Case Comment re: R. v. St. Onge 2012 SCC 57

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1 INFORMATION EDUCATION ADVOCACY In this issue: Case Comment re: R. V. St. Onge 2012 SCC 57 Godzilla vs. King Kong: The Surpreme Court of Canada Revisits But For vs. Material Contribution Pushing the Boundaries of Trade-mark use in Cyberspace Spencer v. Riesberry: The Court of Appeal Cuts a Hole in the Net (Family Property) Editor-in-Chief: Joseph Neuberger Contributing Editors: Bankruptcy and Insolvency Marc Wasserman Business Law Ali Baniasadi Citizenship and Immigration Nan Berezowski Class Actions John Callaghan Commercial Litigation/ Commercial List Paul LeVay Competition and Trade Law James B. Musgrove Constitutional/Administrative Jason MacLean Construction Law February 2013 Case Comment re: R. v. St. Onge 2012 SCC 57 By David Rose C.S., Neuberger Rose LLP In the ever increasing complexity of Criminal Law, the statutory provisions for Over 80 prosecutions deserve special mention. There are fewer areas of the Criminal Code which govern more cases[1], and the Criminal Code has had ongoing revisions to allow for the breath test results to be admissible in Court without the Crown having to call expert evidence. The latest such amendment, and a substantial one at that, was Bill C-2, which on July 2, 2008 significantly altered the manner in which an accused could raise a reasonable doubt about his blood alcohol content (BAC) as evidence by the Breathalyzer readings. Prior to that date it was open to an accused to lead 'evidence to the contrary'[2] about his or her alcohol consumption in the relevant time period, and call a defence expert witness to give an opinion on the accused's BAC at the time of the incident. If the cumulative effect of that defence raised a reasonable doubt, then Over 80 charge was dismissed. This was known as the "Carter" [3]defence, although one Brampton judge, perhaps wryly, referred to this as the "two beer defence"[4]. Bill C-2 amended the evidence to the contrary provisions [5] by providing that evidence to the contrary, and therefore a reasonable doubt about the breath readings, would be raised if the accused showed three things: i) that the approved instrument was malfunctioning or operated improperly; ii) that the malfunction or improper operations resulted in an Over 80 reading from the accused; and iii) that the accused's BAC at the time of the offence was under 80. Whereas the Carter defence was relatively straightforward and relatively simple, C-2 added two statutory components; attack on the machine or its operation, and real effect arising from that. Bill C-2 was a game changer in criminal courts, not the least because there was a diversity of judicial opinion about whether the new Over 80 provisions applied retroactively or prospectively[6]. More importantly, the new C-2 provisions set the bar for evidence to the contrary much higher, and not surprisingly attracted constitutional scrutiny[7]. In November the Supreme Court of Canada rendered its opinion on the constitutionality of C-2, in a case from Quebec R. v.st. Onge Lamoureux[8]. There the court saw two out of the three the new provisions as unconstitutional, and struck them down. According to the majority, it was appropriate to require the accused to show evidence to the contrary by showing malfunction in the machine or improper operation. Conversely, it was a violation of the presumption of innocence to require the accused to show that a malfunction or improper operation

2 Anne McNeely Corporate Transactions and Securities Matters Michael Partridge Court Procedures James C. Morton Criminal Law Dirk Derstine Environmental Law Jack Coop Estates and Trusts Ian Hull Family Law Melanie Manchee Franchise Law David Kornhauser Health and Elder Care Law Lisbeth Hollaman Immigration Randolph K. Hahn Intellectual Property Don MacOdrum Labour and Employment Paul Boniferro Media Law Lorne Honickman Professional Liability/ Discipline Christopher Wayland Real Estate Tannis A. Waugh Regulatory Compliance Ken Jull Tax and Pensions Kathy Bush of the breathalyser resulted in a reading of Over 80. Similarly, it was unconstitutional to require the accused to present evidence that his BAC was under 80 at the time of the incident if it was already shown that the machine was malfunctioning or improperly operated. While the Court left evidence to the contrary in s. 258(1) as meaning only that there is a malfunction or improper operation of the Breathalyzer, it did not give much guidance as what constituted a malfunction. Given the Court's majority opinion that there need not be evidence that the malfunction or improper operation resulted in a falsely high reading, I would argue that the Court is signalling to trial courts that the malfunction or improper operation need not be serious in order to qualify as evidence to the contrary. This issue, however, seems ripe for further litigation. Also in issue is disclosure. After July 2, 2008 there has been a lack of uniformity about whether the Crown would disclose maintenance and previous test records for the Breathalyzer in a given case. Again, judicial opinion was divided on that point[9]. The Supreme Court in St. Onge Lamoureux found that "the prosecution must of course disclose certain information concerning the maintenance and operation of the instrument...