Archive for the ‘Litigation and ADR’ Category

Herb Silber, Q.C.
Monday, March 6th, 2017    Posted by Herb Silber, Q.C. (posts)
Herb Silber, Q.C.
Herb Silber, QC brings a strong combination of experience, knowledge and empathy to the arbitration process as Arbitrator or Counsel. Herb’s approach creates the positive, respectful atmosphere critical to a successful arbitration process.

Typically the format of a mediation hearing involves the following stages:

  1. The parties meet in a plenary session with the mediator to set the stage for the mediation. This provides the forum where the parties can state their positions.
  2. The mediator caucuses with each party. These sessions are confidential save to the extent the mediator is authorized to take information to the other party.
  3. After one of more of these sessions, a point will come where the parties will either reach a settlement or find they are unable to do so.
  4. If a settlement is reached it is documented; if not, some mediators, including myself, have expressed a willingness to remain involved to facilitate ongoing discussions between the parties which may lead to a settlement.

Even an unsuccessful mediation can bear fruit. It can clarify and narrow the issues which can bring about a settlement at a later stage. That said, the optimum is to encourage a settlement if one is to be had on the day set aside for the mediation. The parties are most invested in trying to reach a settlement then. They have set aside the time and each has usually approached the Mediation with an optimism that a settlement is possible, albeit on terms they see most advantageous to themselves.

With that in mind, mediators look to try to bridge any gap that exists. An activist mediator will try to achieve this through a mix of encouraging the parties to try harder, utilizing one’s realistic or practical advice, commercial perspective and the use of other skills. Some may suggest a med-arb approach whereby the mediator makes a written determination of the outcome and places it in sealed envelope only to be opened at the end of the mediation if there is no settlement. That is a risky business but if the parties buy into it they will be encouraged to moderate their positions so they achieve a collaborative solution rather than one that will have been imposed.

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Herb Silber, Q.C.
Friday, May 6th, 2016    Posted by Herb Silber, Q.C. (posts)
Herb Silber, Q.C.
Herb Silber, QC brings a strong combination of experience, knowledge and empathy to the arbitration process as Arbitrator or Counsel. Herb’s approach creates the positive, respectful atmosphere critical to a successful arbitration process.

One issue that often bedevils a mediator is the role of legal counsel at the Mediation. The goal from the mediator’s perspective is to encourage the parties to find a settlement. A Mediation that does not arrive at a settlement, or does not at least set the stage for one by narrowing the dispute, must be considered a failure. Legal counsel may be part of the solution, but often times are part of the problem. Some litigation counsel are stuck in the belief that any concession by their client is a sign of weakness. Thus, if the dispute does not settle they and their client will be seen as weak. It is precisely because of this perception that counsel with this mindset ought to have the most invested in a successful process. The parties, with perhaps the exception of a mandatory mediation (even then it is not all that clear), are “at the table” to find a resolution for a variety of reasons; cost savings, husbanding of non-pecuniary resources, preserving of relationships, privacy and others. Counsel must identify with these goals and try to find a path to achieve them, not be imprisoned by their own ego because the resolution will necessarily be a collaborative effort, and not engineered by them. One way to get Counsel on board is to persuade them of the risk of not settling, not the reward of not doing so. This requires a mediator with experience; a strategic thinker and one with judgment who either has or can gain the confidence of all parties and their counsel.

 

The other challenge that I wish to address that often arises in mediation is where does the truth lies between the parties. This is where mediation and a trial or arbitration part company. Mediation is not a search for the truth like a trial. It is a search for a settlement. A skillful mediator must understand that and be able to subtly influence the parties so they are not invested in finding the truth, but rather in finding a resolution. The resolution may reflect, in some fashion, the respective versions of the truth, but that is not crucial. What it needs to reflect are the respective interests of the parties and how they have been able to rationalize those needs to achieve a settlement.

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Herb Silber, Q.C.
Tuesday, March 29th, 2016    Posted by Herb Silber, Q.C. (posts)
Herb Silber, Q.C.
Herb Silber, QC brings a strong combination of experience, knowledge and empathy to the arbitration process as Arbitrator or Counsel. Herb’s approach creates the positive, respectful atmosphere critical to a successful arbitration process.

In my last post, I addressed the question of whether an Arbitrator should conduct his or her own independent research of the facts outside of the evidence presented by the Parties. Now I want to address the second part of that question which deals with legal research. Succinctly put, should an Arbitrator engage in his her own legal research independent of the submissions made by the Parties or their Counsel.

