Ontario Limited Partnership Agreement Lawyer: Using Limited Partnerships to Invest

Please keep in mind that this is not legal advice. The information provided herein is for educational purposes only. If you would like to get in touch with a lawyer to help you draft, interpret, negotiate or resolve a dispute about an Ontario limited partnership agreement, then you are encouraged to seek a professional (e.g. make a post on Dynamic Lawyers). We have Ontario lawyers who can assist you in this regard (I would know, I’m one of them!). If you want to get in touch with me directly, feel free to email me directly to discuss all your limited partnership agreement needs!

So in this blog,I’ll be talking about how a Limited Partnership can be used as an investment vehicle.  So we start off with the idea that a Limited Partnership is a regular partnership (called a general partnership) that has filed a declaration with the Ontario government (and complied with other rules) in order to become a LIMITED PARTNERSHIP.  What’s the big deal about having a limited partnership, you ask?  Well, the biggest benefit is that the limited partners (i.e. the passive investors) will generally have limited liability – akin to shareholders of a corporation!  That’s great news.  I say “generally have limited liability” because there are ways in which they can lose it – specifically if they take part in the control of the business of the limited partnership (which I previously blogged about here).  But assuming they’re passive, it’s all good.

So the limited partners sign onto the limited partnership agreement and contribute money, property, services, etc. in exchange for an interest in the limited partnership.  Now the general partner is the one running the show.  They have all the powers, duties, and responsibilities to act on behalf of the limited partnership.  They have unlimited liability and are typically a corporation for this purpose.

Now here are a few things to keep in mind when thinking about using a limited partnership as an investment vehicle.

For starters, let’s talk a little bit about TAX.  Yes, that’s right: TAX!  Unlike a corporation, there is no double taxation when you’re using a limited partnership.  The limited partnership is a flow-through entity (because it’s a partnership first and foremost).  This means that the income or loss of the partners is computed at the partnership level as if the partnership were a separate person.  Income and losses are then allocated to the partners.  Now there are a few nuances you should know about that apply specifically to limited partnerships when it comes to tax and you can read about them here in a previous blog I wrote.  So the bottom line is that a limited partnership is not required to pay tax under the Income Tax Act; it merely computes its profit or loss for each fiscal year as if it were a legal person and then allocates the income or loss to the partners.

OK, now what about securities laws implications?  As I’ve previously blogged about here and here, a Unit from a Limited Partnership held by a Limited Partner is likely considered to be a “security”; therefore, Ontario’s securities laws will kick in and govern the Limited Partnership and the Limited Partners’ dealings.  Failure to comply could lead to a prosecution under the Ontario Securities Act!  Specifically, “trading” in a “security” requires the issuer (the Limited Partnership) to be registered and, if the trade amounts to a “distribution”, then the Limited Partnership will be required to issue a prospectus and follow all sorts of other securities laws.  It’s all very complicated and expensive!  To avoid these results, the Limited Partnership will need to find an exemption to the registration and prospectus requirements.  I’ve previously spoken about some, and will mention 2 of the here: (1) accredited investor exemption and (2) private investment club exemption.

Accredited investor exemption: Basically, if you issue Limited Partnership Units to certain wealthy / sophisticated / resourceful persons, you can avoid having to register or issue a prospectus.  Accredited investors include (but are not limited to):

• an individual (i.e. human being) who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000;
• an individual (i.e. human being) whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;
• an individual who, either alone or with a spouse, has net assets of at least $5,000,000; or
• a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements.

Private investment club exemption:  In this situation, the Limited Partnership would have less than 50 partners, would not seek to borrow money from the public, would not distribute its Units to the public, would not pay or give any money for investment management or administration advice in respect of trades in securities (except normal brokerage fees), and would require its Unit holders to make contributions in proportion to the value of their securities for financing purposes.

Overall, assuming you comply with securities, tax, and partnership laws concerning establishing and maintaining your Limited Partnership, you may have found a great structure to use to raise money and invest.  Again, if you need help in this regard, give me a shout!

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Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only.  If you need legal advice with respect to drafting, reviewing, interpreting or resolving disputes concerning partnership and limited partnership agreements, you should seek professional assistance (e.g. make a post on Dynamic Lawyers).  We have Toronto, Ottawa, Hamilton, Mississauga, Brampton, and other Ontario business lawyers registered on the website who can answer your questions or help you with your partnership and limited partnership agreements.  I should know – I’m one of them and you can contact me directly.

As a follow up to a previous blog I wrote about limited partners losing their limited liability status, in this blog, I’ll be discussing this matter in more detail.  So we start off with the idea that, in Ontario, a general partnership does not confer limited liability status on the partners.  That means they will be personally liable for the debts and obligations of the partnership.  Now, if that general partnership register as a limited partnership and complies with the Limited Partnerships Act, then the limited partners’ liability will be limited while the general partners’ liability will be unlimited.  There is an exception to this rule, however: if a limited partners “takes part in the control of the business” of the limited partnership, then they shall be fixed with the same UNLIMITED LIABILITY as a general partner: s. 13(1).  Keep in mind that a limited partner, simply by exercising their other rights and powers granted to them under the Act (as discussed in my previous blog post), will not assume the liability of a general partner.  Such liability only attaches to them exercising control beyond the scope of what they are allowed to under the Act.