[10]", and some Ontario Crown offices have taken this to heart, but not all. A province wide policy regarding expansive disclosure of breathalyser instrument maintenance and test logs has yet to be announced. What is clear from the Court's ruling in St. Onge Lamoureux is that parts of Bill C-2 have been clipped from s. 258(1)(c). What is unclear, and remains to be litigated, is what malfunction or improper operation means in law, and what disclosure is now relevant in law. [ 1]There were 48, 033 Impaired Driving cases completed in Canada in 2010/11 according to Juristat x/ /article/11646/tbl/tbl03-eng.htm#n_2, compared with 16,363 Drug Possession charges in the same period. [ 2]S. 258(1)(c) provides that the breath readings subject to various statutory criteria are admissible unless [3] R. v. Carter (1985), 31 M.V.R. 1, 19 C.C.C. (3d) 174, 7 O.A.C. 344, 1985 CarswellOnt 2 [ 4] R. v. Powichrowski2009 CarswellOnt 6461 (Duncan J.) [ 5]S. 258(1)(c) of the Criminal Code [6]Since resolve in favour of the prospective opinions see R. v. Dineley 2012 SCC 58 [ 7]See Powichrowski supra [8]2012 SCC 57 [ 9]See for eg, R. v. Gubins 2009 CarswellOnt 1061 (OCJ), and (contra) R. v. Hillier 2010 CarswellOnt (OCJ) [ 10] St. Onge Lamoureux at par. 48 BACK TO TOP Tax Law Pooja Samtani Tort Litigation Paul Tushinski GODZILLA vs. KING KONG: The Supreme Court of Canada Revisits But For vs. Material Contribution Connect to our Website by George Gray, Dutton Brock

3 In Clements v. Clements, (2012 SCC 32), a personal injury claim arose from a motorcycling accident. The defendant husband was driving with his wife, the plaintiff, as a passenger. The couple was traveling from Prince George, B.C. to Kananaskis, Alberta when the bike lost control and the plaintiff fell and suffered a severe brain injury. There were several possible "causes" of the fall; some were negligent (the defendant was speeding in wet weather and had overloaded the bike); while another potential cause was non-negligent (a nail had lodged into the tire, causing it to deflate when the tire fell out). At trial the defence called an expert who testified that the probablecause of the accident was the nail. He opined that because of the nail the accident would have happened even without the defendant's negligent acts. The trial judge rejected this conclusion on the basis of the expert's faulty assumptions on which his opinion was based, but at the same time found that the plaintiff was unable to meet the 'but for' test for proving causation. The trial judge suggested that due to the assortment of negligent and non-negligent causes it was impossible for the plaintiff to meet the 'but for' test. He emphasized that it was not the plaintiff's faultthat she was in this situation. The trial judge applied the 'material contribution' test and found the defendant liable on this basis. At the Supreme Court of Canada, the ruling unequivocally disagreed with the trial judge's employment of the 'material contribution' test. The SCC found that this alternative approach to proving causation can be only used in the particular circumstance where there are multiplepotential tortfeasors. The presence of non-negligent potential causes, called neutral factors, even if they make proof of causation impossible, will not get a plaintiff around the 'but-for' test. For defendants, the decision restores confidence that a plaintiff will have to prove causation under the 'but-for' test in all be a small set of easilyidentifiable cases. For plaintiffs, this represents a significant step back from recent decisions (i.e. Resurfice Corp. v. Hanke) in which the Supreme Court ruled that the 'material contribution' approach could be appropriate where: (1) it was "impossible" for the plaintiff to prove causation on the 'but for' test; (2) this impossibility was due to reasons outside of her control, and (3) there was a clear breach of duty on the part of the defendant that exposed a plaintiff to an unreasonable risk of injury. In rejecting a broader applicability for the but-for test, the Court insisted that plaintiffs are equipped with a satisfactory weapon of proof in the form of the robust approach to evidence that should be applied in proving causation.the Court stated "the law of negligence has never required scientific proof of causation; [...] common sense inference from facts may suffice."since the trial judge in this case had found that "[o]rdinary common sense" supported a causal relationship between the injury and the excessive speed and weight, the Court majority sent the matter for a new trial. For this reason insurers should be cautious in evaluating the strength of a potential causation defence. A plaintiff very well many not need to provide an expert opinion on causation and "common sense" may very well be enough. BACK TO TOP