It is not unusual for a Judge to refer to cases that have not been cited by Counsel that may be recent expressions of cases well known and referred to by Counsel to support one side or the other. I see no harm in that. However, once an Arbitrator embarks on his or her own to engage in legal research on an issue not raised or focused upon by the parties I believe he or she is on shaky ground and may subject their Award to a finding of arbitral error.

Underlying all arbitrations is the right of each party to know the case it needs to meet. That is inherent in the concept of a fair hearing. So for an Arbitrator to venture out on his or her own to research a legal issue that the parties have not raised or may be peripheral to the case, arguably, would be manifestly unfair. The saving grace however could be if the Arbitrator raised the legal issue with the parties that is of concern and asked them to address it, rather than doing his or her own research. This would be consistent with the direction to the Arbitrator in BCICAC Rule 19 to make a determination of the case on its merits, but in doing so treating both parties fairly and giving each an opportunity to present their case. Moreover, Rule 33 of the BCICAC Rules makes it clear any award must be decided in accordance with the law, in the absence of agreement by the Parties to do otherwise.

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Lana Li
Tuesday, February 16th, 2016    Posted by Lana Li (posts)

As the baby boomer generation see their children move out of the house and settle into their careers and family, some are now re-examining their marriages or long term relationships and considering what they want to do, and with whom, during their retirement years.  According to Statistics Canada (Marital Status Overview: 2011), there were a greater number of divorced and separated couples over the age of 65 in 2011 than in 2006.  A Times article in October 2014 provides that 1 in 4 divorces in the United States are experienced by those over the age of 50 and 1 in 10 divorces are experienced by those over the age of 65.  Given the aging population, it will not be surprising that these statistics are on the rise.

The social and financial impact of “grey” divorces, a phrase coined to refer to the demographic trend of rising divorce rates for older (grey-haired) couples in long term relationships, can be significant.  While the mortgage on the family home may well be paid off by then, the cost of maintaining two households, even if by modest standards, will likely be higher than for one household, coupled with reduced income in retirement years.  One party may require additional homemaker support, assisted living, or a care facility if there are significant health issues, including dementia or Alzheimer’s.  For some couples, there will be less time to rebuild assets given that one or both may be nearing the end of his or her working life.  The cost of health care coverage may be significant if one party loses coverage upon separation or divorce, previously available through the other spouse’s benefits plan.  Pension splitting will need to be considered.  Family businesses may need to be split up and tax considerations will need to be considered.  If there are prior marriages or relationships, competing interests of all of the children or prior spouses may need to be considered.  Life insurance and beneficiary designations must be re-examined.

From the courts’ perspective, it is unlikely that a court will “force” one party to work beyond his or her age of retirement, especially if there are health issues, but it will examine closely one party’s decision to retire early and the reasons for it. Where a party continues to work after the age of 65, a court may consider that he or she will not retire, absent any health or other reasons for not working and the court may require that party to pay, or continue to pay, spousal support based on that expected working income.  A court will only allow “double dipping” (paying spousal support to a spouse from that part of pension income that has already been equalized) in limited circumstances.[1]  Where one spouse’s needs due to dementia can be determined with some mathematical certainty, spousal support can be ordered and such spousal support can be binding upon the payor’s estate.[2]  In some circumstances, spousal support will be refused if the payor requires all of his or her income to pay for care facility costs, the marriage was short, and the division of assets would adequately compensate the other spouse.[3]   Thus, even if there is need of the other spouse, there might not be sufficient income available to pay after the payor’s needs are taken into account.

At the end of the day, those baby boomers who are facing divorce or dissolution of their relationship should obtain legal and financial advice to assist them in navigating these challenging issues.


[1] Boston v Boston, 2001 SCC 43

[2] S.(E.R.) v S(H.C.), 1998 CanLII 4619

[3] W.C.L. v A.J.L, 2003 BCSC 971

 

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Alisha Parmar
Friday, February 5th, 2016    Posted by Alisha Parmar (posts) and Dan Parlow (posts)
Alisha Parmar
Alisha joined Kornfeld LLP as an associate in 2015 after completing her articles with the firm.
Dan Parlow
Dan is a partner at the firm of Kornfeld LLP. He helps resolve commercial disputes for clients including investors, brokerage houses and financial institutions in the realization of claims by creditors and over disputed investments; entrepreneurs in claims over business assets, shareholder and partnership interests and commercial property; estates, trusts and beneficiaries over disputed wills, trusts and related claims; clients of realtors, lawyers, accountants, brokers and investment advisors; and businesses in the telecom, oil & gas and high-tech industries.