So, given this, the question comes up: what if the general partner of the limited partnership is a corporation and the director or officer of the corporation is the limited partner?   So, in this example, the limited partner is an individual (e.g. John Doe) and is also the director or officer (e.g. President) of the general partner.  If the individual acts on behalf of the general partner, will he or she have personal UNLIMITED LIABILITY for the limited partnership?

This is a tricky situation.  The limited partner is essentially trying to go around the rules of the Limited Partnerships Act by being a controlling the general partner.  Now since the general partner is a corporation, and because corporations are assumed to be separate legal entities, the limited partner would think that he or she is personally NOT the general partner and therefore not subject to unlimited personal liability…that’s the idea, at least…  Well, lets see what the courts have said, shall we?

In Laplante v. R., [1995] 1 C.T.C. 2647, the Federal Tax Court of Canada had to deal with an interesting situation that arose in the context of tax law.  A taxpayer claimed certain losses arising from a partnership.  The partnership had incurred certain losses and the taxpayer wanted to take advantage of those losses.  The Minister of National Revenue, however, claimed that the partnership was actually a limited partnership (not general partnership).  As such, the Minister argued that certain tax-rules (known as ‘at risk’ rules – which I’ve previously blogged about) limited the amount of losses which that taxpayer could deduct.  So the issue for court to decide was whether the taxpayer was a general partner or limited partner during the relevant time period (i.e. when the partnership incurred the losses)?  Ultimately, the Court agreed with the tax payer: he was not a limited partner for 2 reasons.  First, a general partnership existed but had not been registered with the government (recall: to have a limited partnership, you must file a declaration with the provincial government).  Since a limited partnership is not recognized at common law, and because nothing had been filed during the relevant years, there was no limited partnership.

The second reason the taxpayer was not a limited partner was because he had taken part in the control of the business (which would make a limited partner have unlimited liability like a general partner).  Specifically, the taxpayer had been a director and officer of the general partner,had authority to effect banking transactions, and had rendered personal services as a sole proprietor in respect of the partnership.  The tax court cited Zivot as authority for this proposition and concluded:

23          The evidence in this case indicated the appellant was the principal if not the sole person in control of the operation. This is also indicated in the partial agreed statement of facts, supra, even to the extent that the appellant was operating as a sole proprietor. Surely this is indicative of control.

So based on these two reasons, the Court allowed the taxpayer’s appeal and sent the matter back to the Minister of National Revenue for reconsideration as to the taxpayer’s tax liability (in light of the fact that he was NOT a limited partner).

So what’s the moral of this story?  Well, this is another example – in addition to Zivot – that shows that a limited partner who is a director or officer of a general partner may have unlimited liability because they take part in controlling the business of the limited partnership.

So what about contracting out of this position?  In other words, could a limited partner use contracts to have control over the business of the limited partnership but still maintain limited liability?  A 1992 British Columbia Court of Appeal case  offered limited support for the idea that a party could do so: Nordile Holdings Ltd. v. Breckenridge (1992), 66 B.C.L.R. (2d) 183 (B.C. C.A.).  But the better view is that it is unsettled law.  That’s what the Saskatchewan Court of Queen’s Bench said in Stillwater Forest Inc. v. Clearwater Forest Products Ltd. Partnership 2000 SKQB 110:

Loss of Limited Liability by SGGF

7          The plaintiffs allege that SGGF took part in the control of the business of the Limited Partnership and that pursuant to s. 64 of the Act it is therefore liable for the debts and obligations of the Limited Partnership. Section 64 states:

8          On the nonsuit, SGGF argues that even if the plaintiffs are successful in establishing a factual basis for a claim under s. 64 of the Act (which, of course, it does not accept), any potential liability of SGGF is completely answered by the contractual provisions of the agreements. According to SGGF, the parties contracted out of any liability that might arise under s. 64 of the Act. It argues that the specific contractual terms of each of the agreements unequivocally preclude it from having any liability for the general partner’s or the Limited Partnership’s obligations thereunder and it therefore submits that the claim against SGGF in relation to such liability should be dismissed.