4 Pushing the Boundaries of Trade-mark Use in Cyberspace By Allison J. Hayman, McMillan LLP The Federal Court recently addressed the thorny issue of when trademarks displayed on foreign-based Internet websites are used in Canada. In HomeAway.com, Inc v Hrdlicka,[1]the applicant succeeded in expunging a registration for the trade-mark VRBO that the respondent had registered in Canada. The applicant, HomeAway.com, Inc. and its predecessor ("HomeAway"), both Delaware corporations, claimed to have used the trade-mark VRBO in Canada in association with a well known online vacation real estate listing service. The VRBO trade-mark was displayed on HomeAway's website based in the United States and some Canadian properties were featured on the website. An individual, Hrdlicka, applied to register the VRBO trade-mark in Canada on September 2, 2009, and eventually succeeded. HomeAway sought to expunge the registration on the basis that Hrdlicka was not the person entitled to the registration and that the trade-mark was not distinctive of Hrdlicka at the date the Court proceeding to expunge the registration was commenced. The success of HomeAway's attack on Hrdlicka's registration turned on whether HomeAway had used the VRBO trade-mark in Canada in association with vacation real estate listing services. Section 4 of the Trade-marks Act states that a trade-mark is deemed to be "used" in association with services if it is used or displayed in the performance or adverting of those services. Jurisprudence has added an additional requirement, namely that where advertising is the sole mode of "use," the services must also be available to be performed in Canada. The Court took the view that HomeAway had used the VRBO trade-mark in Canada in association with vacation real estate listing services prior to the date Hrdlicka filed the application for the VRBO trade-mark in Canada, on September 2, Justice Hughes held that prior to the filing date, HomeAway was "advertising to and contracting with Canadians to display their premises on the VRBO website and was displaying those Canadian premises on its website. The website displayed the trade-mark VRBO to Canadians as well as persons of every other country who visited the website."[2] As a result, Justice Hughes was satisfied that prior to the date of application "HomeAway was using the trade-mark VRBO by means of advertising and use on its website in association with vacation real estate listing services."[3] He also found that the VRBO trade-mark was distinctive of HomeAway. In contrast, Hrdlicka had not used the trade-mark before November In considering the trade-mark use issue, the Court reviewed a number of decisions in other fields involving the application of Canadian laws to electronic information or electronic transmissions. Justice Hughes concluded that the fact that the computer information on the website was likely inputted and stored outside Canada did not mean the VRBO trade-mark was not used in Canada: I find... that a trade-mark which appears on a computer screen website in Canada regardless where the

5 information may have originated from or be stored, constitutes for Trade-marks Act purposes, use and advertising in Canada.[4] This is a broad statement that appears to have glossed over the legislative and common law principles that the services in question must also be performed or available to be performed in Canada. In this case, HomeAway's property listing services were available to Canadians, so the decision is consistent with these principles. However, it will be interesting to see if future litigants are able to rely on the Court's statement for a broader proposition, particularly in disputes involving Internet websites. If the display of a trade-mark on a computer screen website in Canada constitutes "use" of a trade-mark in Canada with services, it will be significantly easier for web-based businesses located outside of Canada to register their trade-marks in Canada and to bring claims and trade-mark opposition proceedings against persons who use or apply to register confusingly similar trademarks in Canada. Similarly,companies which do not believe they are offering a service in Canada could be the subject of infringement claims in Canada simply because their website is viewed in Canada. This case is also a reminder to trade-mark owners that use of a trademark is fundamental to obtaining and maintaining trade-mark rights in Canada. Once a trade-mark is registered, the registration can be lost if the trade-mark was not properly used before registration or is not properly used