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5 Years After TRC: Is Canada Making the Grade?

Tansi, 

December 2020 marked 5 years since the TRC final report was released with 94 Calls to Action for truth and reconciliation with Indigenous people.  To commemorate this juncture, Team ReconciliAction set out to evaluate progress on each of the Calls to Action in the 5 years since their release. 

It has been quite a year for our team.  In addition to our ongoing report card, we attended the Indigenous Bar Association annual conference, the ILSA speaker series, the Kawaskimhon Moot, the Barton trial, Indigenous language engagement sessions, various faculty talks, we won a Clawbie and we attended protests, marches and vigils.  And we shared all of it with you, our dear audience.  We appreciate all of the engagement we've had this year on the blog and on our social media accounts, and we want to thank everyone who joined the conversation on reconciliation this year.  

Today, we release our final report card, and the culmination of our work over the 2020/21 academic year.  To those who have followed the progress, you have probably figured out that the report card on 5 year progress is bleak.  The few bright spots in reconciliation progress have come at the organizational level, where institutions could quickly work to address the Calls specific to them.  There has been little to no progress on more systemic change that requires governmental action, and in many cases we have actually seen a backslide.  For example, Prime Minister Justin Trudeau has ceased making his emphatic statements that Canada's relationship with Indigenous people is the most important relationship, and here in Alberta we are looking into curriculum changes that exclude education on the legacy of residential schools.  

The takeaway from our report card is that Canada has much work to do, and likely needs to make significant increases to funding and efforts to correct some of these systemic issues in housing, healthcare, the justice system, child welfare and anti-racism.  So what comes next?  Will Canada stop fighting against Indigenous children?  Will Justice Minister David Lametti acknowledge the importance of Indigenous language speakers in this country and allow the bilingual requirement for the SCC to include languages other than colonial ones?  Will communities get clean drinking water?  Will provincial governments denounce racism in education and healthcare?  I mean, we hope so and each of us plans to continue the discussion beyond this blog.

We aren't saying goodbye yet, though.  Stay tuned next week as we get some final thoughts off our chest, and the week after for our individual reflections on the year.  

And now, for those of you who have not already scrolled ahead - The final grade:

Until Next Time,

ReconciliAction YEG

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Liberal Party of Canada - New Constitution

This week, we examine some of the political parties in Canada. We start with the governing party, the Liberal Party of Canada, and its new internal constitution. Check back each day as we feature the Rhino Party, the NDP, the Libertarian Party, and the Conservative Party.

Coincidentally, as we recognize the 150th anniversary of Canada’s first constitution, the BNA Act, the leader of the Liberal Party is the son of the Prime Minister who patriated Canada’s new constitution in 1982. A constitution provides structure and guidance to lawmakers; it is their ultimate rulebook when drafting new laws and managing existing ones. Similarly, each political party also has a constitution to set out the parameters of its internal governance along with bylaw documents, similar to bylaws that corporate entities establish.

In 2016, the Liberal Party of Canada revamped their constitution, voted it in on May 28th, and put it into effect on January 1st, 2017.[1] The goal was to make membership in the party more accessible to a larger number of people and to create a permanent political campaign.[2] Among the changes are waiving the $10 member registration fee, increased participation in the policy development process, and allowing any registered Liberal member to attend conventions. This marks the first time that a major federal political party has offered free membership.[3]

The new 17-page constitution with its 10 bylaws replaces the previous 81-page document.[4] It streamlines the party’s bureaucracy, allowing readers to understand the party’s organization and increasing flexibility for individuals to participate in the political process.[5] The constitution’s preamble states that the Liberal Party “strives to provide a flexible and democratic structure whereby all Canadians can obtain [information and participate in] action both electoral and non-electoral.” The goal is to reach and include more individuals who will support the party in future elections.

The constitution was met with strong opposition. Despite its commitment to transparency and increased democracy, critics warned that the grassroots accessibility was not as promising as had been advertised. Some local party officials and regional members criticized the lack of openness, transparency, and consultation. They alleged that the executive was trying to “strong-arm” it into effect.[6] The party leader and top executives appeared to have expanded their concentrated power over campaigns and policy.[7] Critics argued this was a:

potentially controversial change that would discontinue the historic tradition of developing party policy positions for election campaigns through national convention debate and votes on resolutions from grassroots party members across the country.[8]

To alleviate these concerns the executive amended the constitution just hours before the vote and Trudeau addressed directly and publicly the allegations of increased centralized power.[9] The amendments and Trudeau’s speech to increase support were successful. Ultimately, the convention delegates voted strongly in favour: 1,988 to 66.

Although there was much opposition to this new constitution, members clearly saw the need for a complete overhaul. Criticism has been subdued but it is possible that it might arise again as the party moves forward under the new constitution. Having suffered election setbacks in the last few elections, the new governing structure might aid the Liberal Party in future elections.

 

[1] Liberal Party of Canada, “Towards a More Open Liberal Party” (2017), online: Federal Liberal Agency of Canada <https://www.liberal.ca/1party/towards-a-more-open-liberal-party/>.

[2] Lee Berthiaume, “A Leaner Liberal Machine: Trudeau Convinces Party Members to Sign off on New Constitution,” National Post (28 May 2016), online: Canada.com <news.nationalpost.com/news/canada/canadian-politics/trudeau-ready-to-take-the-stage-at-liberal-convention-where-members-have-concerns-about-new-constitution>.