9          There are no Saskatchewan cases interpreting s. 64 of the Act and only two Canadian cases that deal with similar statutory provisions in other provinces: Haughton Graphic (Graphics) Ltd. v. Zivot (1986), 33 B.L.R. 125 (Ont. H.C.) and Nordile Holdings Ltd. v. Breckenridge (1992), 66 B.C.L.R. (2d) 183 (B.C. C.A.). As to its argument based on contract, SGGF relies on the chamber judge’s decision in Nordile which supports its position that a party may contract out of liability that would otherwise arise under limited partnership legislation. It is noted however, that although the Court of Appeal upheld the chamber judge’s conclusion in Nordile, the appeal court found it unnecessary to deal with the contract issue. There is therefore very limited authority to the effect that a limited partner may contract out of the statutory consequences of participating in the control of a limited partnership’s business.

10          I am satisfied that the plaintiffs have led sufficient evidence which, if uncontradicted, could reasonably support a finding that SGGF participated in the control of the Limited Partnership. As the contractual argument that SGGF relies on is far from being well settled law; and, given the paucity of case law interpreting s. 64 of the Act generally or more particularly, its effect, if any, on contractual provisions acknowledging limited liability, I am not prepared at this early stage of the proceedings to preclude the plaintiffs from pursuing this aspect of their claim. The nonsuit will therefore not be granted with respect to the plaintiffs’ claim that pursuant to s. 64 of the Act, SGGF is liable as a general partner of Clearwater.

So because the idea of whether you can contract out of the clear language of the Ontario Limited Partnerships Act has not been resolved, it is best to comply with the act and not try to get around it through contracts.  It’s unsettled law and you could find yourself in hot water!

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Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to Non-Compete or Non-Solicitation clauses, you should seek professional assistance (e.g. make a post on Dynamic Lawyers). We have Toronto, Ottawa, Hamilton, Brampton, Mississauga and other Ontario lawyers registered to help you.  If you’re looking for Non-Compete and Non-Solicitation clauses within an employment or independent contractor agreement, then check out our legal forms + video guides.

So this if the first of many blog posts about non-compete and non-solicitation clauses.  Yes, I’ve previously blogged about this topic (e.g. here, here, and here).  So here, I’ll be talking about these clauses from the perspective of an employer or human resources manager.  If you’re either one of these, you absolutely need to check out our employment agreements or independent contractor agreements.

First thing’s first: do I actually need one?
Whether you need to restrict or limit an employee’s ability to do something (e.g. compete with the business, solicit clients from the business, solicit employees from the business) really depends on whether you have something worth protecting.  Do you have a legitimate interest in protecting a business idea?  If you have provided confidential information to an employee, clearly you want them signing a confidentiality agreement as part of their employment (if they are an employee) or engagement (if they are an independent contractor).  If an employee or independent contractor had access to client lists, trade secrets, pricing policies, formula, or technology that is proprietary, the last thing you want is for them to set up shop across the street or share it with anyone else.  So there has to be some type of harm or damage which could result from this employee or independent contractor doing something to you.  If there is a reasonable prospect of such harm occurring, then having a non-compete or non-solicitation agreement or clause within an agreement makes sense.

Difference between Non-Compete and Non-Solicitation Agreement
OK, so assuming you need a non-compete or non-solicit, the next question to ask is: what’s the difference? And will one of them suffice? A non-compete clause in an employment agreement or an independent contractor agreement puts limits on the person’s ability to establish their own business or work for others so as to compete with their previous employer or client.  This is a much more drastic step than a non-solicit clause.  The latter, when included in an employment agreement or an independent contractor agreement, means that the person will not solicit customers or employees of the previous employer or client.  Now, why not have both, you ask?  Well, there are a few reasons…

First, having both may dissuade a prospective employee or independent contractor from signing on from the get go.  They may feel that, if anything goes wrong and they leave, they will be unemployable.  Related to this is the morale factor: a new employee or independent contractor may feel bad because, right away, they’re threatened with sanctions if things don’t work out and they try to do something akin to what they’ll be doing for the employer.  Ouch!  Finally, having non-compete and non-solicit clauses may actually INCREASE the amount of notice (or payment in lieu thereof) an employee is entitled to at common law if the matter gets litigated: courts may increase the normal amount of notice or payment in lieu thereof because it would take the employee longer to find suitable work with the existence of non-competes and non-solicit clauses.

So, assuming you as an employer still want to have a non-compete and/or non-solicitation clause just for the sake of having them, the next question becomes: do you need both or will one suffice?

Non-Compete vs. Non-Solicit in Employment Context
Interestingly, the case of Lyons v. Multari (2000) 3 C.C.E.L. (3d) 34 becomes relevant here.  This is a leading case by the Ontario Court of Appeal concerning an employee dentist who was sued for allegedly breaching a non-compete clause in an employment contract.  The issue before the court was whether that restrictive covenant was enforceable.  The facts of that case are straightforward.  One dentist was a principal of the business (i.e. the employer).  Another dentist was an associate (i.e. employee).  The two dentists signed a short-hand note that limited the associate’s ability to practice dentistry if he chose to leave.  The entire non-compete clause said: “Protective Covenant.  3 yrs. – 5 mi.”  After 17 months of working, the associate dentist left and opened up his practice – which competed with his employer’s business and was 3.7 miles away.  The employer sued for breach of contract.  The Ontario Court of Appeal disagreed, holding that the non-compete clause was unenforceable.

