laws have. They make participation in the political process complex. Registration as a third party election advertiser is required in B.C. for as little as running off a few pages of a pamphlet on a copier or making a homemade sign to put in a window. Once registered, election advertisers must file reports on the kinds of things they spent money on and are subject to audits and other investigations. If one goes over the limits and Elections BC pursues the matter, the penalties are severe. Federal legislation similar to this has been in place for several election cycles now and the effect has been to drive down the total of third party election advertising to around $1 million. That contrasts with party spending in excess of $66 million. So much for allowing equality of voices in the process and not drowning anyone out. It is worthwhile keeping in mind how much even the $66 million amounts to in the context of all commercial advertising that goes on. Recent figures show that the amount spent in Canada on advertising runs at a rate of $13 billion a year. So in the time span of a federal election (a bit more than a month), major political party spending amounts to only 6% of all advertising cost. There is something odd about constraining political advertising, given its importance in our democracy, to that level when ads for the latest movie, a detergent, or new pills, cars and vacations occupy so much advertising space. In reality, the view that one side could “dominate” a debate is unrealistic. If an issue is of interest to people and contentious, then no doubt both sides will find resources to advertise. That is seen in practice. Once the trial court ruled in 2009 that pre-campaign election advertising limits on third parties were unconstitutional, unions that had been wanting to advertise did so, but so did business groups and political parties. The field was not left to

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COUNSEL COMMENTS just one side of the argument. The B.C. Court of Appeal decision should not come as a surprise to anyone, including the government. The 2012 amendments provided for restrictions for up to 40 days before the election campaign itself on third party election advertising. The courts had previously struck down a 60 day pre-campaign restriction period: British Columbia Teachers’ Federation v. British Columbia (Attorney General), 2009 BCSC 436 stay refused at 2009 BCCA 156; trial decision affirmed at 2011 BCCA 408. Why did the government have another go at trying to impose pre-campaign restrictions? The Attorney General’s speech in the Legislature was a marvel of inscrutability. It recited, almost by rote, the words of Bastarache, J., in Harper about equality and electoral fairness. Presumably that was done so that the lines could be trotted out in court as the only purposes government had for the legislation. But why put forward 40 days and a formula for reducing the restricted period if the Legislature had been sitting? The government fastened upon a phrase in the Court of Appeal’s first decision that the 60 day law was invalid as it would suppress political speech aimed at Legislature proceedings. The 60 day restriction would likely include time when the Legislature was in session, with a Throne Speech, debate on that, plus debate on the budget, spending estimates, government bills, as well as question period, all matters for public debate and potential political advertising. Such expression need not be directly aimed at the upcoming election. This was an issue because the definition of “election advertising” in the Election Act is so broad that, as the parties conceded and the courts concluded, it covered practically all political expression. The definition provides that any advertisement that referred to a candidate or party or any issue with which a candidate or party was associated was caught. Interestingly, Bastarache, J., held in Harper that the restrictions during the federal election campaign were justifiable at least in part because third parties had the right to unlimited advertising outside the campaign period and also because within campaign periods he thought that some advertising could still go on by such groups. He was of the view that the limits would not apply to such advertising as it fell outside the definition. That is a surprising (and no doubt completely incorrect) view. The federal definition of election advertising was used as the model for the B.C. law and is extremely broad. It is, as our courts have found, difficult to conceive of any political expression not caught as an issue with which political parties and candidates are somehow associated. The B.C. 2012 amendments suffered from the same problem the 2008 ones did. They were overbroad. They caught political expression that was not directly related to the election.