[3] Ken Hanly, “Canadian Federal Liberal Party Adopts New Constitution,” Digital Journal (29 May 2016), online: digitaljournal.com <www.digitaljournal.com/news/politics/canadian-federal-liberal-party-adopts-new-constitution/article/466581>.

[4] Tim Naumetz, “Justin Trudeau, Party Brass Set to Gain More Power over Campaigns, Policy Under New Proposed Liberal Constitution,” Hill Times (15 April 2016), online: Hill Times Publishing <https://www.hilltimes.com/2016/04/15/justin-trudeau-party-brass-set-to-gain-more-power-over-campaigns-policy-under-new-proposed-liberal-constitution/58608#>.

[5] Hanly, supra note 3.

[6] Ibid.

[7] Naumetz, supra note 4.

[8] Ibid.

[9] Berthiaume, supra note 2.

Law School: How Hard can it be, Anyway?

Law schools are notoriously difficult to get into and the challenge increases over time as applications increase. Today’s post discusses the change in demographics in law schools since 1867. Only two Canadian law schools existed prior to Confederation; both in Quebec.

Women in Law

At, and shortly after, 1867 women could not participate in the legal system in what was then Upper Canada. Men exclusively ruled the law schools and the legal system until Clara Brett Martin came onto the scene. She petitioned the Law Society of Upper Canada to become the first female articling student but she was refused.¹

However, like other influential women of her time, Martin was persistent. She refused to take no for an answer and introduced a provincial bill to allow women to attend law school and practice law.

In 1893, Martin’s conviction changed the legal profession forever.Her bill was passed, allowing women to be admitted to the law society as solicitors.² Martin was admitted as a law student in the same year and helped pass legislation to allow women to become barristers. In 1897, she became the first female lawyer in the British Empire.

Martin opened the door for women to excel in law, which is reflected in Canadian law school demographics today. Since 2000 at the U of A, about half of all law students in the faculty are women.³

Aboriginal and Indigenous Lawyers

In 1954, William Wuttunee was the first Aboriginal person to graduate from law school in western Canada.⁴ A Cree man, Wuttunee worked tirelessly to develop Aboriginal law in Saskatchewan and later moved to the national scene.

On the west coast of Canada in BC, Aboriginal peoples were “pretty much restricted from becoming lawyers” until the 1950s.⁵ It was Alfred Scow who broke down that barrier, becoming both the first Indigenous law student and member of the bar in BC.⁶

Today, many law schools in Canada including the U of A have a separate application categories for Aboriginal law applicants. The schools recognize the persisting underrepresentation of Indigenous lawyers, and are working to correct the disparity.

Getting In

Though Canadian law schools have admitted more women and Aboriginal students since 1867, admission remains difficult. While some schools like the University of Calgary have moved to a more wholistic approach to admission, high grades and LSAT scores remain important.

The average U of A law student admitted in 2016 had a GPA of 3.8 out of 4.0 (based on the last 2 years of post-secondary courses) and an LSAT score of 161 out of 180.⁷ The LSAT did not exist in 1867.⁸

In addition to the demographic diversity, the applicant pool continues to grow. In 1848, 23 men petitioned McGill University to create a law school.⁹ In the last few years, , McGill rejected over 80% of applicants and U of A rejected about 85%.¹⁰

¹Constance Backhouse, Dictionary of Canadian Biography, (University of Torotono/Universite Laval, 2005) sub verbo “Martin, Clara Brett”, online: <www.biographi.ca/en/bio.php?id_nbr=7840>.

²John D. Blackwell, The Canadian Encylopedia, (2008) sub verbo “Clara Brett Martin”, online: <www.thecanadianencyclopedia.ca/en/article/clara-brett-martin/>.

³See the University of Alberta Faculty of Law JD Program FAQs, <www.ualberta.ca/law/admissions/juris-doctor/faq#WomenEnrolled>.

⁴Doug Cuthand, “Remembering William Wuttunee: Cree lawyer was a trailblazer”, CBC News (2 November, 2015), online: <www.cbc.ca/news/indigenous/remembering-bill-wuttunee-1.3300662>.

⁵Yolande Cole, “B.C. judge Alfred Scow remembered as “aboriginal pioneer”, The Georgia Straight (8 March 2013), online: <www.straight.com/news/360396/bc-judge-alfred-scow-remembered-aboriginal-pioneer>.

⁶Allison Griner, “Aboriginal lawyers stride in footsteps of legal pioneer” (25 March 2013), online: <thethunderbird.ca/2013/03/25/aboriginal-lawyers-stride-in-footsteps-of-legal-pioneer/>.

⁷See the University of Alberta Faculty of Law JD Program applicant profile tab, <www.ualberta.ca/law/admissions/juris-doctor/applicant-profile>.

⁸William P. LaPiana, “A History of the Law School Admission Council and the LSAT”, (Keynote Address delivered at the 1998 LSAC Annual Meeting, 28 May 1998) [unpublished], online: www.lsac.org/docs/default-source/publications-(lsac-resources)/history-lsac-lsat.pdf.

⁹See McGill Faculty of Law’s “Our history” webpage, http://www.mcgill.ca/law/about/history.