So how did the Court of Appeal end up there?  Well, it started off by saying that all restrictive covenants go against public policy (free trade, etc.) and are therefore VOID.  The only exception to this general rule is if the restraint is reasonable in the interests of the parties and also reasonable in the public interest. So there are a few factors which a court should consider to answer these questions: (1) whether the employer has a proprietary interest entitled to protection, (2) whether the temporal or spatial features of the clause are too broad, and (3) whether the covenant is unenforceable as being against competition generally, and not limited to proscribing solicitation of clients of the former employee.

So with this test and factors in hand, the Ontario Court of Appeal held the following:

• The employer had NO proprietary interest in other dentists who referred clients (so those referring dentists were up for grabs);
• The employer benefited from the relationship with the employee;
• The role played by the employee was not special; and
• A non-solicitation clause would have sufficed (a non-compete clause was too drastic).

So based on all of these things, the Court of Appeal concluded:

48 For all of these reasons, I conclude that Dr. Lyons’ non-competition clause is unenforceable. His legitimate interest in protecting his own referring dentists and patients could have been protected by a non-solicitation clause. An established professional person or firm — be it in the field of dentistry, medicine, engineering, architecture, law or other professions — will constantly seek to recruit entry level associates to the practice. Such recruitment is good for the established person or firm and for the young associate.

So what does that tell prospective employers and employees?  Well, basically, you can put whatever you want in an employment agreement (for show), but at the end of the day it may not be enforceable.  Asking too much and not being reasonable may defeat your restrictive covenant.  In the case above, the Court of Appeal held that a non-solicitation clause would have sufficed because a non-compete was too harsh.  Only in exceptional cases will non-compete clauses be upheld; that case was not an exceptional one.

Exceptional cases for non-competes?
So what constitutes an exceptional case for a non-compete clause, you ask?  Well, although the court in the above case didn’t get into it, there was a case in Manitoba which did try to answer that question.  In Winnipeg Livestock Sales Ltd. v. Plewman [2001] 1 W.W.R. 153, the Manitoba Court of Appeal reviewed the various Canadian authorities on the issue of “exceptional cases” and held that the following factors were relevant:

In summary, the authorities reveal that the following circumstances will generally be relevant in determining whether a case is an “exceptional” one so that a general non-competition clause will be found to be reasonable:

1. The length of service with the employer.
2. The amount of personal service to clients.
3. Whether the employee dealt with clients exclusively, or on a sustained or recurring basis.
4. Whether the knowledge about the client which the employee gained was of a confidential nature, or involved an intimate knowledge of the client’s particular needs, preferences or idiosyncrasies.
5. Whether the nature of the employee’s work meant that the employee had influence over clients in the sense that the clients relied upon the employee’s advice, or trusted the employee.
6. If competition by the employee has already occurred, whether there is evidence that clients have switched their custom to him, especially without direct solicitation.
7. The nature of the business with respect to whether personal knowledge of the clients’ confidential matters is required.
8. The nature of the business with respect to the strength of customer loyalty, how clients are “won” and kept, and whether the clientele is a recurring one.
9. The community involved and whether there were clientele yet to be exploited by anyone.

So any employer or HR manager should think long and hard about these factors if they’re concerned about the validity and enforceability of a general non-compete clause…

Now onto the next blog about non-competes and non-solicitation clauses and agreements…

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Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to incorporating (e.g. registering articles of incorporation, drafting by-laws, director / shareholder resolutions, registries), you should seek professional assistance (e.g. make a post on Dynamic Lawyers). We have Toronto, Ottawa, Hamilton, Brampton, Mississauga and other Ontario lawyers registered to help you. You can also contact me directly (I am a Toronto business lawyer).

In this blog, I’m going to be talking about Ontario corporate shares and what it means when someone says they are authorized, issued and outstanding.

Authorized and Issued
So when a corporation is created through the filing of articles of incorporation, you will need to indicate the limit (if there is one) on the number and type of shares.  For example, do you only want the corporation to be AUTHORIZED or permitted to issue (i.e. give to a person in exchange for receiving money, property, or past services rendered) only 100 shares?  Once these 100 shares are then issued, the corporation will not be able to issue any more unless the articles are amended to authorize the corporation to issue more shares.  Get it?

So if the parties want to try to limit the VALUE of the corporation, they will limit the number of shares which the corporation is authorized to issue.  This way, the directors of the corporation (who are elected by the shareholders entitled to vote) cannot issue additional shares and dilute existing shareholders. This is only done in situations where all the shareholders are content with the value of the company and don’t need to seek external financing.  If they want external financing, they will make the corporation authorized to issue an UNLIMITED number of shares.