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COUNSEL COMMENTS The deleterious effects on the freedoms clearly outweighed whatever might be argued as a beneficial effect on “electoral fairness”. They were also discriminatory and unfair. Drawing from cases in the U.S., we noted that it was odd that campaign finance laws exempted a variety of persons and entities who engaged in political speech. Media organizations were the most prominent exemption. Whether done under the traditional garb of “objective journalism”, the resurgence of opinion-oriented commentary or even what may be called “infotainment”, the fact is that the media gets to put forward messages about parties, candidates and issues they are associated with on an exempt basis. If one had to value that during a campaign, it would vastly exceed whatever political parties, candidates and others spend on paid advertising. Noting this is not to be taken as encouragement for regulation of the media and what they publish. Far from it. But the rationale for exempting some from political expression spending limits bears scrutiny. It cannot be simply that don’t have an identifiable and consistent point of view. It cannot be that they are not seeking to influence political affairs on particular issues. So why are the media exempt, but organizations like Greenpeace or Sea Shepherd or others are not? Reports and studies on Canadian media corporations (e.g., the Davey Inquiry in the 1970’s and the Kent Commission Report in the 1980’s) plus the recent decision by the CRTC to deny the application by Bell to acquire Astral Media, suggest that concentration of ownership in the media is a concern. But this is a digression. The Court of Appeal did not find it necessary to comment on this aspect of the matter. Curiously, the government chose not to provide any evidence, studies, reports or analyses in support of the 2012 amendments. Its position was that the apprehension of harm that was noted in Harper and that was recited in the Legislature as the motivation for introducing this law was all it had to do. It argued that its choice was owed “deference”, without explaining how it came to it. It opted not to put forward any briefing note to Cabinet or any memorandum from researchers in the Attorney General’s office or elsewhere setting forward what different approaches might be taken to advance the goal of ensuring electoral fairness. That was an interesting strategy, in terms of how the case was approached, largely because it must have been done knowing that McLachlin, C.J.C., had laid down that governments seeking to justify infringing rights cannot rest on “vague and symbolic objectives”, and must instead provide “demonstrable justification” to defend the limitation on rights: Sauvé v. Canada (Chief Electoral Officer), 2002 SCC 68 per McLachlin C.J.C. (for the majority) at paras. 22-23. There were many things government could do to help voices in the political process get attention, without stifling participation by others. Indeed, for the BCCLA, we argued that the absence of those many things from B.C.’s law meant that it was not really following

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COUNSEL COMMENTS the “egalitarian model” that Bastarache, J., talked about in Harper. Among other things, we noted that government “could make available time on the cable TV channel used to broadcast legislative proceedings, which currently sits idle much of the time. It could provide for paid mail-outs at regular intervals, with or without other government mailings, including when voter registration are distributed. It could buy radio time, newspaper pages or billboard space. It could set up space on the Elections BC or other government operated websites.” As long as allocation was done on a content-neutral, non-partisan basis, it is doubtful many would disagree. Canada’s federal legislation has significant differences from that of B.C., including (a) a cap of $1,150 per annum for donations to a registered party; (b) a cap of $1,150 per annum for donations to a riding association or candidate; (c) contributions to parties and candidates are banned from unions and corporations and may only be made by individual citizens and permanent residents of Canada; (d) free-time broadcasts on the CBC for political parties during election campaign periods are made available; (e) annual subsidies are paid by the government to political parties based upon the number of votes received (this provision is currently being phased out); (f ) reimbursement of 50% of election expenses is paid registered parties who achieve certain vote levels; and (g) reimbursement of 60% of election expenses is paid candidates who achieve 10% of the vote in their riding. Under B.C.’s system, a corporation, unions or individual could donate millions of dollars to a political party. A party that runs a full slate of candidates in B.C. can spend more than $12 million in the campaign and pre-campaign period under the existing limits on party expenditures. Raising that kind of money is usually an ongoing task for politicians. Obviously, raising it in bigger bundles is easier in many ways than raising it through many small donations. But under B.C. law, one person could donate the whole amount to a party and likely exert control over it just as rotten boroughs were controlled long ago. With this context in mind, B.C. has chosen not to have an egalitarian model of election laws. To assert that putting severe limits on third party election advertisers, whether in the campaign or pre-campaign period, does so is inaccurate. One cannot assert that equality is achieved by limiting the participation rights of one group, while putting either very high limits or no limits at all on those of others. When faced with a choice over having limits on pre-campaign advertising by third parties, it is no wonder that the courts found the B.C. government’s 2012 amendments to the Election Act unconstitutional. There was no evidence of any benefit. Indeed, allowing regulation of pre-campaign expression would likely be taken by government as an invitation for limits to be extended all the way back to the date of the last election. The reference question asked not just whether the 2012 amendments were justifiable under section 1 of the Charter, but also asked in what respects it was non-compliant if that was

