Law Times

Law Times • OcTOber 21, 2013 Page 7 COMMENT Case offers useful guidance on gifts, disposition costs O ur rainy summer did manage to bring with it a good family law decision from the Ontario Court of Appeal that we should all read. In Buttar v. Buttar, Justice Marc Rosenberg discussed three important elements of equalization, namely disposition costs of assets, partition and sale of property, and gift exclusions from the equalization calculation. These are the things we fight over so much and this case is a useful tool to refer to. The basic facts are that Doris and Bruce Buttar had been together for 36 years with three grown and independent children. They were a farming family, as were the husband's parents. At the time of separation, the family had several properties comprised of their family home and farming lots as well as a time-share in Collingwood, Ont. The trial judge, in determining the issues of equalization of the parties' respective net family properties, distributed them between the spouses so that each walked away with four and Doris would receive a small top-up payment rather than ordering a sale and calculating an equalization payment. The trial judge also denied the husband's claim to deduct disposition costs with respect to the capital properties, despite the fact he had already used up his entire personal lifetime capital gains exemption, and denied his claim to exclude his milk quota from the calculation of the equalization payment. The should apply to the disposition judge held that although he recost because the owner will ceived the milk quota from his Family maintain full use of the asset for father for no money, considerLaw many years to come. ation did flow due to the fact An even more interesting that the father had a life interdiscussion in this case was the est in continuing to farm some appropriateness of the trial of the Buttars' farming lots. judge's redistribution of capiWriting for a unanimous tal assets between the parties Court of Appeal, Rosenberg in relying on the Partition Act. disagreed with the trial judge While a creative solution to on the issues of disposition an equalization problem with costs and partition of property Marta jointly owned lands, it wasn't but agreed on the denial relatSiemiarczuk in accordance with the statued to the milk quota. There's certainly a long-standing body of tory scheme. Quite rightly, in my mind, case law that tells us disposition costs are a Rosenberg confirmed the court couldn't proper debt reflected in the determination rely on the Partition Act as a basis to reof net family property. So why do we keep distribute properties between the parfighting over these issues? Well, we often ties to satisfy equalization obligations. disagree on the test as to when they apply. Instead, it must calculate equalization as Rosenberg found that the applicable test is a payment from one spouse to the other. whether it's "more likely than not" a party Only in rare circumstances should propwill incur such costs in the realization of the erty vest in a spouse to satisfy an equalvalue of the assets rather than one of "inevi- ization payment, such as in cases where tability" as applied by the trial judge. What there's a risk of non-payment. If there's to be a partition, it more propthe decision didn't really explore — and is something I think the court should always erly occurs when it's possible to divide a look at when dealing with disposition costs single piece of property between two own— is the calculation of their net present val- ers rather than taking a grouping of propue. So, for example, if parties will be dispos- erties and redistributing them. The proper ing of an asset imminently, they'll incur the order must instead be sale of joint propercost right away and it would be appropriate ty. While there are some jurisdictions that to discount its value by the full capital gains statutorily allow for regular redistribution tax as well as other transactional costs. If, of property instead of an equalization payon the other hand, they'll be selling a prop- ment (or a combination of both), Ontario erty but likely not for 15 years, a discount isn't one of them. Finally — and something I view as the most interesting discussion in this case — was the issue of the exclusion of alleged gifts from third parties. That's the stuff we really argue about a lot, of course. In this case, the claimed gift was a milk quota given to the husband by his father at the time he also transferred a number of the farming lots to the parties jointly. It was worth just under $2 million at the time of sale. In considering the issue, Rosenberg discussed the three elements needed to have a true gift: intention to gift something without consideration; acceptance of it; and actual delivery. In this case, the issue was whether there was actually any consideration for the gift. Although the father gave the milk quota to Bruce, both the trial and appeal courts determined that consideration did in fact flow in the form of allowing him to continue to use the family farm until his death as a life interest. Therefore, although the father gave the quota just to Bruce and not to the couple jointly as with the other properties, he did so as part of a larger transaction with both parties and the life interest in the farmlands had a sufficient connection to the milk quota that it took it out of the realm of a gift. LT Marta Siemiarczuk is a lawyer practising family law litigation and collaborative family law at Nelligan O'Brien Payne LLP in Ottawa. She can be reached at marta. siemiarczuk@nelligan.ca. Will Metron decision kill the company? BY NORM KEITH For Law Times T It was that provision that Bigelow used, together with the evidence and submissions of counsel before they met at trial, to determine the $200,000 fine. The Court of Appeal, however, indicated the provision could focus more on the ability of the corporate defendant to pay than its continued economic viability generally as long as it continued employing workers. It also reviewed