D. Jared Brown quoted in the Lawyer’s Daily on rescinding his adherence to the new Bencher Code of Conduct

I was interviewed by the Lawyer’s Daily regarding my concerns with the Bencher Code of Conduct (the “Code”) implemented by the Law Society of Ontario on the eve of my election as Bencher last year in a highly contentious election.

Below I summarize my main concerns with the Code.

The Lawyer’s Daily article can be found here:

https://www.thelawyersdaily.ca/articles/20613/lso-code-of-conduct-stifles-free-speech-benchers-argue

The Code is incorporated into a document called the Governance Practices and Policies (“GPP”) found here:

Click to access governance-practices-policies.pdf

My primary concerns with the Code and the GPP document into which it is incorporated are twofold:

1) The Code seeks to fetter the discretion of Benchers and restrict the exercise of their judgment on highly political issues contrary to their fiduciary and common law duties as Benchers; and,

2) The complaints mechanism deviates from typical governance documents by placing a single individual (the Treasurer) in the role of investigator, judge, jury, and executioner.

After my election as Bencher, I immediately voiced my concerns with the Code upon being advised that my adherence was a new requirement of becoming a Bencher.

I provided a limited adherence by stroking out the most offensive section.

In January 2020 I delivered notice that I was rescinding my adherence to the Code in its entirety.

Part 1, section 1(4), page 4 of the GPP purports to require benchers to govern the practice of law and the provision of legal services in accordance with certain fashionable political stances favoured by the last Bench.

4. In keeping with the statutory principles above, Convocation is committed to
    governing the practice of law and the provision of legal services in a manner that will
    a. achieve a reduction of barriers created by racism, unconscious bias and
        discrimination;
    b. achieve better representation of Indigenous licensees, racialized licensees and
        licensees from all equality seeking groups in the legal professions; and
    c. advance reconciliation, acknowledging a collective responsibility to support
        improved relationships between Indigenous and non-Indigenous peoples in
       Ontario and Canada.

While the Law Society is supposedly an evidence based regulator, it requires that Benchers govern with regard to the concept of unconscious bias.  A concept of questionable scientific validity given we have no known means to reliably identify it, test for it, or intervene to influence it.  My thoughts on the concept of unconscious bias can be found here:

https://litigationguy.wordpress.com/2017/01/30/unconscious-bias-training-proceed-with-caution/

I further question whether it is the role of a public interest regulator to govern with the primary objective of manipulating the demographics of the professions to achieve better representation of certain groups vs other groups, as seems to be required of Benchers by section 1(4) of the GPP.

Finally section 1(4) requires that Benchers govern to advance reconciliation, an undefined term with potentially significant and contentious political implications.

There is also concern that the Code introduces conflict for Benchers by requiring them to elevate their fiduciary duties to the Law Society organization above the statutory public interest mandate.

Why did the last Convocation enact the Code?

We know the last Bench was quite comfortable restricting the expression, thought, and conscience rights of their colleagues with the Statement of Principles.

So its no surprise they’d set out to restrict the privileges and judgment of future Benchers on highly political matters.

I note that former Benchers Anne Vespry and Rocco Galati had concerns that the Code would restrict their ability to speak out against the Law Society or its policies.

Despite the assurances of people like former Bencher Peter Wardle, it is being used for precisely that in the case of Bencher Goldstein who was cautioned by Treasurer Mercer for publicly stating his belief that the Law Society was operating a deficit (a true statement).

The Code is being weaponized both inside and outside Convocation to attack Benchers and it is having a chilling effect on debate and expression.

I believe it was the objective of the proponents of the Code to bring Benchers in line and compel them “to speak with one voice” (as was stated by former Bencher Rebecca Durcan at the time), and to constrict the discretion, judgment, and expression rights of Benchers.

Both Treasurer Donnelly and the new Chair of the Audit and Finance Committee Bencher Joseph Groia voted against adoption of the Code at the time.

I believe the new Code Working Group struck by Treasurer Donnelly is confirmation that the Code needs to be revisited and I look forward to working with my colleagues to address these issues.

How to repudiate a contract and end up ahead…

Repudiation

In contract law, the concept of Repudiation was developed where one of the parties to a contract by actions, words, or inaction expresses to the other party its intention to no longer be bound by the contract to which they are a party.

A repudiation of a contract is a form of termination of the contract, however, it goes further in that a party that repudiates the agreement is signaling to the innocent party their intention to no longer be bound by the contract and to no longer perform.

The innocent party faced with a repudiation, can demand continued performance and then bring a court claim for damages or specific performance (ie. compelling the offending party to do the things they promised to do in the contract) if performance does not follow, or they can accept the repudiation, at which point all parties are relieved of further performance, however rights accruing under the contract prior to the repudiation remain.

