What is believed?

"People who would not believe a High Priest if he said the sky was blue, and was able to produce signed affidavits to this effect from his white-haired old mother and three Vestal Virgins, would trust just about anything whispered darkly behind their hand by a complete stranger in a pub."

Terry Pratchett, from the novel Maskerade.

The wisdom of crowds can be overrated.

"The IQ of a mob is the IQ of its most stupid member divided by the number of mobsters."

Terry Pratchett, from the novel Maskerade.

Separation Agreements: Full Disclosure and Fair Dealing

The Supreme Court of Canada in Rick v. Brandsema has recently clarified the law regarding what is and isn't fair in the negotiation and contents of a separation agreement.

The SCC headnote found at Canlii gives an excellent summary (the numbers in square brackets being the relevant paragraph of the SCC judgment; the hyperlinks are by the author of this blog):

The parties married in 1973 and separated in 2000. During their 29 years together, they had five children and acquired a dairy farm in which they were equal shareholders, as well as other real property, vehicles and RRSPs. The parties were intermittently represented by lawyers and also used the services of mediators during their negotiation of a separation agreement. Approximately a year after their divorce, the wife sought to set aside the agreement on the grounds of unconscionability or, in the alternative, a reapportionment order under s. 65 of British Columbia’s Family Relations Act.

The trial judge found that the agreement was unconscionable because the husband had exploited the wife’s mental instability during negotiations and had deliberately concealed or under‑valued assets. This resulted in the wife receiving significantly less than her entitlement under the Act, despite the fact that it was the parties’ express intention to divide their assets equally. As a result, the trial judge made an order awarding the wife an amount representing the difference between the negotiated equalization payment and the amount she was entitled to under the Act. The Court of Appeal disagreed with the trial judge’s conclusions about the extent of the wife’s vulnerabilities and concluded that, in any event, they were effectively compensated for by the availability of counsel. [The wife appealed that BCCA decision to the Supreme Court of Canada and won.]

[...]
The singularly emotional environment that follows the disintegration of a spousal relationship means that the negotiation of separation agreements takes place in a uniquely difficult and vulnerable context. Special care must therefore be taken to ensure that the assets of the former relationship are distributed through a process that is, to the extent possible, free from informational and psychological exploitation. Where exploitation results in an agreement that deviates substantially from the objectives of the governing legislation, the resulting agreement may be found to be unconscionable and, as a result, unenforceable. [1] [44] [47]

While parties are generally free to decide for themselves what bargain they are prepared to make, decisions about what constitutes an acceptable settlement can only authoritatively be made if both parties come to the negotiating table with the information they need to consider what concessions to accept or offer. This requires that there be a duty on separating spouses to provide full and honest disclosure of all relevant financial information in order to help protect the integrity of the negotiating process. This duty not only anchors the ability of separating spouses to genuinely decide for themselves what constitutes an acceptable bargain, it helps ensure the finality of agreements. An agreement negotiated with full and honest disclosure and without exploitative tactics will likely survive judicial scrutiny. [45‑49]

Whether defective disclosure will justify judicial intervention, however, will depend on the circumstances of each case, including the extent of the misinformation and the degree to which it may have been deliberately generated. [49]

There is no reason to disturb the trial judge’s conclusion that the separation agreement was unconscionable. His findings about the husband’s defective disclosure and exploitation of his wife’s known mental vulnerabilities, support the conclusion. Although in some cases professional assistance will effectively compensate for vulnerabilities, in this case the trial judge concluded that the wife’s mental instability left her unable to make use of such assistance. [2] [6] [27-28] [31] [36] [58‑60] [62]

The husband’s failure to make full and honest disclosure, his knowledge that the negotiations were based on erroneous financial information, as well as his exploitation of what he knew to be his wife’s profound mental instability, resulted in a negotiated equalization payment that was $649,680 less than the wife’s entitlement under the Family Relations Act. In these circumstances, the trial judge was entitled to award this amount to compensate the wife for the loss caused by the unconscionable bargain. [6] [27-28] [31] [53] [63] [69]

The Canadian Centre for Policy Alternatives Weighs looks at the HST

The Canadian Centre for Policy Alternatives is "an independent, non-partisan research institute concerned with issues of social, economic environmental justice. Founded in 1980, the CCPA is one of Canada’s leading progressive voices in public policy debates".

CCPA recently examined the recently-approved Harmonized Sales Tax (HST)and concludes that the "majority of Ontarians won’t be worse off when the [HST] is implemented. Not A Tax Grab After All: A Second Look at Ontario’s HST examines the Ontario government’s HST plan and finds it's virtually revenue neutral when viewed as part of a total tax package that includes increased sales and property tax credits and a significant decrease in personal income tax rates".

To read CCPA's full paper in PDF format you can right-click and download it from here.

