The Lawyers Weekly - January 20, 2012

ABORIGINAL LAW

ABORIGINAL STATUS AND RIGHTS – Civil actions and liabilities – Historical grievances – Residential schools – Practice and procedure – Settlements – Orders – Enforcement of orders.

Appeals by Daniels and the Attorney General of Canada from an order appointing a receiver under the Maintenance Enforcement Program. At issue was whether monies payable by the federal Crown under the settlement of an Indian Residential School class action could be the subject of an order appointing a receiver under the Family Maintenance Act. The class action settlement agreement provided for the payments to be made from a trust fund established by the Crown as special purpose accounts. Daniels was a class member and a recipient of payments under the settlement agreement. He was in default under a 2005 child support order, with arrears totalling $84,125. In child support enforcement proceedings, a Master ordered attachment of the settlement payments due to Daniels. The judge supervising the class action replaced the attachment order with an order appointing the receiver. The judge found that the attachment order was invalid, as there was no jurisdiction to attach a debt owed by the federal Crown unless specifically permitted under federal legislation. However, the judge concluded that it was just and equitable to appoint a receiver over Daniels’ property to ensure that the funds were applied to the benefit of Daniels’ children. Daniels and the Crown appealed, asking that the receiver order be set aside. The Crown submitted that the effect of the receiver order was the same as the attaching order and thus offended common law and statutory principles of Crown immunity, and that the judge lacked jurisdiction to bind the federal Crown with an order made under provincial legislation. Daniels submitted that the terms of the settlement agreement prohibited attachment in any way, that the judge lacked jurisdiction, that the order was precluded by ss. 88 and 89 of the Indian Act, and that the judge erred in relying on s. 55 of the Court of Queen’s Bench Act in finding that a receiver order was just and equitable.

HELD: Appeal by Crown allowed;
appeal by Daniels dismissed. There was no
error in jurisdiction or the procedure
adopted. The judge did not act inconsis-
tently with the Family Maintenance Act, as
s. 60 provided for the appointment of a
receiver for any purpose under the Act,
even without prior application. The judge
exercised his discretion judicially and for
the purpose of securing a just and exped-
itious resolution of the issues related to the
enforcement of Daniels’ arrears of child
support. The appointment of the receiver
did not itself offend Crown immunity, as
the law recognized the possibility of such
appointment where it created the power to
receive and did not constitute an order
against the Crown. However, the powers of
the receiver under the terms of the receiver
order were coercive in nature against the
federal Crown. Consequently, the receiver
order was altered to address the provisions
that offended the principle of Crown
immunity. As a result, no issue arose as to
whether the federal Crown was improperly
embraced by compulsory provincial legis-
lation. The judge made no error in law in
concluding that the receiver order was not
contrary to the terms of the settlement
agreement, as the appointment of a receiver
did not constitute an assignment of funds
by Daniels. Neither s. 88 nor s. 89 of the
Indian Act was engaged by the receiver
order, as the payments to Daniels were
pursuant to a settlement agreement rather
than federal legislation, and both Daniels
and his wife were status Indians.

BANKING & FINANCE LAW
NEGOTIABLE INSTRUMENTS
AND BILLS OF EXCHANGE – Bills,
cheques and notes – Liabilities of parties.

Appeal by the defendant from a trial judgment finding that the respondent’s action for payment on a demand note was not statute–barred. The appellant had given his parents a promissory note in 1980 to repay the amount of $750,000 one year after demand. The father died in 1984. The mother died in 2006. No demand for payment was made during the lifetime of either parent. The respondent was appointed administrator for the mother’s estate in 2008 and demanded payment on the note. The appellant refused. The appellant then commenced an action in 2009 to recover the sum owing under the note. The appellant argued that the demand note became payable and actionable one year after it was executed and that the limitation period expired in 1987. The trial judge, in relying on the Zeitler case, held that the promissory note was a delayed–demand promissory note, and that the six–year limitation period began to run when the respondent made a demand for payment.

HELD: Appeal dismissed. The trial judge did not err in finding that a demand in a delayed–demand promissory note could properly be characterized as a contingent future event. The end of the designated period following the demand marked the moment when the cause of action arose and the Limitation Act began to run. There was no merit to the appellant’s argument that the demand in a delayed–demand note might never be made and was therefore uncertain and not at a determinable future time.

Ewachniuk Estate v. Ewachniuk, [2011] B.C.J. No. 2397, British Columbia Court of Appeal, L.S.G. Finch C.J.B.C., C.A. Ryan and M.E. Saunders JJ.A., December 14, 2011.