Outstanding
Once the corporation issues shares, it generally collects money or property.  The value of what it receives is recorded and called the paid up capital (in tax terms) or stated capital (in corporate or accounting terms).  Now, when it does issue corporate shares, it records the number and type (class, series) of share that is outstanding.  This is another way for the corporation to keep track of who owns what and how much they paid for it.  Remember: the value of the shares may not be adequately reflected in the paid up capital or stated capital.  This is just the amount of money that was paid at one point in time to the corporation in exchange for getting shares issued at that time.  The fair market value of the shares may be based on future prospects, intangible assets, etc.

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Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only.  If you need legal advice with respect to getting, varying, or terminating child support in Ontario, you should seek professional assistance (e.g. make a post on Dynamic Lawyers).  We have Toronto, Ottawa, Brampton, Hamilton, and other Ontario family law lawyers registered on Dynamic Lawyers who can offer information, advice, and assistance with respect to helping you get, vary, or terminate child support.

This is the first of a series of blog posts I’ll be writing about family law in Ontario.  In this blog, I’ll be discussing something vary basic: child support obligations in Ontario.

A common question people sometimes ask: if I never get married but have a child with someone, do I still owe them child support?  Well, the Ontario Family Law Act doesn’t care if you, as the child’s father or mother, is married.  Nor does the Act care if you’re common law.  All that matters is that the payor is the child’s parent.

Basic Obligation of Parent to Pay Child Support
O.k., so when does a parent have to pay child support in Ontario?  Basically, there are two situations under s. 31(1) of the Act which require a parent to pay child support.  Here’s what that section says:

Obligation of parent to support child

31. (1) Every parent has an obligation to provide support for his or her unmarried child who is a minor or is enrolled in a full time program of education, to the extent that the parent is capable of doing so.

So by reading this section, it becomes clear: every parent has an obligation to provide support for his or her unmarried child who is (1) a minor or (2) enrolled in a full time program of education.  There is an exception to these two tests and that is set out in section 31(2), which states that the obligation under s. 31(1) does not extend to a child who is 16 years old (or older) and who has withdrawn from parental control.  What exactly is meant by “parental control” will be discussed in the next blog.

First Branch: Minor
Under the first branch, the first question to ask is: who is considered a “minor” in Ontario?  The Age of Majority and Accountability Act states that: “Every person attains the age of majority and ceases to be a minor on attaining the age of eighteen years” [s. 1].  Remember: this liability is limited by the parent’s capability of paying child support [s. 31(1)].  This liability is further restricted if child, assuming he or she is over 16 years old, has withdrawn from parental control [s. 31(2)].

Second Branch: Attending School Full Time
Even if a parent’s child is over the age of 16 (indeed, there doesn’t appear to be any upward limit here), a parent may still be liable to pay child support if the child is “an unmarried child who…is enrolled in a full time program of education”.  This is the second branch.  Once again: this liability is limited by the parent’s capability of paying child support [s. 31(1)].  This liability is further restricted if child, assuming he or she is over 16 years old, has withdrawn from parental control [s. 31(2)].

Caselaw
So how have Ontario courts interpreted these sections of the Act dealing with the obligation of a parent to support a child?

In Giess v. Upper (1996), 28 R.F.L. (4th) 46, Mendes da Costa J. of the Ontario Court of Justice – General Division wrote the following about the support obligation created by s. 31(1) of the Act in the context of that case:

16 The support obligation created by section 31(1) is two-fold. First, it applies to an “unmarried child who is a minor”. While the child, Elizabeth, is unmarried, she was born on October 22nd, 1977, and is now 19 years of age. As she is no longer a “minor”, she does not qualify for support under this limb of the subsection. Secondly, the support obligation extends to a child who is “enrolled in a full time program of education”. With regard to this extension of the support obligation, the word “child” is used as a term of relationship, and does not imply any limitation as to age.

In that case, the 19 year old child was found to be enrolled in a full time program of education. Mendes da Costa J. explained that the word “enrolled” meant that the child’s participation had to be meaningful: “it must be of such a nature and equality as to be consistent with the program’s purposes and objectives”. The father was found to have an obligation to provide child support under the second branch of s. 31(1) of the Act – subject to whether the child had “withdrawn from parental control”.

In McCann v McCann, the Ontario Court of Justice – General Division rejected the argument that if a child stopped being enrolled in a full-time program of education and ceased to be eligible for any child support, then their eligibility forever ceased and could not be resurrected by a subsequent enrollment in school in a full-time program of education. As per Aston J.:

24 Christopher McCann is now an “unmarried child” who is enrolled in a full-time program of education. I cannot conceive of any reason in logic or equity why it should matter that he has not been continuously enrolled in a full-time program of education since attaining the age of 18. The word “continuously” does not appear in the wording of subsection 31(1) of the Family Law Act.

25 There is a discretion in the court to deny support to an adult child who has left a full-time program of education and then resumed such a program but a gap in an ongoing program of education does not, in my view, automatically disqualify an applicant child from seeking support.