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COUNSEL COMMENTS

the court’s ruling. Having made obiter comments in the first appeal about alternatives Records and Documentation Better care for a better life are carrying on a business, you the government could have considered, it was prudent for the court not to do Ifsoyouagain. are required to keep adequate record Home care has become all-too-frequent Ultimately, the message has to be that rights erosion a that provide sufficient details and forguaranteed you support to determine government pastime. Declaring thatdesigned no limit on especially a constitutionally freedom in how much tax you owe. Estimates and incomplete • Nursing perhaps have• Funding this context would ever be reasonable would been Investigations too abrupt. But by declining information are not acceptable to CR • Personal Care • Free Assessments In this regard, I refer you to CRA’s to offer up advice on the point, the court may well have sent the right message. At the least, • Home Support • Nurse Supervised Staff Vancouver office Guide RC4409 Keeping Records, Companionship • 24 Hour/7 the Attorney General’s decision not to •appeal shows that this lineDayofService attack on which fundamental can be found on CRA’s Website 604.873.2545 freedoms is not likely to be repeated soon.” 1.866.227.3106 A Company www.bayshore.ca

Another way to do business is throug a company. A company is a separate legal entity that can undertake to do business and own property in its own name. A company has its own requirements to file tax returns, pay taxes, and meet other obligations. A company pays tax at different rate than does an individual proprietor.

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This article is not intended to provide a complete summary of issues and requirements relating to individuals in business; it highlights a few preliminary considerations. The comments provided herein are based on information available at the time of writing and are general in nature. We recommend that individuals consult their own tax advisors before acting on information contained in this article, to ensure that their own specific circumstances and current ta legislation are taken into account. s

Kathryn G. Edwards, CA, is a Partner with Pagnanini Edwards Lam Chartere Accountants. Kathy@accountantsplus.ca

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The Society of Notaries Public of British Columbia

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Volume 19 Number 2 Summer 2

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COUNSEL COMMENTS Reference re Election Act (BC) Comments provided by Lauren Wihak, Counsel for Gloria Laurence

“T

his case represents the second attempt by the Government of British Columbia to have the courts endorse amendments to the British Columbia Election Act, RSBC 1996, c. 106, which would extend the campaign spending limits for third parties during election campaigns endorsed by the Supreme Court of Canada in Harper, to a pre-campaign period. The need for spending limits during a pre-campaign period was thought to be necessary due to British Columbia’s Lauren Wihak move to fixed elections. British Columbia was the first province in Canada to adopt fixed election dates. The rationale for limiting spending in a period leading up to a fixed election date is that, because the election date is fixed, third party election spenders will know well in advance when the election will take place, and can plan their advertising spending accordingly and, effectively, work around the limits in place during the campaign period. Both the British Columbia Supreme Court and Court of Appeal struck down previous versions of the amendments at issue in this case, on the basis that the total prohibition of third party election advertising, which necessarily extended to pure issue advocacy or pure political speech, was not proportionate as that term is contemplated in the test set out in R v. Oakes, [1986] 1 SCR 103 [Oakes]. Ms. Laurence, along with another woman, participated as defendants of the legislation in the first round of litigation, and it was on the basis of this prior participation that Ms. Laurence was permitted to participate in this Reference. Ms. Laurence is a special education teacher in British Columbia and, as a condition of her employment and the ability to exercise her profession, she must be a member of a union, and contribute union dues. Ms. Laurence November 2012