CORPORATIONS,
PARTNERSHIPS
& ASSOCIATIONS LAW
CORPORATIONS – Derivative
actions – Conditions precedent to
bringing action.

Appeal by the plaintiffs from a decision striking out their statement of claim as disclosing no reasonable cause of action. The appellants were shareholders of a company that sold farm equipment. The company failed and its assets were sold after the respondent bank required the company to repay a line of credit. The appellants sued the respondent for the financial loss incurred, alleging breach of contract and negligence. The motions judge found that the statement of claim constituted a derivative action by the appellants as shareholders of the company, which was not permitted by the Rules. The motions judge also found that the pleadings did not disclose a cause of action against the respondent in contract or tort.

HELD: Appeal dismissed. The motions judge was correct when he concluded that derivative actions were not permitted under the laws of Prince Edward Island. The action was a derivative action since the appellants had no liability to the respondent for the indebtedness owed by the company to the respondent, except to the extent of their personal guarantee. As the pleadings did not allege that the appellants were ever called upon to pay under the personal guarantee, it was not possible at law for the appellants to pierce the corporate veil and maintain causes of action against the respondent for wrongs alleged to have been inflicted on the company. Even if a derivative action was permitted, the action as pleaded was for the appellants’ personal benefit as shareholders and not for the benefit of the company. The statement of claim disclosed no personal cause of action against the respondent in tort or contract. The statement of claim did not plead sufficient facts which, if proven at trial, would establish that the respondent owed the appellants a duty of care. There was no proximity of relationship between the appellants and the respondent such that it should have been foreseeable on the part of the respondent that actions which it took against the company would cause harm to the appellants as shareholders. There was no proximity of relationship between the respondent and the appellants which would give rise to a prima facie duty of care on the part of the respondent. Even if there was proximity of relationship such as to make it foreseeable on the part of the respondent that if it caused harm to the company, harm would result to the appellants as shareholders, policy reasons would dictate that a prima facie duty of care should be negated as to do so would necessarily pierce the corporate veil. The statement of claim disclosed no reasonable cause of action for breach of contract or breach of good faith. The contractual arrangements placed in issue were between the respondent and the company, not between the respondent and the appellants as shareholders of the company.

McGowan v. Bank of Nova Scotia, [2011] P.E.I.J. No. 35, Prince Edward Island Court of Appeal, J.A. McQuaid, G.L. Campbell and W.D. Cheverie JJ.A., December 14, 2011.

CRIMINAL LAW
CONSTITUTIONAL ISSUES – Can-
adian Charter of Rights and Freedoms
– Procedure – Notice of constitutional
question.

Appeal by the Crown from a decision setting aside the respondent’s speeding conviction for unreasonable delay. The respondent was charged in June 2007. The first trial date of April 2008 was adjourned due to the heat in the courtroom. A new trial date for August 2008 was set. At the August date, the respondent argued that the charges should be dismissed due to delay. The trial continued because the respondent did not give the required notice of his Charter application. The respondent was convicted. The appeal court judge held that the respondent did not have to give notice under s. 109 of the Courts of Justice Act because any violation of s. 11(b) of the Charter was a result of the conduct of the municipality and not that of the government of Ontario and, therefore, did not require notice to the Attorney General of Ontario. The appeal court judge held that the respondent’s right under s. 11(b) of the Charter was breached and the charge was stayed.

HELD: Appeal allowed. A new trial was ordered. The appeal court judge misconceived the constitutional relationship between provincial and municipal governments, misunderstood the contractual relationship between the government of Ontario and the municipality in the domain of the prosecution of Provincial Offences Act offences, and ignored the actual interests of the government of Ontario in the issue of alleged delay in this case. The wording of s. 109 of the Courts of Justice Act paralleled the wording of s. 32(1) of the Charter, which supported an interpretation of s. 109 requiring notice in this case. The term “Government of Ontario” in s. 109 should be construed to parallel s. 32(1) (b) of the Charter. There was a nexus between the respondent’s speeding ticket and the interests of the government of Ontario since the respondent was prosecuted for violating a provincial statute pursuant to procedures set out in another provincial statute. Interpreting s. 109 to require that Provincial Offences Act Part I defendants notify the Attorney General of Ontario before seeking Charter remedies served the purposes of s. 109 in that it enabled the government of Ontario to decide whether to exercise its right to take over a case under the Provincial Offences Act and furthered the government of Ontario’s important interest in monitoring the performance of municipalities under Memoranda of Understanding. Section 11(b) cases might also raise concerns about systemic problems that implicated provincial responsibilities and provided the government of Ontario with important data about key components of the provincial justice system.