Other Camberwell House posts with further information on the HST:
"The HST and you"
"HST Transitional Rules"

Quantum Meruit

“Quantum meruit” is Latin for “as much as he deserves”. It refers to how the court determines what a party is owed for work done for another in one of two main cases: where there is no contract (and thus an unjust enrichment case) or where there is a contract but there are no express terms governing payment, (which can be an oral contract, or a written contract which is silent or unclear as to payment). If the right to payment is established by the court then, “in such circumstances, the Courts award reasonable remuneration to the person who has rendered the services”, [Dictionary of Canadian Law, (3d ed.)].

It is important that the rendering of services by one person to another has to be to one who has requested such services “or freely accepted them with the knowledge that they are not rendered gratuitously." [Gill v. Grant (1988), 30 E.T.R. 255 at 271 (B.C.S.C.) per Rowles J.] The rationale for this two-way-street is obvious: one should not be forced by a court to pay for services which one had neither requested nor knowingly accepted.

A very neat summary of what must be present to win a claim based soley on quantum meruit are found in Summers v. Harrower, 2005 CanLII 50261 (Ont S.C.J.), ¶ 11:

1. there was a contractual relationship between the parties;
2. the parties agreed that certain work was to be done but failed to agree on all aspects of the contract, for example, the price to be paid;
3. the defendant accepted the work;
4. both parties had or should have had in the circumstances an expectation that the work was not being rendered gratuitously; and
5. the payment sought was reasonable remuneration for the work done.

Quantum meruit is a very useful principle of law, permitting recovery of funds where there is inadequate documentation but evidence of the agreement and the work done.

Latin and the law

This post started as an entry on the principle of quantum meruit, but the phrase itself got me to thinking about Latin words in the law. (The post on quantum meruit will have to wait until here.)

There was a time when reading law was an exercise in plowing through the classical educations of the British lawyers of a different era, a kind of penance paid by the rest of us for the sins of the teachers of countless generations of public school boys vigorously beaten into translations of the classics. Such educations produced a weird result where anything important had to be in Latin because, well, Latin was how educated people said important things and that was that. It also helped that such a forest of Latin stood as a code or in-language for the ruling classes which often excluded the entrepreneurial middle classes and definitely placed a comprehension barrier between the lower classes and their understanding of the net of laws that so severely and unfairly bound them. It's still surprising to realize that the study of English among Britain's educated classes was, until well into the 20th Century, often reserved for those children of privilege considered too slow for Latin and Greek. How idiotic such a fetishization of past millenia was is shown by the fact that Winston Churchill was shunted off into the study of English at Harrow because he was considered too dim for the classics. (The lad was once beaten when, told that a certain sentence construction would be used when addressing a table, blurted out, "but I never do!". Fortunately this early immersion in English eventually turned out to be for our societal benefit.)

Over the years Latin has, thankfully, largely dropped from frequent use in the law. Generations of lawyers have grown up without ever having picked up a Latin primer and I have a sneaking suspicion that the drop in the study of the classics is linked at least in important part to the end of corporal punishment in the schools: kids -- me, for one! -- probably have to be threatened with violence to waste time learning the endless, oppressive complexities of Latin grammar, an educational point recognized by the lads of Monty Python in this classic Life of Brian scene.

Reading a judicial decision from eighty years ago is an exercise in frustration, blocked as one is at every turn by a barbed wire tangle of Latin phrases which have perfectly acceptable English equivalents. Modern decisions are mercifully free of Latin, save where the term in question has become a term of art which is generally and instantly understood by lawyers to denote a specific thing, a word or phrase which one treats as an English word by adoption, like (non-legal) but instantly-comprehended words "blitzkreig", "bungalow" or "fait accompli". The law is better off for it.

Unjust Enrichment

Unjust enrichment is a doctrine for the compensation of one who has unjustly received a benefit from another in a manner that the law will correct. It is a principle of “equity”.

Thomson-Carswell’s Dictionary of Canadian Law (3d ed) neatly summarizes the doctrine:

“ An action for unjust enrichment arises when three elements are satisfied: (1) an enrichment; (2) a corresponding deprivation; and (3) the absence of a juristic reason for the enrichment.”

Each of these is required for the doctrine to be applied. Only when they are proven is the action established and the court able to grant compensation; from there the court goes on to determine what remedy will be applied: monetary compensation or a judgment finding a “constructive trust” which will result in an order that the claimant has an interest in or title to property.

An example of unjust enrichment would be two companies working together without a written contract on a building project where Company A owns the land and Company B contributes labour and building supplies. Co.A refuses to pay Co.B, so where is B’s remedy? It can allege an oral contract, yes. But it can also allege that Co.A is unjustly enriched. Co.A has been enriched to the value of the contributions in labour and supplies and through any increase in the value of the property. Co.B has suffered a corresponding deprivation, in that it has lost those contributions and the profit (the increase in value) which would have been provided if those contributions had been used elsewhere. Lastly, there is no juristic reason for what happened. If, for example, Co.A had been owed $1m by Co.B and B’s deprivation was roughly the same, Co.A could claim a set-off for that debt, which could be a juristic reason which may be upheld by the court.

For further reading and a discussion of the principle, please see the Duhaime page on unjust enrichment.