Category Archives: News Commentary

Comments on news of the day.

Resolving Disputes During COVID-19: Considering mediation and arbitration

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As Ontario litigants will have been told by their lawyers, and prospective litigants likely will have learned from news coverage, Ontario courts are now closed to all but demonstrably urgent matters. To a large extent, matters considered by the court to be urgent will likely relate to family law issues and rarely to commercial disputes.

In many cases, defendants in commercial litigation cases will consider this to be something of a silver lining around their situations generally. Most defendants are in no hurry to get to trial and will regard the procedural delay currently being experienced as something of an advantage. Indeed, in my experience defendants typically seek out ways of delaying what might be an adverse result in the hope, for example, that the party suing them will lose interest or go out of business before the final reckoning takes place.

However, there are cases in which both parties to a dispute have a genuine interest in getting to the finish line sooner rather than later. This may arise because business realities make it important that the dispute “comes off the books”, for example because one or both of them is interested in selling the business, seeking financing, or entering into some other business transaction that would be negatively impacted by the existence of a lawsuit. Alternatively, this situation may arise where both parties genuinely believe that they are going to win and have no particular reason to delay getting to a result.

One alternative available to parties in those circumstances is to proceed by way of arbitration. While the courts may be closed, arbitrators are still in business and there are many qualified arbitrators who are willing and able to conduct arbitration hearings using Zoom, WebEx, or some other such vehicle.

There are some disadvantages to proceeding in this manner. Aside from the fact that arbitrators, unlike judges, are paid by the parties to provide their services, the conduct of a legal proceeding by video is simply not as effective, from the prospective of counsel, as dealing with the matter in person. In my view, it is always going to be more effective for counsel to examine and cross-examine witnesses and make persuasive arguments in person rather than by video. This is particularly true where the matters in dispute involve significant credibility issues. In those cases, it is important for counsel and for the judge or arbitrator to be able to observe the demeanor of witnesses and the nuances in their behavior in as much detail as possible. While video may be somewhat effective in that regard, obviously it is inferior to an in-person attendance.

One dispute resolution technique which can be pursued just as effectively through Zoom as it would be by means of a personal attendance would be mediation.

Again, there are many qualified mediators who are more than happy to conduct mediations by video. If necessary, arrangements can be made through one of a number of court reporting services, such as Neeson’s Court Reporting, who now provide the appropriate video facilities. Arrangements can be made for the parties and their counsel to “meet” in a joint session and then split off into separate “rooms” so they can deliberate, both with and without the mediator attending, with the same element of confidentiality that they would enjoy in normal circumstances.

To some extent, litigation process in Ontario has been suspended. However, where both sides to a dispute are interested in seeing the matter concluded, other avenues are available to achieve that objective.

If you have any questions about the mediation or arbitration process or would like to begin a mediation or arbitration, please do not hesitate to reach out to contact me.

COVID-19 Legislation and Other Relief

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Given the current circumstances, rather than publish another case comment, I thought it would be useful to set out a list of measures put into place by the Canadian and Ontario governments and others to provide assistance and relief for Ontario citizens as of today, March 23. I wish to extend my thanks to Josh Hersh, one of our firm’s excellent articling students, for his assistance with this.

COVID-19 Legislation

Federal Measures

Note: The Federal Government has announced an $82-billion aid package to help Canadians and businesses cope with the global COVID-19 pandemic. Parliament could be recalled as early as March 24 to pass legislation to bring in the fiscal measures. The following are the specific measures that will be enacted. Updates can be found at: https://www.canada.ca/en/department-finance/economic-response-plan.html and at the Canada Revenue Agency https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update.html.

Temporary Income Support for Workers and Parents

Employment Insurance – Effective March 15, 2020, the Government of Canada will waive the one-week waiting period for people who are in quarantine or have been directed to self-isolate and are claiming for Employment Insurance (EI) sickness benefits, at an estimated cost of $5 million. The Government is waiving the requirement to provide a medical certificate to access EI sickness benefits.

Emergency Care Benefit – Administered through the Canada Revenue Agency (CRA), the Emergency Care Benefit will provide up to $900 bi-weekly, for up to 15 weeks to:

  • Workers, including the self-employed, who are quarantined or sick with COVID-19 but do not qualify for EI sickness benefits;
  • Workers, including the self-employed, who are taking care of a family member who is sick with COVID-19, such as an elderly parent, but do not qualify for EI sickness benefits; and
  • Parents with children who require care or supervision due to school closures, and are unable to earn employment income, irrespective of whether they qualify for EI or not.

Longer-Term Income Support for Workers

Emergency Support Benefit – Provided through the CRA, it will provide $5.0 billion in support to workers who are not eligible for EI and who are facing unemployment.