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COUNSEL COMMENTS must contribute union dues to causes not related to the collective bargaining process, and for which, often, she does not personally support. Ms. Laurence has no control whatsoever over how her union dues, which are mandatorily deducted, are spent. The record before the British Columbia courts both in this Reference and in the prior litigation demonstrated, quite clearly, that unions, not corporations, are the most significant third party political advertisers in British Columbia. Ms. Laurence participated in this litigation not to challenge directly, under s. 2(d) of the Charter, the use of her mandatorily collected union dues for purposes for which she did not agree. Rather, Ms. Laurence sought to draw the BCCA’s attention to an important contextual factor relevant to the Court’s s. 1 analysis as mandated by cases such as Thomson Newspapers Inc. v. Canada (Attorney General), [1998] 1 SCR 877: the importance of balancing the protection of two Charter rights, s. 2(b) and s. 2(d). From Ms. Laurence’s perspective, in this case, these two rights were operating at cross-purposes. Ms. Laurence sought to persuade the Court that the fact that these limitations in the pre-campaign period, which simply extended the limits that have already been determined to be constitutionally justified for the campaign period in Harper, limit the ability of big-spending unions in British Columbia during the pre-campaign period from using dues mandatorily collected from their members for advertising campaigns that may not have, and likely do not have, the full support of the union membership, is a further salutary benefit of the legislation. While Ms. Laurence never argued that this factor should be determinative of the Court’s analysis it was, nevertheless, a relevant contextual factor for the Court to consider. The Court did not make any significant comments regarding Ms. Laurence’s arguments, in particular because the BCCA decided the Reference at the minimal impairment stage of Oakes. Had the analysis proceeded the salutary vs. deleterious effects stage of Oakes, counsel for Ms. Laurence maintains that the significant salutary benefit of these limits, particularly given the profile of the significant third party advertisers in British Columbia, ought to have been considered by the BCCA. When determining the proportionality between the salutary and deleterious

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COUNSEL COMMENTS effects of the impugned statute or statutory provision, a court is required to consider not only the deleterious effects that actually result from a particular statute or statutory provision, but also the “salutary effects that actually result from” the implementation of the provision (Dagenais v. Canadian Broadcasting Corporation, [1994] 3 SCR 835 at 887-88). This is not to say that such an actual salutary effect, if unintended by the legislature, should be determinative of the analysis. But surely, if actual deleterious effects, if unintended, must be considered, then surely actual salutary effects must also be considered.”

November 2012

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COUNSEL COMMENTS Reference re Election Act (BC) Comments provided by Catherine Boies Parker, Counsel for the Amicus Curiae

“F

reedom of expression, as guaranteed by the Charter s. 2(b), certainly lies at the very foundation of democracy” (para. 23). This statement by the BCCA itself sits close to the core of its 48-paragraph judgment in Reference re Election Act (BC). With this, the Court acknowledges the looming precedent which shaped submissions in the hearing: Harper v. Canada (Attorney General), 2004 SCC 33. Catherine Boies Parker

In Harper, the Supreme Court of Canada, in a 6-3 decision, upheld restrictions on third party election spending limits in the period between the dropping of the writ and election day. A fundamental point of disagreement in Harper involved the nature and sufficiency of evidence required to discharge the government’s obligation to justify an infringement of freedom of expression in the context of the election. The majority held that even though the broad definition of election advertising captured a variety of forms of important political expression, such restrictions on that speech were justified. The majoirty held that the available social science evidence, combined with logic and common sense, sufficiently demonstrated the need for such restrictions to ensure a fair election, once the appropriate level of deference was shown to the legislature’s choice in the highly political context of an election. The decision in the Reference makes it clear that Harper does not relieve the government from its obligation to lead evidence demonstrating that infringements of Charter rights in the election context are justified. The broad reach of the definition of election advertising which was upheld in Harper could not be justified in a pre-campaign context, notwithstanding general assertions about the need to regulate advertising earlier because of

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COUNSEL COMMENTS the effect of fixed-date elections. While the Court of Appeal accepted that advertising intended to influence the election would occur in the campaign period, there was nothing to show that unlimited advertising at that time would have the same effect as Harper had found it would during the election period. Without evidence demonstrating the need for restrictions on freedom of political expression in the extended pre-campaign period, the provisions at issue could not be justified. Logic and common sense, even combined with judicial deference, were not sufficient. The decision in the Reference also demonstrates the appropriate approach when considering the constitutionality of legislative amendments enacted in response to a finding of unconstitutionality by the court. In the previous BCTF decision, it was clear that one central concern of the courts was the original Act’s restriction on expression while the Legislative Assembly was in session. That specific concern was addressed by the new amendments considered in the Reference. But the court held that while the new amendments were less rights-impairing than the previous legislation, that was beside the point. While the previous case had focussed on one way in which the legislation was overbroad, in the Reference, the Court of Appeal still had to consider whether the legislation was justified in its various applications. It was not enough that one identified concern had been addressed. The government was still required to justify the legislation as a whole. The case is important because it emphasizes the importance of freedom of expression in the most important time in the life of a democracy – the election period. As the intervenors’ submissions in this case emphasized, any legislative restriction on citizens’ ability to participate fully in the election process must be subject to meaningful scrutiny by the courts. In Harper, the rationale for limiting speech in the campaign period was one aimed at promoting democratic participation – those with great resources should not be allowed to drown out smaller voices, who had an equal right to participate in the process. The Reference decision confirms the importance of that principle, and makes it clear that the government will have to justify any further restrictions on political speech with equally compelling reasons.” November 2012