Recently however, the Ontario Court of Appeal ruled in a way that would appear to be rewarding a repudiating party (in this case a law firm).  In the case of Miller, Canfield, Paddock and Stone, LLP v. BDO Dunwoody LLP, the Court of Appeal considered a contingency fee retainer agreement contract (the “Agreement”) between a law firm (MCPS) and the client (BDO).  The Agreement would call for BDO to pay an agreed percentage of funds recovered in a matter to MCPS as fees.  If MCPS was unsuccessful in recovering funds, there would typically be reduced or no fees at all.  The Agreement in this case contained an early termination clause requiring BDO to pay certain fees to MCPS in the event BDO were to terminate MCPS’s services prior to completion of the matter or recovery of funds by MCPS.

An early termination provision is common in contingency fee matters as it acts as a disincentive for clients to switch law firms prior to recovery of funds, and ensures that the law firm recovers some of its costs incurred in representation to the date of an early termination.

In this case, MCPS declined to retain (and pay) a third party appeal counsel to conduct an appeal of the matter.  BDO took the position that this refusal was in fact a repudiation of the Agreement by MCPS and BDO then accepted the repudiation which ended the relationship.

At the lower level court, the court found that BDO was entitled to accept the repudiation of the Agreement by MCPS and was relieved from further performance under the Agreement, and particularly the early termination provision requiring BDO to pay MCPS fees to the date of termination.

The Court of Appeal however went a very different direction and determined that while MCPS may have repudiated the Agreement, and BDO was entitled to accept the repudiation, BDO would still have to pay fees to MCPS to the date of acceptance of the MCPS’s repudiation because the act of accepting the repudiation was in fact a termination of the Agreement as contemplated by the early termination provision in the Agreement.

The way I see it (and I am no doubt swimming against the tide of old contract law on this one), is that if MCPS repudiates the Agreement, and the repudiation is accepted by BDO, the Agreement is being terminated by MCPS, not BDO.  Accordingly, the early termination provision that acts to compensate MCPS if BDO terminates early, ought not to be applied.  Essentially, MCPS as the breaching party ought not to be able to enforce a termination provision of the very Agreement they declined to abide by (in effect they terminated first).

It seems to be a very odd result that the offending party MCPS ought to be able to repudiate its own Agreement (that they likely drafted), refuse to perform, and effectively terminate the Agreement, and then in the result find an entitlement to fees from the innocent party for purporting to trigger a termination.

While I understand basic contract law concepts, I sometimes find myself in situations like this on the sidelines scratching my head at how a repudiating party ended up ahead on this.  While the result may be legally correct, it leaves something to be desired in the justice department.

Published by D. Jared Brown – Lead Counsel – Brown Litigation

Phantom Contractors

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In an era where organizations increasingly engage consultants, independent contractors, and short term employees, there is a new reality where the contingent workforce of a company can become a nameless faceless entity.

Working from home and remote connection only increase the risk that a company loses track of its workforce.

Both companies and 3rd party organizations that provide contingent workforce management must rise to meet the challenge posed by this disparate, decentralized, and increasingly mercenary workforce.

Thorough onboarding, management, tracking, and checks and balances should be integral components of the normal payroll function.

Take the scenario mentioned by the National Post in the article linked below.  A spanish employee found there wasn’t much for him to do at his job so he simply stopped showing up. He collected wages for 6 years until he managed to win an award for long service. Problem is… no one could find him to present the award.

While potentially a more damning condemnation of government as a competent employer, all large organizations should take heed.

http://www.nationalpost.com/m/wp/news/blog.html?b=news.nationalpost.com/news/world/a-spanish-man-didnt-report-to-work-for-six-years-and-no-one-noticed-until-he-won-an-award&pubdate=2016-02-14

Posted by D. Jared Brown – Lead Counsel

 

D. Jared Brown judges at U of T Upper Year Moot

Brown-logo-230

D. Jared Brown joined Mr. David Bristow Q.C., and Ms. Lise Favreau on a panel adjudicating the U of T upper year moot program regarding a contract law issue.

With the mentorship of ‘Chief Justice’ Favreau, the students performed remarkably well, and everyone including the judges enjoyed the experience.

I was appreciative of being allowed to participate in the program.

Confidentiality in Employment Settlements

It is typical in most settlements of employment disputes for the employer to request, and the employee to agree, to provide a confidentiality provision with respect to the settlement.

Typically these clauses prohibit the employee from disclosing the details of the settlement to any third party (spouse, financial and legal advisors excepted).

Some clauses stipulate that the fact that the matter settled may be disclosed but nothing else.

Other clauses contain an explicit penalty provision that permits a clawback or forfeiture of settlement funds if a breach.

