The Law Society of Upper Canada is Getting a New Name

Canada’s oldest law society is getting a name change.

On Thursday, September 28, the Law Society of Upper Canada voted 33 to 11 in favour of  a motion to discard “Upper Canada” from its name at its first fall Convocation meeting. The organization has not yet decided on a replacement name.

Why Change the LSUC’s Name?

The name of Ontario’s regulatory body for lawyers and paralegals has been a contentious subject for some time now. Efforts to change the name originated at Convocation all the way back in 1993; since then, the debate has re-emerged every few years, with support growing in favour of those who wish to adopt a new name.

Though the tide has shifted towards change, the issue is far from settled among the province’s legal community, and nearly a quarter of the Law Society’s benchers (most of whom were elected by lawyers and paralegals) voted against the motion.

Why change the LSUC’s name? On the surface, the issue seems fairly straightforward. The name originates in a time when the “Upper Canada” designation was relevant; it has not been so for several hundred years. It’s likely many Ontarians have never heard of Upper Canada, let alone could explain what it is.

It’s old-fashioned, to say the least. But it goes deeper than that.

The Law Society is mandated to regulate the lawyer and paralegal professions in the public interest. Many in support of the name change have rightly pointed out the organizations name as an obstacle to carrying out that mandate.

After all, how can we expect people to understand what the Law Society of Upper Canada does if they have no idea what (or where) Upper Canada is?

If the organization adopted a more relevant name (like the oft-suggested “Law Society of Ontario”), the public would at least know the province in which it operates. That’s the hope, at least.

But it’s up for debate whether that sort of change would really solve the problem. One bencher pointed out that the term “Law Society” is obtuse as well.

In this context, “society” is basically a synonym for “group” – the word doesn’t connote the fact that the organization is responsible for licensing, regulating, and disciplining lawyers and paralegals in the province. Someone who isn’t familiar with the legal profession could think it’s a group that advocates on behalf of lawyers or paralegals, or that it’s a voluntary group like the Ontario Bar Association or a Law Association.

This bencher also suggested a name along the lines of, “Regulatory Authority of Ontario Lawyers and Paralegals.” RAOLP has a nice ring to it, no?


Aside from the Law Society’s mandate towards the public, it’s important to note another prominent aspect of the debate: colonialism.

Many benchers pointed out the association between Upper Canada and colonization. The name harkens back to a dark time in Canadian history, evoking violence towards and oppression of the country’s Indigenous peoples. The Law Society itself was not innocent in this regard, with an admissions process that was (and still is, to an extent) discriminatory and Anglo-centric.

It was thought by many that the Law Society could help shed its colonial past by adopting a more contemporary name. However, this is also up for debate. One bencher argued that changing the name for the purpose of reconciliation ignores the ongoing struggles of Ontario’s Indigenous communities, in addition to the colonial connotations of the name ‘Ontario.’

The Law Society of Upper Canada will continue to operate under its own moniker until a new name is chosen in November. Whether it ends up being the OLS, the LSO, or the RAOLP, the new name is sure to be controversial.

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How Does Income Sprinkling Work?

Earlier this summer, the federal government announced plans to change Canada’s tax laws to remove the practice known as ‘income sprinkling’, which lets people lower their income tax burden by distributing money among family members.

With Parliament out on vacation for the season, this issue didn’t boil over until recently. And boil over it did. From the moment the House re-opened its doors, there has been a nonstop flurry of outrage on the issues from both sides of the political aisle, including infighting within Prime Minister Trudeau’s own party.

As an avid CBC radio listener, I’ve been disappointed to hear little in the way of bipartisan discussion on these proposed tax changes. They’ve featured a cavalcade of sympathetic, well-spoken characters explaining why various classes of working people shouldn’t have to pay their full income tax obligation — doctors, dentists, lawyers, farmers.

Unfortunately, what we haven’t heard is the hundreds of professionals who support ending the practice. Nor has there been much talk of what exactly income sprinkling is. While I wouldn’t accuse the CBC of being on board with the CPC, I’d like to see a more in-depth discussion on this issue before consultations end on October 2nd.