¹⁰See the University of Alberta Faculty of Law JD Program FAQs, <www.ualberta.ca/law/admissions/juris-doctor/faq#AverageScores>.

An Odd Coincidence, Some Irony, And A Bit Of Canadian Legal History

This is not quite an Oxford Story but there is at least one Oxford connection.

Once upon a time, in central North York, Ontario, Canada, when North York (despite Mel Lastman's pretensions) was really only a suburb of the City of Toronto - much like the boroughs of New York, NY are only suburbs of Manhattan - before North York amalgamated with Toronto and other suburbs of the City of Toronto, there was a small community of houses, apartment buildings and a small public school in an area bounded by Highway 401 to the south, railroad tracks to the west, and major streets on the east and north.

The area that is now the massive, upscale, Yorkdale Plaza is southeast of the community, on the other side of the 401.

What is Section 91?

Dear Sir or Madam:

Today we write to you regarding the emergence of section 91 of the British North America Act of 1867 (BNA Act) and the powers that the provision awarded. Canada needed to balance the competing interests of individual provinces with the ideal of creating a strong and united Canada. Canada was not the first country faced with this dilemma, many other sovereign nations, including the United States, encountered the same predicament while trying to write their constitutions. The BNA Act recognized the interests of both parties, concretizing Canada’s federal powers in s. 91, and provincial powers under s. 92. A brief history as to how these provisions arose is detailed below.

A month after the Charlottetown Conference (aforementioned in yesterday’s letter, click here to review yesterday's post), the existing provinces all met at the Quebec Conference to try and hash out a constitutional framework for the impending nation of Canada.¹ This was where federalism, or the division of powers between the federal and provincial governments, became a focal point of discussion. The delegates passed the “72 Resolutions”, which detailed which powers the provinces and the Dominion of Canada would retain should Confederation move forward.²

Certain provinces were interested in maintaining individual autonomy, whereas others were more interested in developing a strong centralized government. The Atlantic Provinces were particularly worried that a strong centralized government would leave their unique island needs improperly governed.³ Mainly due to their size and unique culture, they wanted to ensure they were still accurately represented at the national level. In contrast, John A. McDonald, one of Confederation’s key leaders, advocated for a strong centralized federal government to avoid tension between neighbouring provinces.⁴ This kind of tension led the United States down the road to the American Civil War, an ending McDonald wanted to adamantly avoid.⁵ Ultimately, the BNA Act would account for both provincial and national interests by creating a federalist nation under ss.91-92.

Section 91 granted the federal government several far-reaching powers. Notable powers included: regulation of trade and commerce, military, banking, bankruptcy and insolvency, Indians and Lands reserved for Indians, marriage and divorce, and the criminal law.⁶ The majority of these powers seemed to be a reasonable compromise since they had widespread impact on almost every province in the Dominion.

Other powers granted remained more suspect. Powers including: navigation and shipping, sea coasts and island fisheries, beacons, and ferries between provinces,⁷ seem to relate directly to the interests the Atlantic Provinces were concerned about losing control over. Last time we at the Dominion checked our records; the people of Upper Canada have not done much fishing or shipping in their day. Although a strong central government helped the Dominion establish a sense of unified allegiance, one must wonder if we gave the federal government too much power over practices they cannot accurately understand.

 

Your Humble and Obedient Servants,

The Dominion

 

¹P.B. Waite “Confederation”, (22 September 2013), http://www.thecanadianencyclopedia.ca/en/article/confederation/
²Ibid.
³Ibid.
⁴Ibid.
⁵Ibid.
⁶Constitution Act, 1867 (UK), 30 & 31 Vict, c 3, s 91, reprinted in RSC 1985, Appendix II, No 5.
⁷Ibid.

A (veiled) hint at the future of Canadian corporate law jurisprudence?

Please check out my case comment on the SCC's recent decision in Chevron Corp. v. Yaiguaje in the Canadian Business Law Journal - you can read the decision here and the comment here. The Court's decision is primarily concerned with affirming and clarifying a liberal approach to the recognition and enforcement of foreign judgments pursuant to an equally liberal conceptualization of comity. But the Court's decision also offers an intriguing (if veiled) hint at the near future of Canadian corporate law jurisprudence, including the possibility of recognizing the principle of enterprise liability in respect of close corporate groups.

Women and Men in the Practice of Law

“When half of your talent pool is comprised of women, there’s a danger that you’re missing out on keeping some of the best and the brightest.”[1]

 

Last week we published an interview with the Right Honourable Kim Campbell. Ms. Campbell is widely known for her cabinet positions where she was the first female Minister of Justice and Attorney General of Canada, the first and only female Minister of National Defence, and the first and only female Prime Minister of Canada.[2] As Ms. Campbell discussed in her interview, when all people in society are equally free they are able to pursue goals based on their personal interests, rather than what is conscribed by gender roles required for the survival of the species.