In McNulty v. McNulty, [2006] W.D.F.L. 434, Howden J. of the Ontario Superior Court of Justice observed:

10 The obligation to pay support for a child has not been applied by the court on a standard of perfection (or near-perfection) in attendance or in achievement by marks. The requirement of section 31(1), for the child who has reached 18 years of age and is no longer a minor, is that that “child” be enrolled in a full-time program. That has been applied to mean participation in the educational program in which he/she is enrolled in a meaningful way.  Giess v. Upper, (1996) 28 R.F.L. (4th) 460 (Ont. Gen Div).  In Copeland v. Copeland, (Ont. Gen. Div. (unreported Dec. 9/92, noted in Ontario Family Law Practice 2006, by C. Perkins, D. Steinberg and E. Lonkingly (sp?), p. 696), it was determined that a court should not impose a standard of devotion, priority and effort on a child as a condition of continuing a claim for support. In another case, that of a daughter over 18 years of age who completed high school but did not attend school for a year, the court held that the parent’s support obligation had not ended. Huneault J. held:

11 The purpose of the obligation to provide support extending into a child’s adult years is to reinforce parental responsibility for the education of their children beyond the age of majority. Reading this section as a whole, the legislative intent of parental support is to provide and continue to provide support for a child who is pursuing an educational program and remains dependant on the parent while he/she has not completed their education…

…

13 …The requirement of enrolment in a full-time course of education does not contemplate mere enrolment of the student to operate as a continuing trigger for support payments without some participation by the “child” in the program. Barring special circumstances (such as Tiara’s pregnancy, giving birth and maternal duties in her newborn’s first year), the “child” of 18 years or more owes a duty of due diligence to participate meaningfully in the educational program (interpreted in a contextual understanding, and purposive way) under section 31 of the Act.  Figueiredo v. Figueiredo (1991), 33 R.F.L. (3d) 72 (Ont. Gen. Div.), following Giess v. Upper.

Finally, in Simpson v. Hart, 1998 CarswellOnt 5163, Dunbar J. of the Ontario Court of Justice – General Division noted that: “The law is clear that a child who is independent may re-qualify for support from a parent by recommencing school and thus becoming dependent once more on the parents”.

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Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only.   If you need legal advice with respect to a mistake in a Will,  you should seek professional assistance (e.g. make a post on Dynamic Lawyers).  We have Toronto, Ottawa, Hamilton, Brampton, Mississauga and other Ontario lawyers registered to help you prepare and draft a Will.

A Will is only valid if the Testator knew and approved its content.  If words have been mistakenly inserted into a Will without such knowledge or approval, then a court may strike out those specific passages or phrases.  In Barylak v. Figol, 9 E.T.R. (2d) 305, for example, a residuary clause had been inserted by mistake.  That clause gave the residue of the deceased’s estate to a fund to create a scholarship for needy students of Ukrainian origin. The Testator never gave his solicitor instructions to include that offending residuary clause. There was no evidence that the Will was ever sent to the Testator prior to its execution for review by him. Even if it had been, there was no evidence as to whether the Testator’s command of written English was such that he would have fully understood it. Also, there was no evidence that a true copy of the executed Will was left with the testator or that a copy was sent to him. Overall, the Ontario Court of Justice (General Division) held that the Testator knew nothing about the residuary clause and that it did not reflect his expression. Accordingly, the Court deleted the clause from his Will based on the doctrine of mistake.

written by admin \\ tags: brampton, court of justice, educational purposes, legal advice, mississauga, needy students, ontario court of justice, ontario lawyers, ottawa, passages, professional assistance, residuary clause, solicitor, testator, true copy, ukrainian origin, Wills and Estates

Although I’m not a family law lawyer per se, I often get asked the question: “How does emancipation work in the context of child support obligations?”.  I think the better way of asking this question is: “How can I end my child support obligations?”.  You see, I’ve researched Ontario and Federal laws and court cases and the term “emancipation” just doesn’t seem to appear anywhere.  The term ‘emancipation’ is more of an American term and one which Ontario family law lawyers may not be familiar with it.

If you’d like to know more about ending child support, you should basically be asking for two things on Dynamic Lawyers: (1) what does the law say about how to end child support and (2) what procedural steps need to be taken to go about ending child support?

With respect to the first question, the answer is based on which laws (i.e. statutes, regulations, and cases, etc.) apply to your situation and those depend on where you live.  If you live in Toronto or Ottawa, for example, you should go to Dynamic Lawyers and make a post (it’s 100% FREE and Anonymous) and have local family law lawyers respond to your inquiry.  Once the Toronto or Ottawa family law lawyer has been retained and understand your situation, he or she can explain to you what the law says about ending child support (a.k.a. being emancipated from child support).