EI Work Sharing Program – Provides EI benefits to workers who agree to reduce their normal working hours as a result of developments beyond the control of their employers, by extending the eligibility of such agreements to 76 weeks, easing eligibility requirements and streamlining the application process.

Income Support for Vulnerable Individuals

Goods and Services Tax Credits – The government is proposing to provide a one-time special payment by early May 2020 through the Goods and Services Tax credit (GSTC). This will double the maximum annual GSTC payment amounts for the 2019-20 benefit year. The average boost to income for those benefitting from this measure will be close to $400 for single individuals and close to $600 for couples. This measure will inject $5.5 billion into the economy.

Canada Child Benefit (CCB) – The government is proposing to increase the maximum annual Canada Child Benefit payment amounts, only for the 2019-20 benefit year, by $300 per child. The overall increase for families receiving CCB will be approximately $550 on average; these families will receive an extra $300 per child as part of their May payment. In total, this measure will deliver almost $2 billion in extra support.

Indigenous Community Support Fund – The government will provide $305 million for a new distinctions-based Indigenous Community Support Fund to address immediate needs in First Nations, Inuit, and Métis Nation communities.

Canada Student Loans – Six-month interest-free moratorium on the repayment of Canada Student Loans for all individuals currently in the process of repaying these loans.

Registered Retirement Income Funds (RRIFs) – Reducing required minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25% for 2020. Similar rules would apply to individuals receiving variable benefit payments under a defined contribution Registered Pension Plan.

Reaching Home Initiative – Providing the Reaching Home initiative with $157.5 million to continue to support people experiencing homelessness during the COVID-19 outbreak.

Women’s Shelters and Sexual Assault Centres – Providing up to $50 million to women’s shelters and sexual assault centres to help with their capacity to manage or prevent an outbreak in their facilities.

Taxpayers

Filing Due Date Deferral for Individuals – The return filing due date will be deferred until June 1, 2020.

Filing Due Date Deferral for Trusts – For trusts having a taxation year ending on December 31, 2019, the return filing due date will be deferred until May 1, 2020.

Payment Deferral for Individuals – The CRA will allow all taxpayers to defer until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.

Payment Deferral for Businesses – The CRA will allow all businesses to defer until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020.  This relief would apply to tax balances due, as well as installments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.

Deferral of Audits for Businesses – The CRA will not contact any small or medium (SME) businesses to initiate any post-assessment GST/HST or Income Tax audits for the next four weeks. For the vast majority of businesses, the CRA will temporarily suspend audit interaction with taxpayers and representatives.

Electronic Signatures – Effective immediately, the CRA will recognize electronic signatures as having met the signature requirements of the Income Tax Act, as a temporary administrative measure. This provision applies to authorization forms T183 or T183CORP.

CRA Outreach Program – Through this service, the CRA offers help to individuals to better understand their tax obligations and to obtain the benefits and credits to which they are entitled. Traditionally available in-person, this service is now available over the phone and by webinar, where possible.

Mortgages

Mortgage Deferral – Canada’s large banks have confirmed that this support will include up to a 6-month payment deferral for mortgages, and the opportunity for relief on other credit products.

Insured Mortgage Purchase Program (IMPP) – The government will purchase up to $50 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation (CMHC).

Businesses

Canada Account – The government is changing the Canada Account so that the Minister of Finance is able to determine the limit of the Canada Account to better assist in exceptional circumstances. The Canada Account is administered by Export Development Canada (EDC) and is used by the government to support exporters when deemed to be in the national interest.

Small Business Temporary Wage Subsidy – The government is proposing to provide eligible small employers a temporary wage subsidy for a period of three months. The subsidy will be equal to 10% of the remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.

Business Credit Availability Program (BCAP) – BCAP will allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than $10 billion of additional support, primarily targeted to small- and medium-sized businesses. The near term credit available to farmers and the agri-food sector will also be increased through Farm Credit Canada.

Domestic Stability Buffer – The Office of the Superintendent of Financial Institutions (OSFI) announced it is lowering the Domestic Stability Buffer by 1.25% of risk-weighted assets, effective immediately. This action will allow Canada’s large banks to inject $300 billion of additional lending into the economy.

Bank of Canada – Lowered the interest rate to 0.75%.

Ontario Measures

Note: Ontario’s Minister of Finance will provide an economic and fiscal update on March 25, which will provide further measures.

Employees

Job-Protected Leave – Per the announcement on March 16, the proposed legislation would, if passed, provide job protection for employees unable to work for the following reasons:

  • The employee is under medical investigation, supervision, or treatment for COVID-19.
  • The employee is acting in accordance with an order under the Health Protection and Promotion Act.
  • The employee is in isolation or quarantine.
  • The employee is acting in accordance with public health information or direction.
  • The employer directs the employee not to work.
  • The employee needs to provide care to a person for a reason related to COVID-19, such as a school or day-care closure.

