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March 22, 2010

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McKELLAR STRUCTURED SETTLEMENTS INC. www.mckellar.com 1-800-265-8381 www.mckellar.com $3.55 • Vol. 21, No. 10 ainmaker_LT_June2_08.indd 1 5/28/08 10:43:29 AM Covering Ontario's Legal Scene ckellar_LT_Jan14_08.indd 1 BLG settles with First Nation A Agreement follows adverse judgment against Toronto firm over fees BY JULIUS MELNITZER For Law Times complex 14-year-old dispute over $1.1 million in legal fees between the Temagami First Nation and Borden & Elliot, a predecessor firm of Borden Ladner Gervais LLP, has ended in a settlement that will be finalized next week. The resolution also brings an end to appeal proceedings in which the Ontario Court of Appeal was asked to determine the extent to which the Indian Act protects aboriginal funds from garnishment. BLG had lost its arguments in that regard at the Superior Court last year. The case arose when the Temagami First Nation (TFN) retained Borden to assist with land-claim negotiations involving the provincial and federal governments. "The retainer went back to 1984," says Robert Bell, the chairman of BLG's nation- al council. Initially, a federal government fund paid Borden's fees, but at some point the payments ceased. Borden continued to act and by 1996 had amassed a $1.1-million account. "Borden & Elliot didn't do anything to collect the fees, all the while understanding that eventually the fees would be paid by the government," Bell says. By 1996, however, limitation periods were becoming a concern, and Borden commenced an action against the TFN and Teme-Augama Anishnabai (TAA). Issuing the garnishment order 'was the only way to make anything happen,' says Robert Bell. In an article published in Blaney McMurtry LLP's "Commercial Litigation Update" in January, Domenico Magisano, who with col- league Catherine DiMarco represented the TFN in the garnishment proceedings, asserted that when Borden served the original statement of claim, the firm "advised TFN that this was merely a procedural step and that BLG had no intention of enforcing on any judgment it might obtain." Consequently, according to Magisano, "TFN and TAA did not defend the claim." Soon after, Borden noted both in default. In fact, Borden took no further steps until 1999, when the TFN and TAA consented to an order granting the firm a charge over any proceeds the groups might obtain through settlement of the land claims. In 2003, BLG sought and obtained default judgment against both the TFN and TAA. "Counsel for the defendants were given a draft of the judgment before Borden & Elliot obtained judgment," Bell says. In accordance with the assurance given when Borden issued its claim, the firm re- frained from taking any steps to enforce the judgment until 2008. Meanwhile, the TFN remained embroiled in complex internal governance disputes, including litigation, that made it difficult for Borden to ascertain whom to deal with. "As long as the governance problems remained, it seemed clear that the band would not be able to deal with the release of funds," Bell says. "In other words, issuing the garnish- ment order was the only way to make any- thing happen." In July 2008, Borden issued a garnishment of funds payable to the TFN by the Ontario See Court, page 3 LSUC should drop Neinstein case: lawyer BY TIM NAUMETZ For Law Times OTTAWA — The Ontario Court of Appeal has overruled a Law Society of Upper Canada hearing panel's finding that To- ronto personal injury lawyer Gary Neinstein sexually harassed two women on separate occa- sions more than 12 years ago. In a ruling that was highly critical of the law society's panel composed of an Ottawa lawyer, a law professor, and a lay bencher that heard the case in 2002, Jus- tice David Doherty's ruling in a unanimous decision last week said the reasons the original hearing panel gave for its find- ings were so inadequate they made a meaningful appeal review impossible and therefore con- stituted an error in law that had to be remedied. Neinstein's law- yer, Brian Greenspan, argues the LSUC should now drop the dis- ciplinary matter. The case included a bizarre and ironic twist concerning "fresh evidence" that Greenspan said demonstrated a reasonable of time he and his panel were hearing Neinstein's case. Greenspan theorized Hunter knew at the time that his own misconduct might come to light and that in treating Neinstein harshly, would have hoped to create an image of himself as someone who wouldn't tolerate sexual improprieties in a profes- The original panel, just in terms of discipline matters, was on another planet. apprehension of bias on the part of the chairman of the original panel, lawyer George Hunter. In 2007, Hunter was found guilty of professional misconduct for carrying on a sexual affair with a client during the same period sional context. Doherty rejected that theory as stretching "the concept of a reasonable appre- hension of bias beyond all prac- tical limits." Doherty nonetheless strong- ly criticized the panel for failing to give adequate weight to or ignoring evidence and testimo- ny from Neinstein, his wife, and other witnesses. With agreement from jus- tices Eileen Gillese and Susan Lang, Doherty allowed Nein- stein's appeal from a Divisional Court judgment that restored the hearing panel's original de- cision after the Law Society Ap- peal Panel had earlier overturned it. He referred the case to a new hearing with a different panel. For his part, Greenspan tells Law Times he hopes the LSUC will decide to drop the prosecution in part because of the eight years that have passed since the origi- nal disciplinary panel heard the evidence. The allegations related See Ruling, page 3 7 Young Criminals 9 Focus On Corporate Restructuring & Insolvency Quote of the week "The decision affirms that a defendant who alleges fraud and loses will have to pay more in costs if the allegations fail even in the face of a relatively small award." — Shane Katz, Singer Kwinter See Court, page 5 Corporate Integrity March 22, 2010 1/8/08 3:03:02 PM Inside This Issue 4 Maybe you need a better mousetrap. 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