Defending a legal action can be an expensive process, even where a defendant is ultimately successful in having the claims against it dismissed. Normally, legal costs are “in the event”, so that a successful defendant will have some of its legal costs awarded to it. However, there may be serious difficulty recovering legal costs depending on the circumstances of the plaintiff – the plaintiff may have no assets, for example.

As a result, in certain cases, it will be appropriate to seek an order for “security for costs”, so that the plaintiff is required to pay a sum of money into court or into a trust account prior to trial of the action and the defendant can have quick recourse for its legal costs against those funds if it succeeds. An order for security can be an important defendant’s tool since a plaintiff who is ordered to, but does not post, security for costs will be precluded from pursuing its claims.

Interestingly, courts apply a different test in deciding whether to order security for costs depending on whether the plaintiff is a corporation or an individual. Where the plaintiff is an individual, the underlying concern is that poverty should not be a bar to the litigation proceeding.[1] Thus, the “fact that the plaintiff resides outside the jurisdiction, has no assets within the jurisdiction, or is impecunious, is not sufficient in itself” to order security for costs.[2] A defendant must show that special circumstances exist for the order, which “could arise if an impecunious plaintiff also has a weak claim, or has failed to pay costs before, or refused to follow a court order for payment of maintenance”.[3]

In contrast, once a defendant can demonstrate that a corporate plaintiff will not likely be able to pay costs if the defendant is successful, security for costs is generally ordered unless the court is satisfied there is no arguable defence to the plaintiff’s claim.[4] The likelihood that a corporate plaintiff will be barred from proceeding with a claim is an insufficient reason, without more, to refuse to order security for costs.[5]

However, a corporate plaintiff may be wholly or substantially controlled by an individual who is also a plaintiff in the proceeding – in this scenario, an order requiring the corporate plaintiff to post security will likely affect the individual plaintiff as well. The question arises whether in such a situation the court should be less inclined to compel a corporate plaintiff to post security?

The British Columbia Court of Appeal recently considered this question and answered in the negative – the test remains the same against a corporate plaintiff even if there is a single shareholder who is also a plaintiff in the action.

In Ocean Pastures Corporation v. Old Masset Economic Development Corporation, 2016 BCCA 12 (“Ocean Pastures”), the two plaintiffs (a corporation and its sole shareholder) sued several defendants, including two corporations and three individuals. Early on, these defendants argued that the plaintiffs would not be able to pay costs if the action was dismissed because neither plaintiff appeared to have assets. The judge first hearing the application ordered security for costs for the actions against the three individual defendants, as the claims against them were weak, but refused to order security for costs for the claims against the corporate defendants.

Despite finding that security for costs would have been warranted if the corporate plaintiff’s claim had been considered in isolation from its shareholder’s claim, the chambers judge denied security, reasoning that (a) any security posted by the corporate plaintiff would have to be supplied by the individual plaintiff; and (b) there were no “special circumstances” which would have justified granting security against the individual plaintiff.

The corporate defendants appealed the decision, arguing that the chambers judge erred in law by applying the “special circumstances” test to the corporate plaintiff. In agreeing with the defendants, the Court of Appeal relied on an older English decision, for the principle that the existence of an individual plaintiff should not shield a corporate plaintiff from an order for security for costs, and that a stricter test for security for costs against corporations is appropriate to prevent individuals from using companies (with the benefit of limited liability) to abuse the litigation process.[6]

Since an order requiring a plaintiff to post security for costs can be a decisive factor early in the litigation process, this decision of our Court of Appeal has both legal and practical implications. Notably, in Ocean Pastures, as the plaintiffs had failed to post security for costs for the actions against the individual defendants, those claims were dismissed.[7] The Court of Appeal decision threatened to have the same result on the balance of the plaintiffs’ claims.

[1]Ocean Pastures v. Old Masset Economic Development Corporation, 2016 BCCA 12 at para. 19

[2]Ibid at para. 20, citing Han v. Cho, 2008 BCSC 1229

[3]Ibid

[4]Ibid at para. 18, citing Fat Mel’s Restaurant Ltd. v. Canadian Northern Shield Insurance Co., (1993), 76 BCLR (2d) 231 (CA)

[5]Ibid at para. 17, citing Kropp v. Swaneset Bay Golf Course Ltd. (1997), 29 BCLR (3d) 252 (C.A.)

[6]Ibid at paras. 24 to 25, citing Pearson v. Naydler, [1977] 3 ER 531 (Ch. D)

[7]Ibid at para. 10

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