The rationale for these clauses is quite simple.  An employer in resolving a dispute has an interest in ensuring that a settlement of a dispute does not create a “shark effect” of future claimants coming forward with the mistaken notion that the employer will settle any dispute.  In most respects, it is the confidentiality clause that the employer is paying for as much as avoiding the time and cost of a trial.  A trial would be a public proceeding whereas a settlement affords the employer the opportunity to control disclosure.

The Toronto Star recently reported on the decision of a Labour Relations Arbitrator  that found that an employee should forfeit the financial remedy received on a successful grievance on account of the employee’s breach of the confidentiality provision.

Interestingly, the employee in question did not sign the settlement agreement or the confidentiality provision.  The grievance having been handled by the employee’s union and as is apparent from the article against the desires of the employee to have an airing of the grievance in a hearing.

We encounter many employee clients who, whether on account of emotion or bad feelings, actually would prefer to have a public airing of their issues with the employer in court for the world to witness, rather than a strictly monetary resolution of the claim.

Similarly, we encounter may employees who are part of a bargaining unit/union, and find that the union is not representing their interests in the way in which they may have expected.

We strive to meet the client’s objectives in any employment matter, however, it is our duty to properly inform the client on what reasonable objectives are attainable from the outset.  Conducting a trial or hearing simply for the purpose of broadcasting a complaint to the public ignores the fact that our civil court system is designed primarily to grant monetary remedies for wrongs.  Clients seeking publicity are best to achieve this objective through the media, rather than a costly and less than ideal court process.

Confidentiality provisions, properly negotiated, and agreed to by the parties are enforceable, and should be treated as such following conclusion of the settlement.

D. Jared Brown – Lead Counsel

A new standard for punitive damages in wrongful dismissal?

The Toronto Star is reporting on a recent decision of a jury trial in B.C. which awarded a long service (34 years) electrical manager significant punitive damages at trial ($573k).

http://www.moneyville.ca/article/1254936–jury-awards-809-000-in-record-wrongful-dismissal-case

The decision is unique not only because of the size of the award, but also because the employee elected to try the case by jury, rather than judge alone.

The article identifies that the case was uniquely suited to a jury trial on account of the fact that the business in question was the largest single employer in a small town, and it was thought a jury of the employee’s peers would better understand the undercurrents that resulted in the termination (the power imbalance between employer and employee).

While it is hard to imagine that this decision on its own will be representative of a new standard for punitive damages, it is noteworthy for the fact that a jury felt the employer’s actions warranted such severe condemnation.

Brown Litigation regularly assists employers and employees in employment disputes through strategies aimed at mitigating risk, minimizing cost, and ensuring favourable outcomes.

Posted by D. Jared Brown – Lead Counsel

 

Employer assistance for the terminated employee (Mitigation)

Mitigation is a two-way street.  While we have discussed in a previous blog post the employee’s duty to mitigate when terminated, the duty to mitigate is a concept that should resonate with employers as well.

While most employers want to use an employee’s apparent failure to take reasonable steps to find alternative employment post-termination as a defence to a wrongful dismissal claim, prudent employers recognize that assisting employees to mitigate can reduce the overall risks associated with wrongful dismissal claims.

When representing employers who have made the decision to terminate an individual, we typically recommend offering post-employment support and outreach to the employee to assist the employee in their mitigation efforts.  Offering services such as outplacement counseling to the departed employee ensures that the employee begins the job search in a timely way, and further has all necessary tools and skills to ensure a successful job search.      As mitigation earnings can set off against entitlements to reasonable notice, timely re-employment (particularly during any period of reasonable notice) ensures cost and risk containment for the employer.

Further, offering post-employment assistance to transitioning employees evidences an employer acting in good faith during the termination process, with due regard to the sensitivities and issues inherent in an employee termination.

In certain situations, it may be appropriate for the employer to offer a new position in the organization to the departing employee either in a different department or geographic region.  In some court cases, the employee’s failure to accept a reasonable offer of alternative employment from the same employer, was ruled to be an unreasonable rejection of an opportunity to mitigate by the departing employee thereby reducing the employee’s entitlement to reasonable notice.

Whether these employer strategies (and the myriad of others available) are appropriate depend upon the circumstances in each case, including the employee in question, the personal relationships at stake, and the anticipated duration of the notice entitlement.

Posted by D. Jared Brown – Lead Counsel

I Don’t Want to Close My Real Estate Deal – Second Thoughts…

A real estate purchase and sale is one of the most significant decisions and transactions undertaken by the average individual in their everyday life. Typically the financial implications of the transaction are significant and accordingly the decision-making process can be fraught with stress and anxiety.

In some situations, the result is a sudden desire on the part of either the purchaser or seller to not close the transaction for which they have already signed a binding agreement of purchase and sale.