In the meantime, I’ll offer my own take.

What is Income Sprinkling?

Before this fall, the vast majority of people would’ve pictured a donut if you asked them about income sprinkling. And to be fair, it is quite the treat if you have the means to grab it.

As is often the case, income sprinkling is not actually a ‘loophole’. It has been recognized and encouraged for years as a legal way for high-earning Canadians to pocket more of their income.

The basic idea is this: someone with a high income creates a corporation and employs their lower-income family members as ‘workers’ in the corporation. The high earner then uses their own income to pay their ‘workers’ a ‘wage.’

The ‘workers’, who may or may not perform any work on behalf of the corporation, pay taxes on their earnings at the lower tax bracket. Then, in one way or another, the high income earner reaps the benefits of that money without having had to pay higher income taxes on it.

Example of Income Sprinkling

Here’s an example of how this might work.

Nice Guy owns a corporation. He’s paying for his adult daughter’s university education. He’s going to use this arrangement to avoid paying income tax.

As the sole owner, Nice Guy could reap the corporation’s $220,000 profit in full. But instead, he employs his adult daughter as a worker in the corporation, paying her an annual salary of $45,000.

His daughter then uses that income to pay for her tuition, rent, and living expenses — which are all things nice guy would’ve been paying for anyhow.

If Nice Guy had taken home the full $220,000 himself, he would’ve landed in the highest tax bracket and handed 33% of that amount to the government. That’s $73,260 in income tax. Instead, his income is $175,000, and he pays at a lower tax rate of 29%, or $57,750.

His daughter, meanwhile, sits in the lowest tax bracket and pays just 15% ($6,750) on the $45,000.

Assuming Nice Guy would’ve had to pay the $45,000 regardless (since he’s paying for his kid’s education, being the Nice Guy he is), he saves $10,760 in income tax by sprinkling some of his income to his daughter.

And he can go further than that. He can also sprinkle some to his wife, who can use that money to buy groceries and pay other living expenses for both of them. He could throw some his son’s way, say $10,000, and have the son re-pay it to him in the form of rent.

Either way, he saves even more on income tax! Great, isn’t it?

Well, for those who have the time and money to incorporate (not to mention the knowledge to take advantage of this scheme), it is nice. But that’s not something most Canadians are capable of doing. Thus the characterization as a loophole for the wealthiest people.

Lawyers and doctors are two of the biggest groups speaking out in defence of income sprinkling, since many are business owners themselves and are accustomed to reaping the benefits of this trick.

The primary argument I’ve heard in favour is that these professionals often spend a lot of their own money to keep their businesses running, and that their non-working family members help them out. Thus, they claim it’s fair to use these people to dodge taxes.

While they’re probably right, the same argument could be made for a lot of Canadians in lower tax brackets as well. We all lean on our families for support; we all spend our own money to buy things for work sometimes.

And the rest of us pay our share of income tax, as we all ought to.

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Will TTC’s Drug Testing Policy Stand Up in Court?

Last month, the TTC suspended a driver for failing a random drug test. 300 employees have been tested since May.

It’s been three months since the Toronto Transit Commission (TTC) began administering random drug and alcohol tests on its employees. More than 300 employees have undergone the test in that time — eight have tested positive. Last month, the TTC suspended the first driver to fail a test, but disclosed neither the employee’s name nor the substance that tripped the test.

The TTC’s random drug testing policy has been controversial at every step. It was first proposed back in 2011, following an incident where a TTC bus driver rear-ended a truck. A passenger died in the accident, and police found marijuana on the driver’s person.

The driver refused to take a drug test, but the implication was clear. In the eyes of the public, drug use was the cause of the accident. Amid the uproar, the TTC responded with a widespread random drug and alcohol testing policy.

But not everyone supports this. The union representing thousands of employees, for one, was opposed from the start. The issue has been in the hands of an arbitrator since 2011.

The first major development in the case came in April 2017, when the Ontario Superior Court rejected the union’s application for an interlocutory injunction, which would have stopped the TTC from moving forward with the policy.