In today’s post we examine the current role that women have in the legal system; however, it is first necessary to examine the history behind women’s role in the legal profession. A parallel can be drawn between the women’s suffrage movement and women becoming members of the legal profession, as women were not always eligible for admission to the bar. Specifically, women first gained admission to law schools in 1891, several years after Canadian universities established permanent law schools.[3] Further, the first female lawyers in Canada pressed for admission to the bar in the late 1800s and early 1900s, which was done concurrently with the suffrage movement.[4] The Ontario bar admitted the first woman, Clara Brett Martin, in 1897. In 1906 in New Brunswick and in 1912 in British Columbia, after being denied admission, women unsuccessfully challenged the provincial bar associations in the courts. Shortly after these court cases, both provinces amended their legislation to allow women to be admitted to the bar and to practice law.[5]

Today, law schools across Canada show that women and men are entering and graduating from law schools at an approximately equal rate.[6] The Law Society of Upper Canada estimated that women accounted for more than 50% of law school graduates during the 2000s.[7] However, women tend to leave private practice earlier than men. For example, a recent CBC Radio interview explored the major reason that female criminal lawyers leave private practice: discrimination.[8]

However, in a casual conversation with a female partner at a mid-size Edmonton-area law firm, I discovered a positive trend. In this particular firm, though the equity partners are almost all men, lawyers at the associate-level are almost all women. Without any direct intention to create more diversity among the lawyers, the lawyers involved in the hiring process noticed that women who applied to this firm simply tended to stand out above men who applied. On the lack of gender bias in their hiring practices, the partner joked that they almost need to start focusing on hiring men at the associate level.

It is certainly encouraging that some law firms are equally impressed with the qualifications and achievements demonstrated by men and women graduating from law school, and that diversity can be well represented among junior lawyers. But what about senior lawyers, who greatly contribute to the legal community as they have a significant number of years of experience? The following quotation from a law professor at York University in Toronto discusses the relevant statistics:

[In the United States, w]omen comprise only about 15% of equity partners and 26% of non-equity partners, even though 46% of law firm associates are women. Among equity partners, women make about 89% of men. The gap in [median] compensation of male and female equity partners cannot be explained by differences in billable hours, total hours, or books of business. Women are vastly underrepresented on the powerful governance committees that make key firm decisions: they hold only 20% of the positions on those committees. Only 4% of law firms have female managing partners. Seventy percent of in-house counsel jobs are held by women.[9]

Specifically, in Canada:

• In 2010, there were 22,261 practicing women lawyers and 37,617 practicing men lawyers.
• For new lawyers practicing 0-5 years, in many areas, women are the majority, or close to the majority, and their numbers and percentages increased from 1998 to 2012 
  • Manitoba: 52.4% of the newest lawyers are women
  • Saskatchewan: 50.4%
  • Ontario: 52.3%
  • British Columbia: 51.2%
  • Barreau du Quebec: 62.1%[10]

[10.1]

Further, the Justicia Project examines diversity and attrition rates among lawyers. Developed in Ontario, the initiative has spread to other provinces in Canada.[11] The Law Society of Upper Canada cites that 38% of lawyers are women, but 60% of lawyers leaving private practice are women.[12] The Law Society of Alberta reports “that in Alberta as law firm size increases, the diversity within the firm is more likely to decrease.”[13] In British Columbia, women comprise 67% of lawyers in private practice while men comprise 82%.[14] The chart pictured at the top of this post, although referencing data from 1995, provides a visual illustration of the staggering differences between male and female lawyers across different age brackets.[15] This graph is also significant because it shows the disparity between lawyers, workers who have a degree other than in law, and the working population in general. Moreover, it demonstrates that while women comprised approximately 50% of lawyers entering practice twenty-one years ago, today women are still not in equal representation as equity partners.

The Law Society of Upper Canada notes that an overwhelming reason that women leave private practice jobs is to achieve a “work-life balance”, especially when women have young children.[16] In our modern economy, it can be financially challenging for two-parent families to allow one parent to stay at home to raise the children, which is a full-time non-paying job. However, due to personal choices among families and arguably also due to the structure of our gender-stereotyped culture, mothers tend to be the parents who elect to reduce time at an out-of-home paid job in favour of spending more time in the home to care for their children. For lawyers, this sometimes includes switching from a time-demanding, private practice in a large firm to in-house counsel positions or government legal positions.[17] Often, these latter types of jobs offer lawyers a work schedule that is more predictable and more manageable in relation to the needs of their families.[18]

Equal representation among lawyers with diverse qualities, interests, and backgrounds is a challenge recognized by the Canadian Bar Association and provincial law societies. While no one should dictate what personal career choices a person makes, the Law Society of Upper Canada asserts that “we need to make sure [lawyers] don’t leave [private practice] because of gender-related issues.”[19] Part of the reason that women’s suffrage and related equality issues was chosen as the topic for our Ms. Suffragette blog is due to the recognition that there are issues which some lawyers face that other lawyers do not. Gender discrimination is one of these issues.[20] With discourse, awareness, and diverse engagement on issues that law students and lawyers face, we can further deconstruct discrimination and create a more fairly representative community among lawyers. Achieving diversity and equality among lawyers, law professors, and judges will help reflect the reality of diversity in our society, and can better inform the legal community of society’s values.

 

[1] Ann Macaulay, How to Retain Top Female Talent, and What Women Should Look for in a Law Firm, The Canadian Bar Association, 10 October 2014 (online): <https://www.cba.org/Publications-Resources/CBA-Practice-Link/Young-Lawyers/2014/How-to-Retain-Top-Female-Talent,-and-What-Women-Sh> [Macaulay].