In terms of answering the second question, the proper procedure (although I haven’t done it myself) in Ontario appears to be to bring a motion to ask the court to vary a court order previously made requiring you to pay child support. This assumes that there was a court order requiring you to pay child support.  You or your lawyer would do things like prepare the motion materials, serve them on the other parties, and file them with the court; thereafter, the parties would attend a case conference, then a settlement conference, then a trial scheduling conference, and then finally go to trial to argue the motion. For each of the conferences, you’ll need to prepare, serve, and file briefs and financial statements. Before trial, you’ll also need to prepare a trial brief. All of this procedural stuff and documentation takes a lot of time to prepare, review, serve, and file. While you can save money by doing it yourself (the court forms are online and so too are the Family Law Rules and the Family Law Act), it’ll take up a lot of your time and you might end up being penalized finally in costs for failing to do something.

Finally, this whole process could take many months, if not years.  I know it sounds discouraging, but that’s the reality of bringing a motion to vary a court order requiring child support payments.

The bottom line is that you should definitely know if you have a good substantive case in law before you set out procedurally to bring the motion (and spend thousands on lawyers and put yourself at risk of losing thousands in legal costs for the other side if you lose!).  Go to Dynamic Lawyers and make a post to get free quotes from Toronto and Ottawa lawyers!

written by admin \\ tags: case conference, child support obligations, court cases, emancipation, family law lawyer, family law lawyers, ontario family law, ottawa, ottawa family law, ottawa family law lawyers, toronto, toronto family law

There are a number of lawyers and law firms in Ottawa that strictly practice family law.  FYI, family law in Ottawa is not really that different from family law elsewhere in Ontario.  The Ontario Child Support Guidelines, Ontario Family Law Act, and the Ontario Family Law Rules all apply – irrespective of the Ontario city in which you reside.  If you need an Ottawa family law lawyer, you should go to Dynamic Lawyers and make a post.  It’s 100% FREE and ANONYMOUS and family law lawyers in Ottawa will respond to you via e-mail with information and quotes.

Please note that the following is being provided for informative and educational purposes only.  If you require an Ottawa family law lawyer to discuss your concerns and particular case, you are once again encouraged to go to Dynamic Lawyers and make a post.

Notably, because family law deals with high tension, stress, and emotional issues involving couples, children, and property, the justice system (i.e. the government which makes the laws and the courts which enforce them) has taken the approach that alternative dispute resolution is generally better suited to deal with these issues than litigation.

Case in point, under s. 9 of the Federal Divorce Act, a lawyer has a duty in divorce proceedings to draw his or her client’s attention to those provisions of that Act that have as their object the reconciliation of spouses and to discuss with them the possibility of the reconciliation (e.g. through counseling, guidance facilities, etc.).  The lawyer must also provide a certificate (i.e. a written statement) to the court upon commencing divorce proceedings that he or she has complied with said duty.

Under s. 10 of that Act, the court itself has a duty – before considering the evidence – to satisfy itself that there is no possibility of the reconciliation of the spouses (unless it would be clearly inappropriate to do so).  The court may even adjourn at any stage in a divorce proceeding if it appears from the nature of the case, the evidence, or the attitude of the spouses that there is a possibility of reconciliation.

Finally, even throughout litigation under the Ontario Family Law Act (e.g. dealing with non-married couples), before trial, there are mandatory case conferences and settlement conferences wherein the parties must attend to try to settle the case before it gets to trial.

These days, collaboration, mediation, and alternative dispute resolution are all buzzwords that Ottawa family law lawyers use to help their clients resolve contentious family law issues.  Family law centres, seminars, counseling, articles, and other alternative outlets are being used to spread the message: divorce doesn’t have to be so ugly and there is a life after it for all of the parties involved!

written by admin \\ tags: alternative dispute resolution, child support guidelines, child support guidelines ontario, divorce proceedings, family law act, family law lawyer, lawyers in ottawa, ontario, ontario child support, ontario family law, ottawa, ottawa family law, ottawa family lawyer

Cassandra Drudi wrote an article entitled “Lawyer told to pay back $250,000 in fees to developers ” (Ottawa Citizen, 4 March 2009) that is worth discussing in some detail here.

In that article, Ms. Drudi talked about a situation involving Ottawa lawyer D. Kenneth Gibson (Gibson & Associates LLP), who had been ordered to repay some clients just over $250K in legal fees billed in respect of a condo development project.  The clients had originally been given an estimate of about $50K by the Ottawa Lawyer, but the retainer letter had some special provisions in it saying that the total could change if extra work required special attention.  As per the retainer agreement:

“We have provided you, in the paragraph above, an approximate estimate of legal fees.  Should any matter arise on your file which requires special attention, our fee will vary according to the amount of time required to attend to these matters.”

The total bill ended up being just over $450K.

It’s unclear from the article whether those fees had already been paid.  In any event, the clients sought an assessment and the assessment officer reduced the Ottawa lawyer’s fees to just under $180K.