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TELUS Corporation v. Mason Capital Management LLC, 2012 BCCA 403 Areas of Law: Corporate Law; Meetings of Shareholders; Notice Description: Nominee of beneficial shareholders able to call general meeting of company; value of share not a ‘right or attribute’ of it.

CLICK HERE TO ACCESS THE JUDGMENT

BACKGROUND

T

he Appellants were Mason Capital Management LLC (“Mason”), and CDS Clearing and Depository Services Inc. and CDS & Co. (collectively, “CDS”). The Respondent was TELUS Corporation (“TELUS”). Mason was the beneficial owner of approximately 18.7% of TELUS’ voting (“common”) shares, held through CDS,

which acted as nominee for the beneficial owners of approximately 95% of TELUS’ common shares. TELUS shares were issued in two classes: non-voting shares and common shares, which traded at a premium of approximately 4.5% to the non-voting shares. TELUS proposed to convert non-voting shares in the company into common shares on a one-to-one basis, and obtained an order for a general meeting for this purpose on the afternoon of October 17, 2012. Mason opposed the proposal, and, through its nominee CDS, requisitioned a general meeting of TELUS under s.167 of the Business Corporations Act, S.B.C. 2002, c. 57 (the “BCA”).

• Estate Litigation • Debt Recovery • Medical Malpractice • Shareholder Disputes 604-669-6609 hobbsgiroday.com 908-938 Howe Street, Vancouver, V6Z 1N9 24

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TELUS Corporation v. Mason Capital , TELUS declined to schedule the meeting, and CDS sent a notice to TELUS shareholders calling a general meeting (the “CDS meeting”) to be held on the morning of October 17, 2012. The proposed resolutions required, or in the alternative advised, that shares be exchanged with a 4.75% to

(cont.)

8% premium for the common shares. TELUS applied to the Supreme Court and obtained an order that the CDS meeting was not properly called because CDS was not the beneficial owner of the requisite shares, and because the proposed resolutions were against TELUS’ articles, which specified that “each common share and each non-voting share shall have all the same rights and attributes and be the same in all respects”. Mason and CDS appealed.

APPELLATE DECISION

as nominee was sufficient to satisfy the purpose of the act in identifying and communicating with the he appeal was allowed shareholder making the requisition. Further, there was and the CDS meeting nothing in the BCA to suggest that a beneficial owner reinstated. TELUS argued that the BCA permitted only persons was required to disclose its identity when its nominee made such a requisition. The Court held that the who were both registered and monetary value of a share was not a “right or attribute” beneficial shareholders to of a share, nor was there any right to exchange shares requisition general meetings, and that beneficial shareholders at a particular rate. Therefore specifying an unequal rate of exchange was not contrary to TELUS’ articles. were required to transfer their Finally, the Court discussed the issue of “empty shares into their own names if voting”: Mason had hedged its position such that its they wished to call a meeting. financial stake in TELUS was minimal, despite owning The Court held that this was almost 20% of common shares in the company. This not supported by the language raised the concern that the well being of TELUS and of the BCA, which defined the value of TELUS’ shares was of little concern to “shareholder” as “a person Mason, despite its significant voting rights. However, whose name is entered in a securities register of a company the Court held that it had no inherent jurisdiction to control any abuses that might occur, but rather that as a registered owner of a share of the company”. As such, CDS specific statutory authority was required. If “empty voting” was a problem, legislative and regulatory was entitled to call a meeting changes were necessary to address it. if it met the requirements of the BCA. CDS’ identity

T

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COUNSEL COMMENTS TELUS Corporation v. Mason Capital Comments provided by Gordon R. Johnson, counsel for the Appellant CDS Clearing and Depository Services Inc.