[2] The Right Honourable Kim Campbell, “Accomplishments” (online): <http://www.kimcampbell.com/node/26> [Campbell].

[3] Mary Jane Mossman, “The First Women Lawyers: ‘Piecemeal Progress and Circumscribed Success’”, Osgoode Hall Law Journal vol 45, no 2 (online): <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1645369>.

[4] Ibid.

[5] Ibid.

[6] Macaulay, supra note 1; Federica Schutz, QC, “Justicia Project Aimed at Retaining Women Lawyers in Prive Practice”, The Advisory: Volume 10, Issue 3, July 2012, Law Society of Alberta (online): <http://www.lawsociety.ab.ca/advisory_2012/advisory_volume_10_issue_3_Jul2012/news/justicia.aspx> [Schutz].

[7] Trisha Crawford, “Women lawyers leaving in droves”, Toronto Star Newspapers, 11 February 2011 (online): <http://www.thestar.com/life/2011/02/25/women_lawyers_leaving_in_droves.html> [Crawford].

[8] Maureen Brosnahan, “Women Leaving Criminal Law Practice in Alarming Numbers”, CBC/Radio-Canada, 7 March 2016 (online): <http://www.cbc.ca/news/canada/women-criminal-law-1.3476637>.

[9] David Doorey, “Women’s Situation Not Improving in Law Firms, But I (Still) Have a Plan”, Doorey’s Law of Work blog, 7 March 2016 (online): <http://lawofwork.ca/?p=5727#sthash.ooej3vaa.dpuf> [Doorey], emphasis added. Please note this refers to USA statistics; Dr. Doorey does estimate that they are similar to Canadian statistics.

[10] "Women in Law in Canada and the US", Knowledge Center, 3 March 2015, Catalyst Inc (online): <http://www.catalyst.org/knowledge/women-law-canada-and-us>.

[10.1] "Statistical Snapshot of Lawyers in Ontario", The Law Society of Upper Canada (online): <http://www.lsuc.on.ca/WorkArea/DownloadAsset.aspx?id=2147488150>.

[11] Macaulay, supra note 1.

[12] Crawford, supra note 7.

[13] Macaulay, supra note 1.

[14] Ibid.; Crawford, supra note 7.

[15] Abdul Rashid, Chart: “Earnings of Lawyers”, Perspectives, Statistics Canada, 2000 (online): <http://www.statcan.gc.ca/pub/75-001-x/2000001/4886-eng.pdf>.

[16] Crawford, supra note 7.

[17] Ibid.

[18] Ibid.

[19] Ibid.

[20] As we recognized in our 630 CHED radio interview with @RyanJesperson, cultural heritage and ethnolinguistic diversity in law school and the practice of law is also an issue in our society.

Closing Remarks from the Strathcona Candidate Debate

On September 9, 2015, Strathcona candidates Linda Duncan (NDP MP) and Eleanor Olszewski (Liberal candidate) debated legal issues which are central to the upcoming federal election. Closing remarks were omitted from the debate, but the candidates were pleased to provide closing remarks for Ms. Magna Carta’s blog. Please see below, and check back tomorrow for a link to the debate video!

 

Linda Duncan

"We have witnessed a decade of Conservative regressive measures changing the face of Canada, marring our international reputation, diminishing our Charter rights, showing disregard for the rule of law and the judiciary, eviscerating our once strong environmental protection regime, and abrogating Treaty rights. It is time for a change in governance to restore our basic democratic rights beginning with an elections process that supports the right to vote and reflects all preferences through proportional representation.  Canadians are calling for a genuinely balanced and diversified economy, one that restores open transparent decision making and restores the balance between development and environment. My twice tabled Environmental Bill of Rights would enshrine those rights and duties. We need a government that honours the UNDRIP and delivers on a respectful nation to nation relationship with indigenous Canadians. We must restore our once lauded international reputation and uphold our obligations and commitments to human rights and environment, including missing and murdered indigenous women and the plight of refugees. This is your time and your choice. I encourage you to play your part in helping to deliver better governance.”

 

Eleanor Olszewski

“Thank you for inviting me to this debate in celebration of democracy's birth certificate – the Magna Carta. With the election a little over a month away, it is an optimum time to reflect upon the foundations of our government and the values that make us Canadian. I believe that Canadians' faith in government has never been lower – that unprecedented power has been concentrated in the hands of the Prime Minister and his office and that our government operates in a culture of secrecy, control, and hyper-partisanship. I also believe that a Liberal government, under Justin Trudeau, will bring about the sweeping changes that we need in order restore a sense of trust in our democracy.

This includes enhanced access to government information, restoring relevance to Question Period, electoral reform, and an end to the "first past the post" voting system, the unmuzzling of government scientists, return of the long form census, an equal number of men and women in Cabinet, and the formation of a Youth Advisory Counsel so that young people can provide advice to the PM on issues that concern them. These proposals form part of the Liberal plan for a fair and open government.

We have many challenges ahead of us – from the threat of climate change to the Syrian refugee crisis; from missing and murdered Aboriginal women to affordable housing. We can make better decisions with a fair and open government that reflects the values and expectations of Canadians. And in so doing, we can remain true to the living document that is the Magna Carta.”