The Ottawa lawyer brought a motion to challenge the assessment officer’s estimate.  On appeal, the Ontario Court of Appeal reassessed the legal fees and held that the client owed about $223K.

Overall, this public episode involving legal fees highlights some of the issues and difficulties both lawyers and clients have in estimating and swallowing the bill.  As a lawyer, I can understand the incentive lawyers generally have to provide reasonable estimates of fees up front.  By providing certainty and predictability to their clients, lawyers can help their clients to plan and budget.  Doing so also makes lawyers accountable by forcing them to try their best to stick with their estimates (which could be based on past experiences) in order to save face and their future reputation.   However, lawyers have been known to get their estimates wrong (for factors outside of their control) and, as such, are advised to include provisions in their retainer agreements explaining that initial estimates may be completely wrong if there are complications, additional issues, etc. that arise in the course of providing legal services.

I guess, at the end of the day, the battle between trying to predict the unknown (i.e. how long and how many people will be involved on the law firm’s part in providing legal services) can be won by constant and effective two-way communication so that there are little or no surprises when the bill finally arrives.  Also, more intermittent billing may be needed so that the final bill isn’t as large as it could have been.

written by admin \\ tags: lawyers, legal fees, ottawa, ottawa lawyer, retainer

Average people in Ottawa have various avenues to pursue in trying to find the right lawyer for their particular case.  Regrettably, most of these avenues are inconvenient and sometimes very costly (e.g. an initial meeting with a lawyer could run you a few hundred bucks!).

More often than not, people find a lawyer through word of mouth referrals from friend and family, colleagues at work, or through professional organizations of which they are a part of or have access to (e.g. other lawyers, bankers, accountants, consultants, realtors, insurance agents, paralegals, etc.).  This, in fact, is how most lawyers find their clients.

Turning to the Law Society of Upper Canada’s Lawyer Referral Service will cost you $6 for a 30-minute conversation with one lawyer.

Finally, people may turn to the Yellow Pages and simply pick an advertisement and make a phone call.  I’ve been told that people tend to pick the biggest advertisement because they somehow believe that the bigger the ad, the more successful the lawyer or law firm.

The point here is that finding the right Ottawa lawyer for you is an important undertaking.  You don’t want to have the lawyer who drafted your will or acted on your house deal to represent you in a criminal case: they may not be up-to-date on court room procedure or have experience cross-examining adverse parties.

People in Ottawa generally need a lawyer only for a limited time and have a limited budget for such engagements. Yet it is hard for these people to distinguish lawyers and law firms from each other, especially given that many small and medium law firms have a general practice. It may also be intimidating for them to approach lawyers with their legal issues, given that doing so may cost money (e.g. $500 for the initial hour visit) and ultimately retaining a lawyer could be very expensive given the uncertainty of hourly billings.

Taken together, these factors likely make people in Ottawa tend to shy away from seeking out or hiring lawyers (sometimes to their own detriment!).  Those sophisticated people who surf the Web looking for a lawyer are hungry for more information than what is provided in the YellowPages or a newspaper advertisement. They are doing a Google or Yahoo search to seek out a particular type of Ottawa attorney in a particular field in a particular area. They are also looking for testimonials and looking for the experience of an Ottawa lawyer.

All in all, it makes perfect sense for people in Ottawa facing these challenges to turn to Dynamic Lawyers as a way of finding the right lawyer for the right price.  Making a post is free and anonymous, posts remain on the website for up to 45 days, and users have the opportunity to receive information and multiple quotes from local lawyers specializing in the area of law requested.  Comparing answers and then following up with the lawyer of your choice is just plain smart – particularly in a field where it is hard to compare one service provider from the next.  All in all, a very good deal…

So now that you have found the right avenue to find a lawyer in a convenient and cost-effective manner: what next?  Well, let’s talk about legal fees.  Many lawyers will charge you a fixed fee for the first consultation.  At this meeting, they’ll ask you questions about yourself and your situation.  The lawyer is trying to understand the legal issues so that he can offer you some type of recommendation on how to proceed.  If the meeting goes well, you may end up signing the lawyer’s retainer agreement, which stipulates the services that are going to be offered and the fees that are going to be charged.  The fees are typically hourly fees ranging from $200 to upwards of $1000 / hour, depending on the size of the law firm, where it’s located (and it’s physical appearance and amenities), and the particular lawyer’s expertise and reputation.

At the first meeting with the lawyer, you should ask some basic questions related to:

1. What services will the lawyer specifically provide;
2. Billing, costs and budget;
3. Time line;
4. Communication (e.g. by phone, e-mail, etc. and how regularly);
5. Past Experience in a particular field;
6. Strategy;
7. Style (e.g. aggressive trial lawyer or alternative dispute resolution lawyer); and
8. Terminating the retainer (e.g. failure to pay, failure to act, breakdown in the relationship, loss of confidence, etc.).

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