“T

here are 2 observations I would make about this appeal.”

CDS operates Canada’s share depository system. It’s objective in this proceeding was to avoid an interpretation of the BC Business Corporations Act which would require beneficial shareholders to re-register their shares in their own names in order to effectively exercise their rights as shareholders. The disputes between the other parties, TELUS and Mason, went far beyond the issues of direct interest to CDS. As a result, most of the issues on this appeal were Gordon R. Johnson very forcefully (and well) argued by counsel for the other parties but not really of interest to CDS. The finding of the Court of Appeal which attracted the most comment is the rejection of an allegation of “empty voting” as the basis for limiting shareholders’ rights. But the Court of Appeal made the suggestion that the Legislature or the Securities Commission should take a careful look at the issue and I won’t be surprised if the BC Securities Commission and the CSA eventually do so.”

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Downs Construction Ltd. v. Workers’ Compensation Appeal Tribunal, 2012 BCCA 392 Areas of Law: Workers’ Compensation; Psychological Injuries; Compensability of Injuries Description: Workers not able to sue for workplace injuries not compensable under the Workers Compensation Act. CLICK HERE TO ACCESS THE JUDGMENT

BACKGROUND

T

he Appellants were Downs Construction Ltd. (“Downs”) and Jerry Webster (“Mr. Webster”). The Respondents were The Workers’ Compensation Appeal Tribunal (“WCAT”) and Vicki Lynn Christianson (“Ms. Christianson”). Mr. Webster and Ms. Christianson were employees of Downs, and in 2006, Ms. Christianson suffered a stress-related injury at work due to the conduct of Mr. Webster. Ms. Christianson sued Downs and Mr. Webster, but they pleaded section 10 of the Workers Compensation Act, R.S.B.C. 1996, c. 492 (the “Act”), which barred claims for injuries arising out of and in the course of employment. Ms. Christianson then claimed compensation under the Act, which at the time limited

November 2012

compensation for stress-related injuries to those that were associated with physical injury or that were the result of a traumatic unexpected event. The Workers’ Compensation Board and WCAT found that the event causing Ms. Christianson’s injury was not unexpected and so did not fall within the compensation scheme provided by the Act. However, WCAT held that because Ms. Christianson’s stress-related injury did not meet the requirements of the Act, her injury did not arise out of and in the course of her employment within the scope of the Act. Ms. Christianson would therefore be able to sue for damages as section 10 of the Act would not apply. Downs and Webster appealed, and in chambers, the judge upheld WCAT’s decision, and commented that if the Act barred suits for injuries the plan did not cover, it would create a “black hole” leaving workers without recovery for actionable injuries. Instead, the chambers judge held that, “[a]bsent a right to claim no fault benefits under the workers compensation legislation, workers are otherwise able to sue co-workers and employers for tortuous conduct that occurs in the workplace… workers who may not be entitled to claim under the [Act] retain their right to sue for tortuous conduct and the employer loses any entitlement to rely on s. 10.”

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Downs Construction Ltd. v. Workers’ Compensation Appeal Tribunal APPELLATE DECISION

employers contributed to a no-fault compensation scheme in exchange for complete immunity to claims for workplace he appeal was allowed. injuries. This complete bar to actions against employers was The Court considered the central to the scheme and without it, the integrity of the “historic trade-off” involved system would be compromised: Pasiechnyk v. Saskatchewan in Workers’ Compensation (Workers’ Compensation Board), [1997] 2 S.C.R. 890. It plans and found that WCAT would undermine the plan if employers were exposed and the chambers judge had to actions for any injuries the plan determined were not misunderstood the statutory compensable. It was clear that Ms. Christianson’s injury scheme. The Act was not arose in the course of her employment, and whether or not based on a ‘quid pro quo’, it was compensable was not relevant to that determination. where workers exchanged Accordingly, the Court set aside that portion of WCAT’s a right to sue for no-fault certificate and replaced it with the certification that Ms. compensation; rather, the Christianson was not entitled to compensation.