Many outlets reported this as the court’s approval of the policy. In fact, the court only approved of the TTC implementing the policy while the case is being litigated. It did not approve nor disapprove of the actual substance of the policy.

That’s for the arbitrator to decide. But don’t be surprised if it winds up in front of the court of appeal afterwards.

Random drug and alcohol testing is a thorny subject in Canada. Unlike many American states, Canadian courts have put very strict limits on when and how employers can test their employees. Testing is considered a significant affront to the dignity and privacy of employees, and addiction is viewed as a disability in the eyes of the law.

Two leading cases in this area are Stewart v. Elk Valley Coal Corporation and Communications, Energy and Paperworkers Union of Canada, Local 30 v. Irving Pulp & Paper, Ltd. In the Irving Pulp case, the company began testing 10% of its employees in safety-sensitive positions over the course of a year. A positive test would attract serious disciplinary action, including dismissal. The Supreme Court of Canada ruled against the employer, stating that an employer cannot unilaterally impose a mandatory random testing program unless it can prove it’s necessary, such as evidence of a general problem with substance abuse in the workplace. Simply having a dangerous workplace is not justification alone for such a policy.

The Elk Valley Coal case is more recent, and confirms that employees can test employees in some circumstances. The employer in that case had a policy where any employee who was involved in an accident while under the influence of drugs or alcohol would be dismissed. However, if an employee felt they had an addiction issue, they were free to disclose it to the employer before an accident occurred and could get help without fear of reprisal. The court upheld this policy.

It’s not clear where the TTC’s policy fits into the law. On one hand, safety is a significant concern among its workforce, as they are responsible for the safety of millions of people, and their workplace spans the entire city of Toronto.

But can the commission prove the policy is necessary? There was the incident in 2011, but that was never conclusively proven to be the result of drug use, and a single incident may not justify infringing on employees’ privacy.

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Should the Government Ban “Double-Ending” in Real Estate Deals?

The practice of “double-ending” has become commonplace in Toronto’s real estate market.

Earlier this year, the government of Ontario launched the Fair Housing Plan, a multi-phase effort to update various aspects of real estate and residential tenancy law in the province. This included an upcoming review of the practice known as “double-ending”, in which a real estate agent represents both the buyer and seller in a transaction.

Currently, there’s no rule against realtors double-ending in Ontario. But one does not require a depth of knowledge about real estate law to see why the practice is questionable.

Ontario real estate agents are governed by a body called the Real Estate Council of Ontario and the Real Estate and Business Brokers Act. The law prevents realtors from manipulating deals or using confidential information to give clients an unfair advantage.

However, the freedom to double-end deals gives agents ample opportunity to violate those rules.

The problem is conflict of interest. When it comes to a real estate transaction, buyers and sellers have entirely different interests. Sellers want to maximize their profit, while buyers want to get the best bang for their buck. The seller’s ideal price is not what’s best for the buyer.

That’s part of why people retain realtors in the first place. Real estate agents are meant to protect their clients’ interests and help them negotiate the best deal.

When your clients’ interests are directly opposed, there’s no way you can represent both of them to the fullest.

Law societies have recognized this for centuries. Avoiding and managing conflicts of interest is one of a paralegal or lawyer’s most important duties. Here in Ontario, the rules for both professions expressly forbid a licensee from representing both sides of a dispute, regardless of how friendly the opposing parties claim to be.

This is also true for lawyers practicing real estate law. There’s an exception for lawyers acting for relatives transferring properties from one to another, but the Law Society still cautions against this.

While a single realtor can represent both the buyer and seller, those parties will have to retain separate law firms for the same transaction. The double standard is clear.

The first phase of the review ended on July 24, with the government ending public comment on the issue. We’ll wait and see whether they’ll tackle double-ending before the next election. If the Liberals drag and delay on this issue, I expect the practice will live on, as the Progressive Conservatives are traditionally friendlier with the real estate industry than their colleagues in government.

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Why Sears Canada Can Legally Deny its Employees Severance

Former Sears Canada employees are left waiting in line with Sears’ other unsecured creditors for statutory severance pay.

