OFF THE RECORD
JEFFREY
MILLER
Worse things happen at sea.
That’s what they tell you in Britain
when you’re feeling low or anxious.
But it would probably be little
comfort to John Letnik, owner of
Captain John’s Harbour Boat
Restaurant. The worst thing has
pretty well happened to him on
Lake Ontario, with Toronto’s property tax authority ramming his
lake-going operations.
Or lake-staying, really, which is
the nice legal point. Letnik has
operated his restaurant on a ship,
at the foot of Yonge Street, for 33
years. At first, he used an old fire
boat from Detroit known formerly
TORONTO S TAR / GETSTOCK. COM
Captain John’s Harbour Boat Restaurant is on Lake Ontario in Toronto.
as the S.S. Normac. In 1981, on one
of its regular shuttles from the
Islands, the ferry Trillium rammed
the Normac. Wounded in its hull,
the restaurant sank two weeks
later. Eventually it was salvaged,
and an anonymous Internet source
says it does duty these days as a
restaurant in Port Dover, Ont.
Jadran — a cruise ship from
Letnik’s homeland of Yugoslavia
— and again served diners on
board. But in the last decade business declined. Disgruntled C.J.
diners resorted to posting Internet
reviews more often, it seems, than
the sated. The terrorist attacks of
September 11, 2001 and more general economic turbulence rocked
the boat, given the restaurant’s
heavy dependence on the tourist
trade. And then the tax authority
assessed Captain John’s as a “
structure” under the Assessment Act,
R.S.O. 1990 c. A.31, at a value of
$269,703. Characterizing the
ship’s berth as “land” added another $774,275.
The Act provides that “land”
includes “land covered with water,”
as well as “all structures and fix-
tures erected or placed upon, in,
over, under or affixed to a highway,
lane or other public communica-
tion or water… .” To avoid the
assessment, Captain John’s argued
that a ship is not a structure, and
that a ship’s berth is above but not
part of the assessable land of the
water bed.
Letters
TO THE EDITORS
fraudsters’ modus operandi have
helped, and continue to help, lawyers avoid being duped. The 18
unsuccessful fraud attempts of the
May 24 weekend should not be
confused with the dozens of
attempted and successful frauds
perpetrated against lawyers.
The legal landscape has
changed: Fraud is a reality of business today. And to avoid being its
victim, lawyers may have to change
certain aspects of their practices.
LAWPRO recognizes that such
change may not come easily, and
we are working with practitioners
to address their concerns about the
enhanced protection for counterfeit certified cheque or bank drafts
— and to help lawyers recognize
and avert fraud in the first place.
these conditions with which real
estate practitioners cannot comply because they cannot a) require
their clients or the solicitor on the
other side of a transaction to electronically “wire” closing funds as
the Standard Form OREA
Agreement of Purchase and Sale
does not contemplate or require
this and b) they cannot hold in
trust for eight clear business days
a bank draft or certified cheque
from the sale of a property as the
client’s mortgage must be paid
out on closing and clients expect
to receive any net sale proceeds as
soon as possible after closing.
While it may be true that
LAWPRO is “enhancing the
existing protection” for counterfeit certified cheques and bank
drafts in 2010, it has also,
through this process, put real
estate lawyers on notice that
they had little or no protection
for such claims, up until now,
unbeknownst to them, and will
in the future only be covered
under very limited circumstances, if at all.
If practising real estate law has
become riskier due to the increasing prevalence of fraud and counterfeit instruments being unwittingly passed off as genuine to real
estate lawyers, then, LAWPRO
should increase the LPIC Levy for
Real Estate Transactions (to be
borne by the public consumer), or
charge a premium to reflect the
risk, not put the risk of any shortfall in a lawyer’s trust account due
to a counterfeit cheque or bank
draft “personally” on the backs of
real estate lawyers. Even better,
shouldn’t the risk and costs of
counterfeit bank drafts and certified cheques be shouldered by the
banks since bank drafts and certified cheques are the currency of
trade invented by them and they
benefit most from their circulation and use?
I am not trained to forensically identify a counterfeit bank
draft or certified cheque (beyond
the usual due diligence). For the
last fifteen years of practising
real estate, without a single
claim, I was under the mistaken
assumption that LAWPRO
would protect me against such
an eventuality. Turns out I was
wrong because it is not “
commercially responsible” for LAWPRO
to insure me against such a risk.
Yours very truly,
Mary J. MacKinnon
Email us at: tlw@lexisnexis.ca
Re: “Counterfeit coverage creates
controversy,” The Lawyers Weekly,
December 11, 2009.
Your article quotes Ms.
MacKinnon as saying that lawyers “effectively have no insurance coverage for such fraud.”
This is incorrect.
Lawyers do have and always
have had coverage in situations
where funds of legitimate clients
were inadvertently paid out to
fraudsters before the lawyer discovered that the instrument was
counterfeit. Moreover, lawyers do
not need to make any changes in
the way they practise for this protection to continue be in effect.
LAWPRO is enhancing the
existing protection starting in
2010: If a lawyer’s trust account is
in an overdraft position because of
a counterfeit certified cheque or
bank draft, and the shortfall is
strictly between the bank and the
lawyer (no legitimate client funds
are taken, or the amount of funds
disbursed exceeded that belonging
to legitimate clients), lawyers will
now have protection — at no additional cost — under the insurance
program, provided that they comply with certain coverage requirements. Moreover, this coverage is
intended to help protect all segments of the bar.
Mr. Claridge confuses claims
reported with claims averted in the
article, leaving the reader with the
impression that we have had few, if
any, claims involving these types of
counterfeit financial instruments.
Again, this is incorrect. We have
had more than the 16 claims he
cites. And, our proactive efforts to
warn lawyers about fraud and
Letters to the Editor should be
exclusive to The Lawyers Weekly.
Include name, address and daytime
telephone number. Please keep
letters under 200 words. Letters
may be edited for length and clarity.
Fax: (905) 479-3758
E-mail: tlw@lexisnexis.ca
Sincerely,
Kathleen A. Waters
President and CEO
Is pleased to introduce
Re: “Counterfeit coverage creates
controversy,” The Lawyers Weekly,
December 11, 2009.
Springbok ADR Services Inc.
Dispute Resolution, Mediation and Arbitration
In response to Kathleen Waters’
letter, I cannot disagree with any-
thing in her except for her asser-
tion in paragraph 3 where she
states: “… lawyers will now have
protection — at no additional cost
— under the insurance program,
provided that they comply with
certain coverage requirements.”
And therein lies the problem with
this “protection — at no additional
cost.”
First, the LPIC premiums did
indeed increase in 2010 over
2009, and, in addition, the Real
Estate LPIC real estate surcharge
levy per transaction increased
from $50 to $65 per transaction.
Secondly, with respect to compliance with “certain coverage
requirements” — it is precisely
Specializing in a full range of financial
mediation and arbitration services for the business
community, including shareholder disputes,
debtor/creditor negotiations, and family,
estate, and succession planning conflict resolution
Irving Feldman, President
ifeldman@sfgroup.ca
416.646.8051
www.springbokadr.com
4950 Yonge Street, 4th Floor, Toronto, Ontario M2N 6K1