T

SS

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COUNSEL COMMENTS Downs Construction Ltd. v. Workers’ Compensation Appeal Tribunal Comments provided by Leslie A. Slater, counsel for the Appellant, Downs Construction Ltd.

“T

his judgment considers whether a worker who does not successfully obtain workers’ compensation benefits for a workplace injury can proceed with a tort claim against her employer and co-worker. At the time of this incident, workers who sought compensation for pure mental stress claims had to fit within the criteria of s. 5.1 of the Workers Compensation Act, by proving that the mental Leslie A. Slater stress was caused by an acute reaction to a sudden and unexpected event, arising out of and in the course of the worker’s employment. This criteria was established to curb claims for chronic workplace stress because of the problematic financial implications on the fund. (This section has since been amended to allow entitlement to compensation for mental stress claims arising from traumatic events, or from significant work related stressors, including bullying or harassment). WCAT found that the plaintiff, co-worker, and employer were workers and an employer under the Act, that the incident occurred at work, and that a psychological injury was caused by the employment incident, but found that the plaintiff had not met the criteria set out in the Act to establish a mental stress claim- while it was an acute reaction to a sudden traumatic event, it was not “unexpected”. The s. 257 certificate issued by WCAT stated that the injury “did not arise out of and in the course of employment”. On judicial review, the court found that if the plaintiff was not entitled to WCB benefits, she could continue with her tort action.

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COUNSEL COMMENTS In this case, it was clear (and accepted by the tribunal) that the cause of the mental stress was the employment incident; there was no other attributable cause. The BCCA noted that the s.257 certificate indicating that the injury did not arise out of and in the course of employment was impossible to reconcile with the facts. As this clearly arose from the employment context, the BCCA then considered the “historic trade-off”, where workers are provided with compensation for injuries without consideration of fault, including their own, from a fund financed by employers. Further, the anxieties and inefficiencies of the tort system are avoided. The other half of the trade-off is a complete immunization for employers from workplace injury claims. The importance of maintaining certainty, and upholding the policy and integrity of the WCB scheme was forefront in the decision. The court emphasized the importance of maintaining the intent of the legislation. Accordingly, if it is established that the plaintiff has a right to claim workers’ compensation benefits, even where it is determined that compensation is not payable, then she is barred from pursuing a tort action. This is so even if it leaves the plaintiff without a remedy under the workers’ compensation or tort schemes. Counsel faced with tort claims arising from an employment incident should remember to bring an application for certification under s.257, which may effectively preclude the continuation of the tort action, even if the plaintiff fails to establish the facts necessary to receive workers’ compensation benefits. This case brings the BC law in line with that of Alberta and Saskatchewan.”

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COUNSEL COMMENTS Downs Construction Ltd. v. Workers’ Compensation Appeal Tribunal Comments provided by Misty N. Hillard, counsel for the Respondent, Christianson

“W

ith bullying and harassment recently of focus in the media, this case is of particular interest as the worker at issue alleged she was a victim of workplace harassment. The decision of the BC Court of Appeal resulted in the worker, who is suffering from post traumatic stress disorder and is unemployable, without a remedy either in workers’ compensation or under our tort system. The worker has been left in what the chambers judge called “a black hole” without remedy.

Misty N. Hillard

Although the section of the BC Workers’ Compensation Act dealing with mental stress was amended on July 1, 2012, tobroaden compensation coverage for mental stress conditions arising in the workplace, this amendment comes too late for this worker, as the amended section applies only to decisions made by the Board or the Workers’ Compensation Appeal Tribunal on or after July 1, 2012, in respect of a claim made but not finally adjudicated before July 1, 2012. The amended provision now provides compensation if the mental disorder is a reaction to one or more traumatic events arising out of and in the course of the worker’s employment; or is predominantly caused by a significant work-related stressor, or a cumulative series of significant work-related stressors, arising out of and in the course of the worker’s employment. With the current wording, arguably, there still exists the possibility that this worker would not be accepted for compensation under the scheme.   After review of the workers compensation legislative schemes across Canada it becomes apparent that had this worker sustained the same