One June 22nd, Sears Canada sought protection from its creditors under the Companies’ Creditors Arrangement Act, laying off 17% of its 17,000 employees and closing 59 store locations. Now, those 2,900 former employees are stuck in limbo, unsure if they will ever receive severance the law entitles them to claim.

Severance Law in Canada

In Canada, the provinces and territories have the authority to set laws governing the employment relationship. However, it’s the federal government that has jurisdiction over bankruptcy law.

Ontario’s Employment Standards Act gives workers the right to notice of termination or severance pay when the employer terminates their employment without cause. Courts can also grant an employee greater severance than the minimum standards based on a number of common law factors, including the employee’s age, years of service, and ability to find another job in the same field.

But that all goes out the window when bankruptcy law comes into play.

Companies can begin bankruptcy action under two laws in Canada: the Bankruptcy and Insolvency Act, or the Companies’ Creditors Arrangement Act. The BIA is more restrictive, as it involves an independent trustee who acts on behalf of all creditors, including former employees with severance claims. The CCAA, on the other hand, lets companies apply to the court for permission to suspend severance and other employee benefits without a trustee’s involvement.

That’s what Sears did in this case. Now, its former employees have to wait in line with Sears’ other creditors to see if they’ll get paid at the end of this so-called “financial restructuring”. And since the workers aren’t secured creditors, there’s no guarantee they’ll get the money they’re entitled to under the law.

Sears plans to continue operating its other stores during this period, and it has secured $450 million to help it re-brand in hope of bouncing back. However, it has also applied to stop paying benefits to its retirement plan that provides life insurance and medical/dental benefits to thousands of former Sears employees. On this, the court compromised; Sears has to continue paying until the end, at which point the retirees are left without benefits.

Fixing Broken Bankruptcy Laws

Not all companies take advantage of the CCAA to get out of paying its employees their dues. Target, for example, set aside a $70 million reserve fund to ensure its employees got severance when it sought bankruptcy protection in 2015. However, this event has demonstrated what many consider to be a gaping hole in Canada’s typically progressive employment laws.

Stuart Rudner, an employment lawyer, says reforming the law to make company directors liable for wages and severance would help protect employees in the future. The government could also amend the law to give workers secured creditor status to ensure they aren’t last in line for payment in the event of a bankruptcy.

Others have called on provincial and federal governments to act. Premier Kathleen Wynne said her government is saying “very close attention” to the Sears situation, but says there’s no real role the province can play in defending the workers. That’s because the law governing these proceedings, the CCAA, is a federal law. But Catherine Fife, an MPP from Kitchener-Waterloo, wants to see Wynne lobbying the federal government for change.

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Ontario Legal Clinic Challenges Aggressive Panhandling Law

Staff at the Fair Change Community Legal Clinic in Toronto is pursuing a constitutional challenge against Ontario’s Safe Streets Act, which criminalizes “aggressive panhandling” in the province.

This is the second legal challenge to the law since it was enacted in 1999. The previous challenge failed,  but the latest case has a broader focus and incorporates more evidence of the effects of the law over the past 18 years.

The Safe Streets Act

The Safe Streets Act was conceived by the former Premier Mike Harris’s Progressive Conservative government in 1999. It came in response to complaints about the behaviour of so-called ‘squeegee kids’ in Toronto, referring to homeless panhandlers who clean the windshields of vehicles stopped at red lights and demand payment from drivers for the unsolicited service.

This manner of panhandling has long been a source of tension in Toronto. Some drivers complain about homeless youth with squeegees moving in and out of busy traffic and the “aggressive” manner in which they solicit payment. There have been at least two violent incidents between drivers an squeegee kids since 1999.

The law makes it illegal to:

  • Threaten a person with physical harm for failing to respond to a solicitation
  • Block the path of someone during or after solicitation
  • Use abusive language during or after solicitation
  • Follow someone after they reject a solicitation
  • Solicit while under the influence of drugs and alcohol
  • Persistently solicit after being rejected
  • Solicit someone using or waiting for an ATM, public toilet, payphone, taxi, or transit
  • Solicit someone stopped on a roadway

Criticism of the Act

Joanna Nefs, the executive director of the Fair Change Community Legal Clinic, argues the Safe Streets Act is too vague, too broad, and infringes on peoples’ freedom of expression and equality rights under the Charter.

