Law Times

Law times • OctOber 28, 2013 Page 7 COMMENT Tories toy with bill targeting revenge porn T and then repeatedly torhe relationship starts off with mutual love The Hill mented as a photograph of that evening circulated on and leads the couple the Internet. into taking pictures It was then that Chof each other in sexual play isholm decided that if this and possibly even some porkind of social violence nographic poses that both of could happen to a teenthem see as nothing more than ager, it could happen to amusing bedroom horseplay. any adult. Photos taken at But as time goes by, the relationship begins to fall apart. Richard Cleroux parties or in the privacy of the bedroom with trusted Eventually, it takes a turn for partners could appear for all to laugh at the worse and the pair break up. One of the partners decides to take years later. Chisholm came to the conclusion that revenge, remembers the pictures, and sends them anonymously to a smut mag- as legislators, MPs should do something azine or posts them on various web sites. as soon as possible to help protect the priAnd soon those pictures are coming vacy now and later on of Canadians no up on Google or any other search en- matter what their age. So he put together bill C-540 and ingine under terms such as "naked moms" or "naked couples." Neighbours and troduced it last spring. It's a private memfriends can recognize the woman by the ber's bill described as legislation aiming tattoos, clothes, and background imag- "to criminalize the non-consensual, maes. Unfortunately for her, there's nothing licious making or distributing of intimate images by mechanical or electronic she can do about it. Right now, even though we have a means regardless of the age of the victim." Chisholm says the crux of the issue provision in the Criminal Code prohibiting the sexual exploitation of children, will be what constitutes non-consensual we have nothing to prevent the mali- actions in each case as well as the interpretation of maliciousness on the part of ciousness of revenge porn. New Democrat MP Robert Ch- the accused. It shouldn't matter how old victims isholm is doing something about it. He spent time with the family of Rehtaeh are. They deserve to have the law on Parsons, the teen whose suicide sent their side when someone decides to creshockwaves across the country and ate or distribute explicit images without revealed an ugly gap in the Criminal their consent. Sharing explicit images without someCode: a lack of legal consequences for distributing intimate images of some- one's consent is an invasion of privacy and an assault on an individual's dignity one without the person's consent. Rehtaeh's parents came to Ottawa and the effects will follow them for the and told Chisholm in detail what had rest of their lives. It was sad last spring to see the rehappened to their daughter before her death: how she was sexually assaulted action of then-justice minister Rob as she leaned out of a window at a party Nicholson when Chisholm introduced bill C-540. Instead of complimenting Chisholm for taking the issue further, Nicholson began bragging about how much the Conservative government had already done to fight exploitation by raising the age of consent but he slammed the NDP for not supporting him enough and had not one good word to say about the proposed legislation. Soon afterwards, Prime Minister Stephen Harper closed down Parliament because the Senate spending scandal was getting too hot for him. The prorogation killed Chisholm's legislation. None of this bothered Chisholm. He says the Conservatives are usually like that. They have trouble giving anyone else any credit. Chisholm resurrected bill C-540 in the House of Commons on Oct. 16. There's a new justice minister, Peter MacKay, and he had nothing bad to say about the bill. Chisholm says he talked to a lot of MPs in the summer who are in favour. He noted a vague positive reference to the issue in the throne speech. But he expects the Harper government will either let the bill languish in committee or kill it outright. They often do that, even if they like opposition proposals, so they can bring them back as their own legislation later in one of their over-the-top omnibus crime bills. MacKay recently announced he had received an internal report with recommendations on the adult pornography issue and committed to "consider the report and its recommendations." So there's hope the government may act. LT Richard Cleroux is a freelance reporter and columnist on Parliament Hill. His e-mail address is richardcleroux@rogers.com. u Letter to the editor UNIVERSITIES AGGRESSIVE ON COPYRIGHT ISSUES Access Copyright was surprised to come across the article,  "Universities slow to use new fairdealing rights," in your Sept. 23 edition and disappointed not to have been offered the opportunity to participate. As you can appreciate, we are deeply involved in the matter at hand and, in fact, are mentioned by name eight times in the article. We know the readers of Law Times appreciate hearing from all sides. Next time, we would welcome the chance to broaden the context of this important discussion to include the voice of the tens of thousands of writers, visual artists, and publishers we represent. Contrary to the suggestions in the article, the copyright guidelines promoted by the Association of Universities and Colleges of Canada and adopted by some institutions are an aggressive approach to attempt to eliminate a 20-year history of licensing the use of copyright-protected works. They are not reflective of the law of fair dealing in Canada; rather, they reflect a broad self-interpretation of what the institutions would like the law to be. Fair dealing remains a case-by-case analysis. Far from being slow to use new fair-dealing rights, educational institutions' practices are the subject of three legal proceedings in Canada. That is because authors, visual artists, and publishers disagree that these practices and policies are fair.  