November 2012

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COUNSEL COMMENTS injury in another province, such as Alberta or New Brunswick she would have  her remedy in tort.  The compensation schemes in these provinces provide a bar to a civil action only when a worker is eligible to receive compensation under the Workers’ Compensation Act. As this worker’s  injuries were not as a result of a “sudden and unexpected event”, due to the fact that the workplace harassment occurred over the course of several years, she would not be entitled to compensation – and therefore, could pursue a civil action.  The safeguard of course, is that in the tort system, she must meet the burden of proof.   The legislatures of other provinces including Alberta and New Brunswick have given different effect to the “historic trade-off” than what our Court of Appeal says, is the legislative intent in B.C.  For British Columbians, the historic trade-off means there is the occasional “lacuna” into which an unfortunate worker may fall.  Whether the recent change in legislation has closed this lacuna or merely narrowed it – is yet to be seen.

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Shanahan v. Turning Point Restaurant Ltd., 2012 BCCA 411 Areas of Law: Punitive Damages; Real Property; Leasing Description: Award of damages for breach of lease, including punitive damages, reduced from $100,000 to $15,000. CLICK HERE TO ACCESS THE JUDGMENT

BACKGROUND

T

he Appellant was The Turning Point Restaurant Ltd. (“Turning Point”). The Respondent was Michael Shanahan. Mr. Shanahan had agreed to lease restaurant premises from Turning Point beginning in May 2008, at a monthly rent of $2,800 plus “triple net” costs, for a restaurant operated by a corporation owned by Mr. Shanahan. Turning Point requested first and last months’ rent to be paid in advance, and Mr. Shanahan deposited $2000 cash before the lease was prepared, and another $5600 by cheque. The lease was prepared and did not require prepayment of the first and last months’ rent, and contained an entire agreement clause. Mr. Shanahan was frequently late in paying rent, and in July 2009, requested that Turning Point apply the $7600 deposit to outstanding rent. The trial judge found that Turning Point’s response was equivocal and lulled Mr. Shanahan into a false belief that it had

November 2012

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agreed to do so. In August 2009, Turning Point terminated the lease and blocked access to the premises. Mr. Shanahan sued for a declaration that the lease was valid and that the cancellation of it was void; an order that Turning Point return all chattels to him or double their value; damages for loss of profit, loss of value of the business; general, punitive and special damages; and costs. The trial judge held that Turning Point was not entitled to terminate the lease and was required to apply the deposit to the July rent as requested, but that Mr. Shanahan was not the proper party to sue for certain claimed heads of damages. The trial judge awarded $100,000 in damages for the wrongful termination of the lease due to Turning Points “high-handed, unjustified action” in wrongfully terminating the lease, failing to honour other provisions of the lease, and depriving Mr. Shanahan of the opportunity to financially recover.


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Shanahan v. Turning Point Restaurant Ltd. (cont.) APPELLATE DECISION

T

he appeal was allowed in part, and the Court varied the amount of damages. The Court noted that the trial judge had not broken the award into heads of damage, and so it was uncertain as to what portion of the award reflected punitive damages, as opposed to compensation for lost opportunity. The Court then considered whether the award was within the range of appropriate awards for the facts as found at trial. Mr. Shanahan was not eligible for damages for loss of profits or loss of business, nor for the value of the chattels in the premises, as the corporation that ran the restaurant was not a party to the suit. The Court held that the claim based in Mr. Shanahan’s $81,000 personal liability on his guarantees to the company must be discounted to $12,500, to reflect the possibility that his business would not have continued in any event: Pacific Destination Properties Inc. v. Granville West Capital Corp., 1999 BCCA 115. The trial judge’s award for damages based on Turning Point’s “high handed, unjustified” conduct was essentially an award of punitive damages as characterised in Whiten v. Pilot Insurance Co., 2002 SCC 18. Punitive damages were more often awarded in action based on breach of a lease, as possession and quiet enjoyment were not purely commercial commodities: Elia v. Chater (1998), 167 N.S.R. (2d) 166 (C.A.). Accordingly, the Court held that an award was appropriate, but should be as low as would properly deliver the Court’s expression of disapproval. Accordingly, punitive damages were awarded at $2,500.

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Carey Veinotte, Taylor Veinotte Sullivan

35

BC Take Five November 2012  

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