In a Toronto Star editorial, Nefs writes the Act, “criminalizes the poor for being poor, compounding inequality, clogging up the already overburdened court system and draining public coffers in the process.”

She says the Act, which has cost Toronto Police over $1 million to enforce between 2000 and 2010, disproportionately impacts people who have mental health or addiction issues, or who are aboriginal or visible minorities. These groups are all protected under s.15 of the Charter.

The previous legal challenge to the Safe Streets Act occurred in 2001. This case focused on the impact of the law on squeegee kids, advanced on behalf of 13 people charged under the act. The Ontario Court of Appeal ruled that although the act did breach their Charter rights to freedom of expression, the breach was justifiable in the interest of public safety.

Nefs says the new challenge has a chance of success because of its broader focus and evidence of the act’s effects on vulnerable populations in Ontario. It also argues the s.15 equality rights angle, noting that the Liberal government amended the act in 2005 to allow solicitation on behalf of registered charities. This, she argues, is an arbitrary distinction that triggers s.15 protection.

There is also a bill to repeal the Act making its way through the Ontario legislature. New Democratic MPP Cheri DiNovo introduced the bill earlier this year. The bill is through first reading, but the Ministry of the Attorney General has so far declined to comment on whether the government will support it.

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Should the Law Society Limit Contingency Fees in Ontario?

A committee report finds many lawyers and paralegals are not following the current rules in place for contingency fees.

What’s best for lawyers and paralegals isn’t always best for the people they serve.

The Law Society of Upper Canada regulates the legal professions in Ontario in the public interest. It’s part of its mandate to ensure the public gets a fair shake when it comes with dealing with lawyers and paralegals. That’s why legal professionals can’t just do what they want – they have to follow the Rules of Professional Conduct and the Paralegal Rules of Conduct respectively.

Recently, the Law Society changed the rules for referral fees and advertising. Now, it’s tackling contingency fees.

What’s a Contingency Fee?

Lawyers and paralegals can structure their fees in a few different ways. Most often, they charge a running hourly rate for their services. Sometimes, they charge a fixed or block fee to perform a certain task. They can also charge contingency fees.

In a contingency arrangement, the fee is based in whole or part on the amount of money the client wins in the case. In other words, if the representative doesn’t win the case, the client doesn’t pay.

The idea of a contingency fee is that it gives clients who can’t afford hourly or fixed fees a change to get legal representation. The lawyer or paralegal takes on the case knowing there’s a chance they won’t get paid at the end.

Contingency fees aren’t allowed in criminal or quasi-criminal (provincial offences, like by-laws) cases, since that would jeopardize the representative’s loyal to the client and the rules of conduct. But just about every other area of law involves contingency arrangements some of the time. It’s especially common in personal injury cases with the potential for a big payout at the end.

Why Limit Contingency Fees?

Recently, the Law Society formed a committee to study issues in advertising and fee arrangements for lawyers and paralegals. It just released its interim report on contingency fees, which found significant issues in the matter.

According to the report, many licensees are failing to follow the current rules on contingency fees. Contingency fees are supposed to be fair, reasonable, and confirmed in writing. People aren’t doing that.

As a result, the committee finds, change is necessary to protect clients.

The committee recommends requiring a mandatory standard form agreement to make sure the client understands how the fee works before they agree to it. It also suggests additional safeguards, such as hard limits on fees (either a percentage of the settlement or the amount), requiring the client get independent legal advice before paying the fee, and new reporting requirements.

Reaction to the Recommendations

Changing the rules of conduct always creates some debate in the legal community, and this is no exception. It’s especially contentious among personal injury lawyers, whose practices often run on contingency fees.

Andrew Spurgeon, a personal injury lawyer who sits on the committee, supports the changes. He says the goal is to come up with an approach that protects the public by ensuring fees are reasonable and transparent. “The present system is archaic and needlessly complicated. It’s very difficult to explain how it works to a client. So the first thing we have to do is simplify it.”