Creators and publishers want their works to be widely shared and used. But they also want to be sure there is a sustainable system in place so the students of tomorrow have access to the Canadian content they require. Access Copyright is dedicated to forging a future for copyright in Canada that works for everyone.  Roanie Levy, executive director, Access Copyright Advice for proving rescission damages in franchise cases BY EpHRAIM STULBERg and SCOTT pAULIN For Law Times I franchisee has provided accurate records with respect to its revenues. Unfortunately, this may be only half the battle as the expenses incurred by the franchisee may not have been sufficiently documented. In deciding whether or not to pursue a claim under the fourth subsection, it is often useful to attempt to estimate what portion of the franchisee's expenses cannot be documented. In a recent case we were involved in, the franchisee, who had operated a relatively large franchise restaurant, acknowledged he had paid his employees in cash. While we did not have any documentation that would enable us to quantify the level of cash payments, based on data from Statistics Canada showing that labour costs for larger restaurants are typically equal to 25 to 35 per cent of sales, we estimated them to be in the range of $300,000 for this restaurant. Based on this level of undocumented expenses, we explained to counsel that in order to make any sort claim under the fourth subsection, the franchisee would have to have actually lost in excess of $300,000, a very large sum for this particular franchisee to be able to finance. Counsel then decided to abandon the claim for operating losses and instead focus on the first three subsections. Franchise legislation contemplates swift settlements of rescission claims with amounts paid within 60 days of receipt of the notice of rescission. While the reality is that many disputes take longer, the high-level review described above will hopefully prove useful to counsel in resolving claims more quickly and efficiently. LT u SPEAKER'S CORNER n October 2012, the Manitoba government proclaimed the Manitoba Franchises Act into law. The legislation, like its counterparts in several other provinces, provides franchisees with the right to rescind a franchise agreement within two years if the franchisor does not provide a disclosure document. Upon rescission, the franchisee has the right to receive an amount that will, generally, place it back in the same financial position it was in when it entered into the franchisee agreement. This provision, which also features in the provincial franchise legislation of Ontario, New Brunswick, and Prince Edward Island, has given rise to much litigation over the past decade; yet reported decisions involving detailed outlines of rescission remedies awarded have been few and far between. It's useful, then, to provide counsel with two examples from among the various analytic tools available at an early stage of the litigation process to assess the potential magnitude of such a financial remedy. The various franchise acts use identical language in setting out the amounts paid to the franchisee upon rescission under four subsections. They require that, upon rescission, the franchisor must refund to the franchisee any money received other than funds for inventory, supplies or equipment; purchase from the franchisee any inventory purchased pursuant to the franchise agreement; buy any supplies and equipment the franchisee had purchased pursuant to the franchise agreement; and compensate the franchisee for any losses incurred in acquiring, setting up, and operating the franchise. Quantifying the amounts under the first three subsections can be relatively straightforward. The franchisor will have a record of the amounts paid to it by the franchisee. The purchase of supplies and equipment is also typically well documented. The inventory component is often relatively insignificant. But what of the fourth subsection related to the startup and operating losses? In order to quantify losses, a party must be able to prove both the revenues and expenses of the business. Based on our experience in quantifying such claims, rescinding franchisees will often not have had proper financial statements prepared, and without them it may be difficult at first glance to provide even a rough estimate of the potential quantum under this section. Consider the example of a franchisee that operated a restaurant. It presents financial statements showing revenue of $800,000, cost of sales of $600,000, and other operating expenses of $600,000 for total reported operating losses of $400,000. Assume that all of the expenses are fully documented. Is there any evidence that the revenue figure is accurate and complete? Consider that, based on data from Statistics Canada, the average cost of sales for a full-service restaurant, as a percentage of sales, is generally in the range of 35 per cent. But this franchisee shows cost of sales of 75 per cent. While there may need to be some allowance to account for poor management skills, this accounting ratio may be an indication that there have been significant levels of unreported sales and that the reported operated losses are too high. Recognition of this issue will likely have an impact on counsel's strategy for the litigation. Consider a second example. Suppose that the www.lawtimesnews.com Ephraim Stulberg and Scott Paulin are managers in the Toronto and Winnipeg offices of the forensic accounting firm Matson Driscoll & Damico Ltd. Their practices focus on quantifying economic damages in a wide variety of contexts, including franchise disputes.

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