Alberta Court of Appeal affirms that creditor proofing a judgment debtor can amount to oppression: 1007374 Alberta Ltd. v. Ruggieri, 2015 ABCA 205

In its recent decision 1007374 Alberta Ltd. v. Ruggieri, 2015 ABCA 205, the Alberta Court of Appeal held that efforts to creditor proof a company amounted to oppression under Alberta’s Business Corporations Act.[1] This case illustrates how practitioners can make use of the oppression remedy when dealing with a debtor who is working hard to avoid enforcement of a judgment.  It also provides a precedent (i) for holding the director of the corporate debtor personally liable for oppressive acts, and (ii) for claiming a large punitive damages award against an evasive judgment debtor.

The Background

The 2011 Trial

In 2003, the plaintiff had entered into a consulting agreement with Ruggieri Engineering.  The relationship between the parties soured.  In 2011, the plaintiff sued Ruggieri Engineering for breach of contract, and was awarded $337,130 in damages.[2] 

Creditor Proofing the 2011 Defendant

Antonio Ruggieri was the controlling mind of Ruggieri Engineering. After trial, but before the judge hearing the matter released her decision, he took a number of steps, which had the effect of making it more difficult for the plaintiff to enforce a judgment against Ruggieri Engineering.  Ruggieri Engineering granted general security agreements of $500,000 in favour of Mr. Ruggieri and a related company, and also issued promissory notes to Mr. Ruggieri and the related company.[3]   Mr. Ruggieri then started a new company, Alberta Engineering, under whose name he carried out the same business for the same clients and with the same employees.[4]

The Decision Under Appeal - the 2014 Trial

The plaintiff sued again, this time naming a number of defendants: Antonio Ruggieri, Ruggieri Engineering (which was now operating as a numbered company), Alberta Engineering, and another related company. The plaintiff advanced a number of claims, including fraudulent conveyance actions under the Fraudulent Preference Act[5] and the Statute of Elizabeth,[6]conspiracy, unjust enrichment, and oppression.

In a decision released in October 2014, the trial judge found that the plaintiff succeeded on each of its claims.[7] The trial judge awarded the plaintiff damages of $476,498.86, which amounted to the initial judgment, plus pre-judgment interest and costs.[8] Additionally, the trial judge awarded the plaintiff punitive damages of $100,000, reasoning that the defendant’s conduct was “so oppressive, calculating and unremitting and has carried on for so many years, that nothing short of punitive damages will serve to properly condemn and punish this misconduct.”[9]

The Court of Appeal’s Decision & Analysis

The Court of Appeal upheld the trial judge’s decision, including the judgment of $476,498.86, plus $100,000 in punitive damages.  It found that the plaintiff had established its claim for oppression, and did not consider the plaintiff’s other claims.

The Oppression Claim

A “complainant” can bring an oppression claim under the Business Corporation Act.  The definition of complainant in Alberta’s Business Corporation Act includes creditors.[10]  When a creditor brings an oppression claim, the Court must consider if “the effect of the corporation’s conduct is unfairly prejudicial or unfairly disregards the interest of the creditor. The Court must determine the reasonable expectations of the creditor.”[11]

A creditor’s reasonable expectations include the following:

1. "A creditor reasonably expects that a corporation will not be used as a vehicle for fraud;
2. A creditor reasonably expects that the debtor will not convey away, for no consideration, exigible assets, which will leave the creditor unpaid and unable to realize upon assets to satisfy the debt;
3. A creditor reasonably expects that the directors of a corporation will manage the company in accordance with their legal obligations, namely to act honestly and in good faith in the best interests of the corporation and to exercise the diligence expected of a reasonably prudent person; and
4. A creditor reasonably expects that the debtor will honour the understandings and expectations which the debtor has created and encouraged."[12]

The Court of Appeal focused on the second and fourth expectations on this list.[13] The Court of Appeal held there was ample evidence upon which the trial judge could conclude that the defendant had engaged in a “deliberate course of conduct to strip Ruggieri Engineering of its exigible assets.”[14] This conduct was “unfairly prejudicial to the plaintiff and disregarded its interests.”[15]

The Personal Liability of the Director

The trial judge held Mr. Ruggieri personally liable for the oppressive acts of Ruggieri Engineering.[16]  The Court of Appeal affirmed this aspect of the trial judgment, noting that liability may lie with directors if they “exercise power in a manner that is unfairly prejudicial or unfairly disregards the interests of the complainant.”[17] Furthermore, the Court of Appeal noted Mr. Ruggieri personally benefitted from the oppressive acts, by collecting $800,000 in management fees from the new company, to which Ruggieri Engineering’s business had been diverted.[18] 

The Punitive Damages Award

The Court of Appeal affirmed the award of $100,000 in punitive damages against the defendants.  It concluded, “that punitive damages are ‘very much the exception’ rather than the rule and imposed only if there has been ‘high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour’, we find no basis to interfere with the award of punitive damages in this case.”[19]

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[1]Business Corporations Act, RSA 2000, c B-9.

[2] 1007374 Alberta Ltd v. A. Ruggieri Engineering Ltd, 2011 ABQB 804 at para 148, 61 Alta LR (5th) 193, Bensler J.

[3] 1007374 Alberta Ltd. v. Ruggieri, 2015 ABCA 205 at para 2 [“The Appellate Decision”]; see also the timeline at para 26 of 1007374 Alberta Ltd. v Ruggieri, 2014 ABQB 641, Wilson J [“The 2014 Trial Decision”].