Childcare Centres – The Ontario government announced March 22 that it would be opening select child care centres across the province to help frontline workers. Included under health care and frontline workers eligible for child care are doctors, nurses, paramedics, firefighters, police, and correctional officers. The services will be free and covered by the government.

Legal Proceedings and the Middle Class

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In an article posted recently in the online version of Canadian Lawyer, Margaret Waddell put forward a proposal which she entitled “A Radical Idea for Giving the Average Person Their Day in Court”.

In her article, she suggested that asking whether or not the average person can afford a trial is the wrong question.  Instead, we should ask ourselves whether we can afford to maintain a judicial system that effectively bars the average person from being able to take his or her civil dispute to trial with the benefit of legal representation.

There is simply no question about the fact that the average person is going to have a lot of difficulty paying for a lawyer to take a matter to trial, assuming that by “average person”, we are talking about someone who earns at the level of Canada’s national income.

Litigation lawyers charge their time out at varying rates, generally dependent upon experience and, to some extent, geography. On balance, in my view, one gets what one pays for. That does not mean that a person will only be able to get proper or even adequate representation by paying top dollar.  I know many young litigation lawyers, including those at my own law firm, who can do an excellent job at a reasonably hourly rate.  My definition of “reasonable”, however, may not be shared by everyone.  Even young lawyers can be costly for average income earners.

For those whose incomes are below average but nowhere near the poverty line, the justice system approaches complete inaccessibility.  Family law courts in particular are inundated with cases where at least one of the two parties are unrepresented.  Where an unrepresented party must go into battle against a lawyer acting on the other side, the result can be devastating.  What may be even worse is that the unrepresented party will usually leave the courtroom without the first clue as to what just happened to him or her, or what he or she could have done prior to the hearing in order to increase the odds of success.

In smaller claims, an attempt has been made to address the point by increasing the Small Claims Court jurisdiction to $25,000.00.  The Small Claims Court is designed for people to be able to represent themselves without counsel.  While I do not have any statistics to offer, I have to believe that this has made a positive difference.

Ms. Waddell’s radical idea, incidentally, is that every lawyer ought to choose a case in which the client cannot afford to proceed and agree to act without charging a fee, or at a substantially reduced rate, or on a contingency.  By doing so, she suggests, the client can be shown that he or she is not a faceless commodity and that the legal profession is still prepared to help the average Canadian to obtain access to justice.

Ms. Waddell’s proposal is a laudable one but, I fear, unlikely to gain traction.  While many law firms would be prepared to consider acting without charge where doing so serves the public interest, or where humanitarian considerations exist, the idea of ignoring economic realities out of general principle is not likely to be viewed favourably by very many lawyers.

In my view, a better answer is to pursue the policy that gave rise to the increase in the Small Claims Court monetary jurisdiction by making it easier for people to represent themselves.  The first step to be taken in that process, as far as I am concerned, is to simplify the route which one must take to get to trial.

The need for simplification is nowhere clearer than in the family law context where, as I have indicated, many cases involve unrepresented parties.  Although I do not practice in the family law area, I have been present in Family Law Court and I have been astonished at the inability or the unwillingness of judges to take into account the fact that they are speaking to unrepresented litigants who are familiar with neither the procedure nor the jargon associated with court proceedings.  These are people who leave the courtroom completely mystified and, even worse, feeling as if they have no chance of ever receiving what they would consider to be their day in court.  I would bet that if the stakes were not so high, many would just give up.

I do not believe that lawyers are going to be increasing the number of pro bono cases they take on any time soon.  As Ms. Waddell points out and as many of us know, we do have a problem with access to justice.  In my view, the answer is to increase the opportunities for people to represent themselves where they choose to do so either because they cannot afford a lawyer or for any other reason.  This means, firstly, that the monetary jurisdiction of the Small Claims Court, with its enormously simplified procedures, should be increased even further.

Secondly, parties involved in disputes in that court should be expected to represent themselves.  Indeed, a party wishing to be represented by counsel should have to demonstrate a need for such representation by satisfying a judge, on motion, that the party is incapable of representing himself or herself.

Thirdly, and specifically with respect to parties involved in matrimonial disputes, the process must be simplified.  In that respect, I am not talking about even more steps designed to encourage or, as some might say, coerce parties into attending endless settlement conferences and discouraging them from ever actually entering into a courtroom to have a dispute resolved once and for all.  I am talking about simplifying the rules, eliminating unnecessary steps, and translating the rules into plain English so that people understand what they can expect in a courtroom, and what will be expected of them.