We have received inquiry from parties who are the subject of binding agreements of purchase and sale seeking to explore their options to avoid closing the transaction in question.  In the course of these conversations, we are generally asked about the effect if conditions contained in the agreement (i.e. home inspection) are not waived or satisfied, and the opportunity that may provide for the transaction to be avoided.

The short answer is that a party cannot utilize or rely upon the failure to satisfy a condition as justification to avoid the closing of a real estate transaction if the reliance is done in bad faith. In the Supreme Court of Canada case of Dynamic Transport v. OK Detailing, the court implied that each party is under an obligation to do all that is necessary on their part to secure performance of the contract.

Essentially a condition precedent to the closing of a real estate transaction can only be relied upon by a party acting in good faith. In cases involving conditions precedent, a party cannot take advantage of the condition unless is it acting in good faith and has made reasonable efforts to satisfy the condition. Focal Properties Limited. v. George Wimpy (Canada) Ltd. Marlo v. Savage.

Further, conditions such as a home inspection may not rise to the level of a condition precedent, and accordingly may not be relied upon even in good faith to avoid closing a transaction unless the outcome of the inspections reveals fundamental, significant, and unforeseen issues going to the heart of the deal.

Accordingly if you have entered into a binding agreement of purchase and sale that includes conditions that must be satisfied or waived by the closing, you are  under an obligation to act in good faith to take reasonable steps to ensure that those conditions are satisfied.  Any indication that a party is not acting in good faith resulting in a failure to satisfy or waive a condition could be grounds for a claim for breach of contract seeking full performance and closing of the transaction in question, or alternatively a claim for damages arising from the failure to close including forfeiture of deposits.

Posted by D. Jared Brown – Team Lead

Fired? Get a Job!

If you have been dismissed from your job, there is a duty in contract law which states that you have an obligation to mitigate your damages.  This doctrine means that a dismissed employee must take steps to minimize the losses they suffered as a result of losing their job.  Basically, this means that you need to take steps to look for another job.

The leading case on the duty to mitigate is the Supreme Court of Canada decision of Red Deer College v. Michaels.  In this case, the Supreme Court explained the duty to mitigate as follows:

The primary rule in breach of contract cases, that a wronged plaintiff is entitled to be put in as good a position as he would have been in if there had been proper performance by the defendant, is subject to the qualification that the defendant cannot be called upon to pay for avoidable losses which would result in an increase in the quantum of damages payable to the plaintiff.  There reference in the case law to a “duty” to mitigate should be understood in this sense.

The Court held that the burden is on the defendant to provide proof that the plaintiff failed to mitigate her/her damages:

It seems to be the generally accepted rule that the burden of proof is upon the defendant to show that the plaintiff either found, or, by the exercise of proper industry in the search, could have procured other employment of an approximately similar kind reasonably adapted to his abilities, and that in absence of such proof the plaintiff is entitled to recover the salary fixed by contract.

The Court went on to emphasize that the onus on the employer is heavy, citing a previous decision, because “the burden which lies on the defendant of proving that the plaintiff has failed in his duty of mitigation is by no means a light one, for this is a case where a party already in breach of a contract demands positive action from one who is often innocent of blame.”

Despite the burden being on the defendant to show that efforts were made, plaintiffs have been criticized by the courts for not making enough of an effort. In Chambers v. Axia Netmedia Corp., it was held:

Clearly, the efforts of Mr. Chambers [the plaintiff] were to a large extent confined to reading the local newspaper and forwarding his resume to employers. Although commendable, I am satisfied, by restricting his search to this one vehicle, the effort was too limited. Although there is no evidence as to whether these other efforts would necessarily have produced a positive result, earlier than he was able to find the employment he did, I am satisfied there was, to some extent at least, a failure to take all reasonable steps to mitigate

There are simple steps that a plaintiff can take to demonstrate that they attempted to mitigate their damages in an attempt to avoid an adverse decision like the one in Chambers.  We counsel our clients to keep a running log or mitigation journal outlining all the key events, dates, and information related to their job search post-termination including identifying job search efforts, networking, applications, and other career building steps.  This is typically done in the form of a diary or a calendar.  Second, retain copies of the letters, emails, or any other correspondence you sent in an attempt to secure a position.  Third, diversify your search.  You don’t need to limit to just one means.  You could add yourself to the social networking site LinkedIn, search on websites such as Workopolis, scan the newspapers and attend local networking events in your city.  Further, Human Resources Development Canada (“HRDC”) offers a range of free networking, job search, and outplacement services for qualifying dismissed individuals.  All of these steps will assist you in demonstrating that a genuine effort was made to secure new employment.

Posted by D. Jared Brown – Lead Counsel