[4] The 2014 Trial Decision, ibid at paras 18-21.

[5] Fraudulent Preference Act, RSA 2000, c F-24.

[6] Fraudulent Conveyances Act, 1571,13 Eliz 1, c 5.

[7] The 2014 Trial Decision, supra note 3 at paras 95, 107, 116, 120, 127.

[8] Ibid at para 4.

[9] Ibid at 131.

[10] Business Corporations Act, supra note 1, s 239(b)(iii).  The Canada Business Corporations Act, RSC 1985, c C-44, s 238 does not include “creditor” in the definition of complainant, but the Court is granted the discretion to allow a creditor, or any other “proper person” to bring an oppression action.

[11] The Appellate Decision, supra note 3 at para 7. 

[12] The 2014 Trial Decision, supra note 3 at para 119, citing Builders’ Floor Centre Ltd. v Thiessen, 2013 ABQB 23 at para 89, 554 AR 152, Nielsen J, citing MA Springman et al, Frauds on Creditors: Fraudulent Conveyances and Preferences (Toronto: Thompson Reuters Canada Limited, 2009) at 24. In Builders’ Floor Centre Ltd at paras 93-94, the judge affirmed the Masters finding that a corporate debtor acted oppressively when it transferred its only asset, a piece of land, to two related individuals.

[13] The Appellate Decision, supra note 3 at para 7.

[14] Ibid at para 8.

[15] Ibid at para 9.

[16] The 2014 Trial Decision, supra note 3 at paras 121-23.

[17] The Appellate Decision, supra note 3 at para 10.

[18] Ibid at para 10.

[19] Ibid at para 13. 

Update: CBA Intervention in Chevron

Quick follow up to my blog post from October 8th: It appears that the CBA will not file an intervenor factum in Chevron Corporation v. Yaiguaje. You can read the CBA's annoucement here.

If you, like me, are interested in the issue of enterprise liability and the application of Salomon, you can still get your fix from the parties' factums in this appeal, available online here. See in particular Factum of Appellant Chevron Corporation at paras. 100-129 and Respondents' factum to the appeal of Chevron Canada Limited at paras. 69-98.

Letters from Dublin, Part I: Celtic Tiger, Hidden Danger

Yesterday was a "bank holiday" here in Ireland, where I am on location researching corporate governance and banking regulation. The reason I am researching this topic in Ireland is a tragic one for the Irish people: Ireland's 2008 banking crisis. Although the crisis was triggered by the subprime mortgage crisis in the US and the resulting global credit crunch, the primary cause of the banking crisis was imprudent lending practices by Ireland's largest domestic banks.

During the 1990s, Ireland experienced phenomenal real economic growth, attracting companies like Dell and Google, earning itself the moniker “Celtic Tiger”. This growth slowed significantly after the tech bubble burst in 2001, but the Irish Government was eager to keep the good times rolling with overly generous tax incentives to generate demand for houses and property development. These tax incentives weren't needed to solve any market failures, but they succeeded in driving up demand, which sent property valuations soaring. At the same time, a single currency and access to cheap credit from other European banks ensured that Irish banks were willing to lend large sums of money to home buyers and property developers, which sent prices even higher. Although the Irish banks (prompted by foreign-owned competitors in the Irish market) were doing things like offering individuals 100% mortgages, it was lending to property developers that got them in real trouble when property values started to fall in 2007. As the Nyberg Commission discovered, the banks had been lending to property developers solely on the strength of the inflated values of their proposed developments. When the credit crunch came, the house of cards threatened to collapse and take Ireland down with it.

Traditionally, banks rely on deposits from retail bankers as the source of the money they lend to others. During the property bubble, the Irish banks were relying too much on "wholesale funding" - loans from other banks - to support their frantic lending. Loans to developers and home owners are long-term - they will be paid back over the course of ten years or longer. But wholesale funding is short-term. The Irish banks had assumed, much like the rest of the global financial markets, that wholesale funding from other banks would always be available. So, when one loan was due, the bank would simply borrow the money from another bank to cover its liabilities, and so on. For Ireland's six largest domestic banks, when the crunch came, they faced the possibility of default and bankruptcy, and the Irish Government was forced to step in.

One of the interesting aspects of the Irish banking crisis is that many in the banking sector apparently recognized that what they were doing was unsustainable, but they were still unable to stop. It seems that the possibility of missing out on large gains was a more immediate concern than the risk of large losses and so management of the banks focused on gains. In some ways it is hard to blame them, since the market was rewarding them for what turned out to be extremely reckless and costly behaviour: the more money the banks lent, the more their share prices went up, so they kept lending larger and larger sums, often to a small number of the same (highly indebted)property developers. Which brings us back to the question of regulation. How can regulators recognize the beginnings of a bubble and put on the brakes before it's too late?

The New Kid on the (Corporate Law) Block: “Public Benefit Corporations”

Ah, Labour Day: a day to watch some football, gear up for the first day of school and catch up on recent developments in Delaware corporate law!

For those readers who are not corporate law aficionados, Delaware is sort of like the New York Yankees of corporate law: a lot of companies choose to incorporate there, what Delaware does affects other jurisdictions and, love it or hate it, everyone pays attention to what’s happening there.