thereafter. [1] 2012 FC [ 2]Ibid 28. [ 3] Ibid 29. [ 4] Ibid 22. BACK TO TOP Spencer v. Riesberry [1]: The Court of Appeal Cuts a Hole in the Net (Family Property) By Ian M. Hull and Alex Bishop, Hull & Hull LLP The Ontario Court of Appeal's Decision in Spencer v. Riesberry has important ramifications in both the areas of trust and family law. For the former, it appears to allow for the holding of a property in a trust as a way to prevent it from being deemed a "matrimonial home" under section 18(1) of the Family Law Act[2] (the "FLA"). For the latter, concerns exist over the apparent circumvention of the legislation and the unfair and inequitable situations that may arise. Facts On March 18, 1993, Linda Spencer ("Linda") bought a property on Riverside Drive in St. Claire Beach, Ontario (the "Riverside Property"). On the same day of the purchase, Linda executed a trust agreement (the

6 "Trust Agreement") by which she settled a trust called the Spencer Family Realty Trust (the "SFRT"). Linda was the named trustee and she and her four children were its designated beneficiaries. Article 1.1 of the Trust Agreement provided that the "Trust Property" was to be made up of the Riverside Property and any additional property that might be added to the SFRT. The proviso to Article 1.1 further states that a beneficiary's interest in the Trust Property is not to be included in that beneficiary's "net family property" as defined in the FLA. One of Linda's children, Sandra Lynn Spencer ("Sandra") was the Applicant at first instance and Respondent on appeal. She married Derek Lawrence Riesberry ("Derek") in 1994 and the couple had two children. After the Riverside Property was purchased in 1993, Sandra and Derek resided there except for two years when a new dwelling was being built on the property. The couple did not pay Linda rent on the property during the time they resided therein but did however pay taxes, insurance, utilities and other expenses. On December 1, 2005, the Trust Agreement was amended so that Linda was replaced as Trustee by Sandra and her sister, Lori. During the next several years, Linda purchased three other properties and included them as part of the Trust Property of the SFRT. Sandra's three siblings were permitted to live in these properties just as she and her family had been residing in the Riverside Property. Sandra and Derek separated in August Following this, Linda moved to take possession of the Riverside Property by giving notice to vacate. Sandra and one child vacated the house while Derek and their other child remained in the house. Sandra commenced divorce proceedings shortly thereafter and issues quickly arose concerning the Trust Agreement and Derek's interest in the Riverside Property. A trial was ordered to deal with the issue of whether or not the Riverside Property should be excluded from Sandra's net family property. Trial Decision In May of 2011, Justice Campbell (the "trial judge") presided over the trial. In his decision, it was held that the Riverside Property was not a matrimonial home as defined in the FLA. Instead, it was found that Sandra held a "contingent beneficial interest" in the SFRT and thus constitutes an "asset" as defined in the FLA. In turn, the trial judge ordered that calculations of that interest be conducted so as to include it in the contemplation of an appropriate equalization payment. Furthermore, the trial judge found that the proviso to Article 1.1 of the Trust Agreement withholding the Trust Property from being included a net family property calculation was a condition subsequent and void for uncertainty. Appeal On Appeal, Derek submitted that the trial judge committed an error by finding that Sandra did not have an interest in the Riverside Property within the meaning of s. 18(1) of the FLA. That section provides as follows: "Every property in which a person has an interest and that is or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and his or her spouse as their family residence is their matrimonial home." In support of his submission, Derek advanced three arguments:

7 1. Sandra's interest as a beneficiary of the SFRT was sufficient to establish an interest in the property within the meaning of s. 18(1); 2. Sandra's role as trustee of the SFRT, combined with her beneficial interest in same, was sufficient to establish an interest in the property within the meaning of s. 18 (1); and 3. Enforcing the notion of the separate entities of trustee and beneficiary will defeat the desired effect of the FLA and the special treatment afforded a matrimonial home in that legislation. Writing for a unanimous bench, Justice Gillesse did not accept Derek's submission or any of these arguments advanced in support of it. In regards to the first argument, she agreed with the trial judge that Sandra had a "contingent beneficial interest" in the Trust Property as a whole, whatever form it may take at the time of