British sentencing guidelines to support the conclusion that the fine against Metron was too low. The final issue on the appeal, whether the sentence was manifestly unfit, led the Court of Appeal to criticize the sentencing judge for imposing the $200,000 fine. It also held that Fazilov bound the corporation by his actions as a senior officer even though he was under the influence of illegal drugs at the time of the accident. In my opinion, it remains an open question whether Fazilov was truly a senior officer of Metron and whether this was an appropriate consideration for the Court of Appeal to seize on to dramatically increase the fine. The Court of Appeal's approach seems to place greater criminal liability and a higher monetary penalty on Metron due to a mistake by a first-line supervisor. But this application of Bill C-45 does not necessarily justify a higher fine but is rather the necessary basis for the conviction itself. The death of the four employees has resulted in controversy, consternation, and a change in occupational health and safety regulations. Enforcement is more aggressive as a result. However, the very high fine of $750,000 is of questionable value for promoting prevention. Is the Court of Appeal in favour of corporate capital punishment given the effect on a small company like Metron? The Court of Appeal has sent a message to employers that the punishment for offences related to criminal negligence under the Bill C-45 amendments may be quite severe. The other sobering fact is that there is no upper limit to fines imposed on a corporation prosecuted under a Bill C-45 offence. The $750,000 fine and potential bankruptcy of Metron may be just the beginning. LT u SPEAKER'S CORNER he Court of Appeal for Ontario sent a stern warning to employers in its decision last month dealing with the sentence appeal involving Metron Construction Corp. The employer of the four workers who died on Christmas Eve 2009 in Toronto, Metron eventually pleaded guilty to a Bill C-45 offence, criminal negligence causing death. At the sentencing hearing, Ontario Court Justice Robert Bigelow imposed a fine of $200,000 after thoroughly reviewing all of the facts, circumstances, and legal requirements for sentencing a corporation under the Bill C-45 amendments to the Criminal Code. The Court of Appeal heard from the Crown that the fine of $200,000 was too low and an unfit sentence. The Court of Appeal dramatically increased the fine against Metron to $750,000 from $200,000. As a result, the case is critical for employers, legal counsel, and health and safety professionals across Canada to understand. In September 2009, Metron entered into a contract with the owner of two northwest Toronto high-rise buildings to do restoration work on concrete balconies. There was an initial attempt to secure appropriate scaffoldings and swing stages, but there were delays in the project due to supplier issues. The swing stage eventually arrived without any instruction manual on how to assemble the various parts. There was no report prepared by a professional engineer stating the swing stage had been erected in accordance with design drawings as required by regulation for construction projects under Ontario's Occupational Health and Safety Act. On the day of the accident, five workers plus a supervisor, Fayzullo Fazilov, boarded one of the swing stages to travel to the ground from the 14th floor. At the time, there were only two lifelines for six workers to provide them with safety redundancy if the swing stages failed. The combined weight of the workers and the equipment caused the swing stage to collapse and four of them fell to their death. One of the critical admissions by Metron was that Fazilov was a senior officer of the company. This was an essential admission for the corporation to make to ensure the trial court accepted its plea bargain. The new statutory formula for guilt for organizations on a charge of criminal negligence causing death requires that a senior officer departed markedly from the reasonably expected standard of care to ensure safety. In other words, without the admission that Fazilov was a senior officer, the Crown could not have secured a conviction under the Bill C-45 amendments. The Court of Appeal was dealing only with a sentence appeal, so the legal issue of whether or not Fazilov truly was a senior officer was never disputed or argued before it or the trial court. This critical issue was one of the major questions never addressed by any court in the case. The Court of Appeal's sentencing decision seemed to play down the fact that three of the four deceased workers had tested positive for the active ingredient in marijuana. However, the court acknowledged Fazilov was one of the individuals who were under the influence of marijuana at the time. The Court of Appeal appears to have ignored that fact as relevant in assessing a proper sentence. On the appeal, the Crown argued the trial judge had committed three errors relating to the sentencing of Metron: relying upon jurisprudence from occupational health and safety regulatory prosecutions; consideration of the corporation's ability to pay; and the general fitness of the sentence. Justice Sarah Pepall, writing for a three-member panel of the appeal court in R. v. Metron Construction Corp., held that the first ground of appeal had no merit since the Crown prosecutor, during sentencing before Bigelow, had invited and even encouraged the trial court to consider the range of fines from a regulatory prosecution. They were in the range of $115,000 to $450,000. Regarding the ground of appeal related to ability to pay, the Court of Appeal was scathing in its criticism of Bigelow. Interestingly, the Bill C-45 amendments expressly gave the trial judge jurisdiction over the issue of the economic viability of a penalty on a corporate defendant. www.lawtimesnews.com Norm Keith is a partner at Fasken Martineau DuMoulin LLP. He's available at 416-868-7824 or nkeith@fasken. com.

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