Claire Wilkinson, head of the Ontario Trial Lawyers Association, disagrees. “Well intentioned as it may be, imposing an arbitrary cap could prove counter-productive, against the public interest and subvert the benefit of the access to justice that could otherwise be provided to many people.”

Another personal injury lawyer, Steve Rastin, echoes what Wilkinson says. “I don’t think there is ever going to be a problem getting lawyers to take on a large case. I think that a cap may function as a disincentive in smaller cases as an access to justice issue to get people to take them on.”

At this point, a cap on contingency fees won’t happen without a fight. Liberal MPP Mike Colle unsuccessfully tried to go around the Law Society and introduce a 15% cap in a private member’s bill last spring. However, I think the standardized contingency form is likely to pass, if only to force lawyers and paralegals to comply with the rules already in place.

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The Case Against Administrative Monetary Penalties (AMPs) in Ontario

Backlog is a problem in Ontario’s courts, but administrative monetary penalties are not the solution.

In most cases, real-life court proceedings are far from the spectacles you see every night on TV. They’re slow, measured, and fairly soft-spoken. Lawyers and paralegals do most of the talking, and since everyone in town knows each other, they tend to maintain a pretty high level of decorum.

Of course, there are exceptions. Traffic Court is one of them.

There, you’ll find ordinary men and women standing their ground, defending themselves from charges like speeding and parking infractions. You’ll watch a practiced Justice of the Peace plow through dozens of cases a day. You’ll see lawyers and paralegals cutting deals with the Crown to resolve cases expediently. Occasionally, you’ll get a longer trial based on complex legal issues, but for the most part, it’s the people’s court.

Not everyone sees this as a good thing.

Ontario’s court system, like all Canadian courts, faces a heavy backlog of cases. That weighs heavily on taxpayers, not to mention the people left waiting for months on end to have their day in court. Hiring more judges and justice may provide temporary relief, but it doesn’t solve the inefficiencies that created this problem in the first place. Eliminating court backlog and increasing access to justice will take new ideas and radical changes.

One radical change that has been proposed has been to take certain provincial offences (like minor Highway Traffic Act offenses) out of the court system and replace them with administrative monetary penalties.

Administrative Monetary Penalties

People often talk about Canada as three levels of government: the federal government based in Ottawa, the provincial and territorial governments, and the municipal or local governments within each province. Truth is, municipalities don’t have much inherent power. They’re more like an extension or a downloading of the provincial government’s power.

In Ontario, it’s the Municipal Act, 2001 that delegates powers to local governments. It grants municipalities to pass by-laws and sets out their responsibilities in terms of transportation, waste management, public utilities, cultural and recreational spaces, and parking, among other things.

Section 434.1 of the Act lets municipalities establish a system of administrative monetary penalties to help it enforce its by-laws. Some municipalities already use these penalties to resolve by-law issues, like parking infractions.

For example, parking illegally in Markham will net you an administrative penalty rather than a parking ticket. Unlike a parking ticket, you can’t dispute this penalty in court — instead, you must request a Screening Review appointment with the city. If the Screening Officer doesn’t let you off, you can appeal to another municipal officer for a second review. But that’s where your right to appeal ends. There’s no court date, no justice to hear your case.

To some, this system is an improvement on the current state of affairs. Administrative penalties are seen as a more efficient way for municipalities to resolve these cases. After all, who really needs to go to court over a ticket?

When people picture backlog in the provincial courts, they often think of the irresponsible speeder who refuses to admit his wrongdoing, or the inconsiderate driver who parked in a loading zone. They don’t think of the trucker who risks losing his livelihood, the novice who was confused by a poorly-placed street sign, or responsible driver who had a tough break on a patch of black ice.

Depriving people of the right to a court hearing, even for minor offences, is not a solution to court backlog. The whole problem with the backlog is access to justice —both for the accused people stuck in limbo for months before their hearings, and the victims who see an accused go free due to unconstitutional delay.

Taking access to justice away from one group in an attempt to restore it for others is no justice at all.

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