her mother Linda's death. In support of this conclusion, Justice Gillesse relies on the principle derived from the decision in Gennaro v. Gennaro[3]: "Unless the terms expressly provide otherwise, a beneficiary has no property interest in any specific asset of the trust, prior to or absent an appropriation of such asset to the beneficiary by the trustee." Dealing with the second argument regarding Sandra's role as a trustee of the SFRT, Justice Gillesse asserts that the powers and duties given to her by the Trust Agreement and legislation are not hers personally, they are hers as a fiduciary. Justice Gillesse further held that the roles of trustee and beneficiary cannot be combined to create an interest in the Riverside Property within the meaning of s. 18(1) of the FLA. Justice Gillesse elaborates on this point in her response to Derek's third argument that the entities of trustee and beneficiary should not be separated. Justice Gillesse states that a trust is a type of relationship, namely the fiduciary relationship between trustee and beneficiary. Furthermore, the separation of the roles of beneficiary and trustee is a fundamental aspect of a trust and to combine them would "render the trust unworkable." Further to this point, Justice Gillesse notes that it is the trustee that is the legal owner of the trust property and it is the beneficiary that is the equitable owner and that when the two are combined, "there is no trust relationship and, therefore, no trust." In support of his third argument, Derek put forward the case of Debora v. Debora[4], where a cottage owned by one party's corporation was found to be the parties' matrimonial home for the purposes of equalization. In Debora, the appellant relied on section 18(2) of the FLA: "The ownership of a share or shares, or of an interest in a share or shares, of a corporation entitling the owner to occupy a housing unit owned by the corporation shall be deemed to be an interest in the unit for the purposes of subsection (1)" While this subsection allowed the court to "pierce the corporate veil" and include the corporately-held home in the equalization payment calculation in Debora, Justice Gillesse does not accept it as allowing it to do the same thing in the context of a trust in the case at bar: "There is no comparable provision in the FLA in respect of trusts." Commentary Through the decision in Spencer v. Riesberry, the Court of Appeal has

8 provided trust lawyers with a tool allowing parents to make inter vivos gifts of property to their children while protecting them from potential FLA claims that may arise from a divorce. However, the trial judge's striking down of the proviso to Article 1.1 of the Trust Agreement (which shielded the Trust Property from net family property calculations) as a reason subsequent, void for uncertainty was not appealed. Justice Gillesse points out this fact and states that nothing in the appellate court's reasons should be taken as an endorsement of that part of the decision. This seems to suggest that this type of 'shielding' term being inserted into a trust agreement is open to future judicial consideration. Spencer v. Riesberry has caused some concern among family lawyers as it appears to allow for complete circumvention of matrimonial home provisions of the FLA. The matrimonial home is deliberately afforded special treatment in the legislation and, in some cases, this special treatment can lead to unfair situations such as the loss of ability to claim a deduction for bringing the home into the marriage. Spencer v. Reisberry seems to allow those who hold properties in trust to avoid the special rules laid out in the FLA. Furthermore, holding a family home through a trust is now an alternative to negotiating a marriage contract dealing with ownership and equalization rights for a property that would otherwise be seen as the matrimonial home. The trust allows one spouse to possess these rights while the other spouse would likely not be aware of the situation. It is also concerning that the right to possession and the right to notice and consent to the sale or encumbrance of a matrimonial home may also be affected by this decision. In response to this decision, some observers have called for a reform of the FLA so as to include a provision for trusts that is similar to s. 18(2) which allows for corporately-held family homes to be treated as the matrimonial home. It is yet to be seen whether or not this type of legislative reform or similar judicial decision-making will be forthcoming. [ 1] 2012 CarswellOnt 7589 (Ont. C.A.). [ 2] R.S.O. 1990, c. F.3. [ 3](1994), 111 D.L.R. (4th) 379 (Ont. Unif. Fam. Ct.). [ 4](2006), 83 O.R. (3d) 81. BACK TO TOP Published Monthly by The Toronto Lawyers Association. Toronto Lawyers Association. The information contained in the Toronto Law Journal may not be published or otherwise distributed without prior written consent. Forward