Archive for June, 2010

Effective July 1, 2010, the Harmonized Sales Tax (HST) will replace the GST and provincial sales tax (PST) in British Columbia.

Some products and services will see an increase in the amount of tax charged as a consequence of the HST, but the taxes on legal services will not increase. Legal services are already subject to both GST and PST and so costs will not increase with the implementation of the HST in B.C.  Legal fees for services rendered (lawyer time and disbursements on the clients behalf) prior to July 1, 2010 are being taxed at 12% (GST 5% + PST 7%), and similar charges after the July 1^st transition date will be subject to 12% HST.

In order to avoid the complications that result from having pre and post HST time and disbursements recorded on files, our law firm has elected to bill matters with outstanding entries prior to July 1, 2010 to clear accounts up to the effective date.

For clients who are not billed prior to this transition date, their bill may show GST and PST for services rendered up to June 30, 2010, and HST for services rendered after July 1, 2010 but without duplication.

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Tags: HST, legal bills, legal services, tax

This is the fifth and final post in a series of posts on this subject.
The full version of the article will be published in the Verdict,
a publication of the Trial Lawyers Association of B.C.

There are several key reasons why counsel will have to work harder in obtaining document discovery.  First, as noted earlier in this paper, the diminished breadth of the initial list means counsel can place less reliance than ever on opposing counsel’s duties in respect of production.

Second, the time limits on examinations will prevent counsel, in many cases, from conducting an oral fishing expedition.  Consider the examination of a bank officer with a view to determining what policy documents existed at the time that loans were granted to a party to the action.  An examination of the officer may take many hours, and require interim adjournments, to ascertain the existence of documents; and by the time they are produced, the time allotted for examination of the bank may have expired thereby preventing counsel from effective discovery on key issues of the case.

Third, there is no longer an automatic right to seek information by way of Interrogatories without consent or order.

In this author’s view, counsel should therefore:

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Tags: document discovery, New Rules, Rule 7-1

On June 10, 2010 the Canadian Securities Administrators issued new guidelines to assist insiders in  reporting certain derivative-based transactions, including transactions which are commonly referred to as “equity monetization” transactions.

An investor is said to monetize the equity in securities when she or he transfers the risk and/or return of those securities for cash, without actually transferring ownership or control.  It is a way for investors to lock in a market gain without concurrently transferring ownership of the underlying security.

The guidelines consider a number of common derivative transactions giving rise to the duty to file an insider report through the System for Electronic Disclosure by Insiders (SEDI):

• Entering into a forward contract to sell the securities for a fixed amount on a specific date
• Entering into a swap transaction which has similar effect to such a  forward contract
• Buying a put option which allows, but does not obligate, the insider to sell the securities on a specific date for an amount which is either fixed or formula-based
• Simultaneously buying a put option allowing the insider to sell to another party at a certain price, and selling a call option allowing the same party to buy the same securities from the insider at a higher price.  The sale of the call option exercisable at a higher price is a way of financing the purchase of the put option.  The combination of a put option and call option is sometimes referred to as a “collar”
• Borrowing an amount close to the current fair market value of the securities under a limited-recourse secured loan for which the lender cannot look beyond the securities for repayment on its due date

Such transactions are most commonly entered into with investment banks who hedge their risk by entering into a series of short sales in the secondary market.

Step-by-step details of the recommended filing methods can be found here.

The guidelines are not mandatory but do serve to give comfort to the investor that disclosure will be acceptable; and they also serve to enhance uniformity of insider reporting requirements throughout Canada.

Tags: call option, derivatives, disclosure of derivative transactions, forward contract, insider disclosure, put option, securities collar, short sales, swap agreement, swap transaction

According to Statistics Canada, divorce is on the decline but for those who are divorcing, nearly three-quarters of them are using lawyers to help them resolve their marital issues.  In B.C. there were nearly 21,000 active divorce cases in 2008/2009 but only 16% had a statement of defence on file.  This means that only 16% of the active divorce files were litigious or specifically, the other spouse did not agree to the proposed resolution of the marital issues.  However, of those active divorce files in B.C., only 2% of them actually proceeded to a trial in 2008/2009.

Lawyers often act as negotiators or mediators to assist clients with resolving the division of assets, custody of children, access to child, spousal and child support.  Once settled, the agreement is documented in a Separation Agreement, signed by the divorcing couple.  When they get around to filing for a divorce, that is all they will ask for as all other issues have been resolved.  They will obtain an undefended Divorce Order only.  Hence, the low percentage of active divorce files with a statement of defence.

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Tags: Asset Division, Divorce, Role of Lawyers, Seperation Agreement

This is the fourth in a series of posts on this subject.
The full version of the article was published in the Verdict,
a publication of the Trial Lawyers Association of B.C.

The English Experience

In England, the courts in civil cases routinely make an order for document discovery, now called “disclosure”.  English rule Civil Procedure Rule (“CPR”) 31.5(1) provides that an order of the court to give disclosure is an order to give “standard disclosure”, unless the court directs otherwise.  CPR 31.6 identifies what documents are to be disclosed by way of standard disclosure, which are: (a) the documents on which he relies; (b) documents which adversely affect his own case or adversely affect another party’s case or support another party’s case; and (c) documents required to be disclosed by a relevant Practice Direction.  The concept of “standard disclosure” has been in place since 1999.

CPR 31.7 limits “standard disclosure” by providing that, when giving it, a party is required to make a “reasonable search for documents falling within rule 31.6(b) or (c)”.  In turn, factors relevant in deciding the reasonableness of a search include the following (a) the number of documents involved; (b) the nature and complexity of the proceedings; (c) the ease and expense of retrieval of any particular document ; and (d) the significance of any document which is likely to be located during the search.  These factors are similar to the proportionality tests which are the basis of the new British Columbia Rules of Court.   Where a party has not searched for a category or class of document on the grounds that to do so would be unreasonable, she must state this in her disclosure statement and identify the category or class of document.  By rule 31.10 the list of documents much include a disclosure statement, which is in turn defined as a statement setting out the extent of the search that has been made to locate documents required to be disclosed and certifying that the maker of the statement understands the duty to disclose documents and that to the best of her knowledge she has carried out that duty.

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Tags: document discovery, New Rules, Rule 7-1