So, it is significant that on August 1, 2013, Delaware became the nineteenth US state to enact legislation concerning “public benefit corporations”. As the name suggests, public benefit corporations are corporations that expressly commit to provide a “public benefit”, as specified in the articles of incorporation, and to “operate in a responsible and sustainable manner”, as well as make money for shareholders. “Public benefit” is defined as a “positive effect (or reduction of negative effects) on 1 or more categories of persons, entities, communities or interests (other than stockholders in their capacities as stockholders)”. The boards of directors of public benefit corporations must balance the financial interests of shareholders, “the best interests of those materially affected by the corporation’s conduct” and the public benefit specified in the articles. For a helpful summary of this and other recent amendments to Delaware corporate law, see here.

I see two troubling implications of creating a separate category of public benefit corporations. First, I have a problem with the implication that regular vanilla corporations do not provide a public benefit. The generally accepted justification for the separate legal personality of corporations and the limited liability of shareholders is the public benefits that flow from facilitating investment in for-profit business enterprises. Apart from creating employment and products and services people need and want, corporations' profitable endeavours also make artistic, cultural, educational, environmental and technological contributions - the types of public benefits listed in the statute. Second, I have a problem with the implication that regular vanilla corporations are not, or ought not to be, run in a “responsible and sustainable manner”. By implying that only designated corporations provide a public benefit and that only designated corporations need to be responsible and sustainable, public benefit corporations could undermine both the legitimacy of the corporate form and efforts to make all corporations more responsible for their negative social impacts.

Business and human rights, the domestic version

When we hear the phrase “business and human rights”, we tend to think about Canadian mining companies operating in developing countries. Last week, I attended a conference presentation that brought the issue of business and human rights closer to home. Dr. Laverne Jacobs began her presentation with an anecdote about the difficulties faced by individuals who use a standard power wheelchair to access certain Air Canada flights. The problem is that the cargo hold of Embraer jets, purchased by Air Canada and then transferred to one of its Air Canada Express operators, is not large enough to fit a standard power wheelchair. The focus of Dr. Jacobs’ presentation was consultation (or the lack thereof) with stakeholder groups regarding government regulations that will affect disability rights. This got me thinking about whether Air Canada had any duty to consult with, or at least to consider the impacts on stakeholders of using these particular Embraer jets. In BCE v 1976 Debentureholders, the Supreme Court of Canada suggested that, in certain circumstances, corporate boards of directors “may be obliged” to consider the interests of stakeholders in fulfilling their duty to act in the “best interests of the corporation” (para 66). Use of a jet that affects interests protected under the Canadian Human Rights Act would seem to be the type of circumstance the Court was contemplating. Even if the BCE decision doesn’t lead to this conclusion, the UN “Protect, Respect and Remedy” framework on business and human rights does. The framework requires corporations to take steps to “respect” human rights, that is, to avoid causing or contributing to “adverse impacts” on individual’s human rights. Compliance with national laws, in this case the Canadian Human Rights Act and the Transportation Act, does not necessarily exhaust corporations’ responsibilities under the framework. It is hard to believe that Air Canada was unaware of this consequence when it decided to use the Embraer jets. So, did this factor into its decision-making? Were alternatives considered that would not impact customers who rely on standard power wheelchairs? If those alternatives weren’t feasible, was a plan put in place to mitigate the impact? I could not find anything in Air Canada’s public disclosure (media releases, its website and the documents cited below) to answer these questions. But what I did find begs the question whether anyone saw this as a human rights issue at all. The Human Rights section of Air Canada’s Corporate Policy and Guidelines on Business Conduct is five lines long and states that Air Canada does not recruit child labour and supports laws against child sexual exploitation. That is very nice, but doesn’t really relate to how Air Canada operates its business. Air Canada’s 2011 Corporate Sustainability Report claims that human rights are not “a significant stakeholder issue”. This is the criticism often leveled at “corporate social responsibility” or “CSR”: corporate officials fail to connect it to the manner in which the company operates or makes decisions. By narrowly defining human rights issues, Air Canada may have missed an opportunity to demonstrate its commitment to the basic human rights of its customers.

Nortel: Another victim of Enron?

Yesterday, Ontario Superior Court Justice Frank Marrocco dismissed fraud charges against former Nortel CEO Frank Dunn, former CFO Douglas Beatty and former controller Michael Gollogly. It represents yet another high-profile not guilty verdict in a Canadian "white-collar" criminal trial.

National Post columnist Terence Corcoran has described the prosecution of the Nortel executives as a "corporate witch hunt" prompted in part by "post-Enron regulatory overkill". Whether or not this is a fair characterization, it seems likely that how Canadian regulators, investors and the general public reacted to Nortel's accounting...er..."irregularities" was coloured in part by the accounting scandals of what has come to be known as the Enron era.

The lesson that Canadian business executives might wish to take away from the Nortel example is the importance of trust. Specifically, the importance of having the trust of regulators, investors and the general public, so that when an event occurs that could be interpreted in two different ways, one benign and the other malignant, the company will be given the benefit of the doubt. How corporate executives are to win back this trust in our current post-Enron, post-financial crisis, post-Occupy age is unclear, but moving away from "aggressive" accounting practices might not be a bad place to start.