Law Times

Law Times • January 17, 2011 Time to stop unreported crime with new jails? H aiti wants Canadian soldiers to stay on for another year. The United Nations people say Canadian military engineers are first class and they need them desperately to rebuild the country. But Prime Minister Stephen Harper says no. He needs the soldiers over in Afghanistan, and more aid to Haiti would cost an- other half-billion dollars, money he doesn't have with a huge budget deficit staring him in the face. But is there money to spend on prisons? Of course, Harper has that. This week, the government announced it would spend an- other $158 million on prison expansion across Canada this year to house all of the new prisoners coming through the legal system as new crime laws take effect. We're looking at a total of 634 new jail cells in Alberta, Saskatch- ewan, Ontario, and Quebec. Even that may not be enough. In some places, they'll be housing prison- ers two and three to a cell. That would be in violation of UN treaties signed by Canada. But who cares about the UN? The new spending is on top of the $601 million Harp- er has already spent on pris- ons since he came to power. Over the next five years, it all amounts to about $2 billion as the system takes in all of the pris- oners sent to jail due to Harper's new sentencing laws. In all, the government expects to add 2,700 cells across Canada. Kevin Page, the parliamentary budget officer who reports direct- ly to Parliament, says the prime minister's figures are all wrong. If all of the Conservatives' crime legislation passes and judg- es apply the full letter of the new laws, the prison population in Canada could double. The added cost would be in the billions. Locking people up is a very ex- pensive business, about $104,000 a year per prisoner. It would be cheaper to house them in hos- tels. But that would be out of the question for Harper. Canadian penitentiaries usu- ally require two prison employees for every three inmates. This two- for-three ratio includes jail guards, support staff, management, med- ical personnel, and supervisors. That's a lot of people doing a lot of watching. Britain used to brag that it was a nation of shopkeepers. Under Harper, Canada is becoming a nation of jailers. Those not in jail can get jobs guarding those who are. As Conservative MP Laurie Hawn said the other day, "From now on, when a judge says 10 years, it will mean 10 years." The Conservatives call that truth in sentencing. That doesn't bode well for early parole for those who deserve it. As well, there will be no more two-for-one credits for jail time served prior to conviction and no more house arrest. In addition, sentences for the most violent The Hill By Richard Cleroux crimes and those linked to the mob would double and be served in full. It doesn't take a genius to do the math. Liberal public safety critic Mark Holland calls it the Harper government's "bricks and mortar" approach to the legal system. But Harper says he's only doing what the Canadian people want. According to Harper, violent gang-related offences continue to rise even as the overall crime rate is falling. Canadians, he insists, deserve safe streets. Unfortunate- ly, he can't provide statistics. But who needs them? The critics say what's needed for gangs is more community policing and more people work- ing with teens before they com- mit crimes rather than waiting until they've done so and then trying to put them in jail in the hope that locking them up will change their mentality. As well, recent studies show that about 60 per cent of all pris- oners in federal jails have some sort of drug addiction or mental illness. Less than half of them are getting adequate treatment. No matter when they get out, they still have the same problems they had before they went in. Of course, Harper has new legislation ordering manda- tory minimum sentences for drug offences. If cops find you with five marijuana plants or more, you become a pusher. NDP justice critic Joe Comartin, a former Crown prosecutor, says that change alone could increase the current jail population of about 13,000 prisoners by 4,000. And for what? Would we be any safer as the kid who grew mari- juana plants in his mother's base- ment ends up in jail? Why does Harper spend bil- lions on more prisons to lock up more people for a longer time when the national crime rate keeps going down? Justice Min- ister Rob Nicholson had an an- swer to that last August. He said we need longer jail sentences and more jail cells because of all of the unreported crimes across the country. Stockwell Day said the same thing. But what if judges rebel by telling Harper they have no in- tention of jailing anybody for an unreported crime? Perhaps Harper could appoint a number of unreported judges to hold unreported trials and convict his unreported criminals for their unreported crimes while saving us all a bundle of money by jailing them in unreported prisons that wouldn't cost a cent to build. LT Richard Cleroux is a freelance re- porter and columnist on Parliament Hill. His e-mail address is richard cleroux@rogers.com. is often described as someone bound to act in the best interests of a beneficiary. Equity, which is a body of substantive law supplementary to the common law, requires fiduciaries to be faithful to the trust or confidence reposed in them. To do so, the fiduciary role must be performed T with fidelity. Thus, fiduciary law may generally be described as the law of fidelity or loyalty. Howev- er, it does not deal with every instance of trust or confidence but only those in which the fiduciary is in a position to affect the legal or vital practical interests of the beneficiary. Corporate directors are classic examples of fiduciaries. A claim that someone has breached a fiduciary duty involves allegations that the fiduciary has contravened rea- sonable expectations of loyalty and faithfulness. Remedies for such a breach lie in equity, not the common law. Given the propensity of tort duties and fidu- ciary duties to overlap, the next significant devel- opment in fiduciary law will likely be the manner in which the courts characterize the interrelation- ship between the two areas. This begs the question as to whether a stranger can be liable for inducing breach of a fiduciary duty. In the strict legal sense, such phraseology is not proper because it intui- tively propositions a concurrency between the common law and equity, which does not exist. As the fiduciary duty, being equitable, was unknown to the common law, it is impossible that inducing breach of a fiduciary duty could be a common law tort akin to, for example, the tort of inducing breach of contract. The Ontario Court of Appeal ruling in ADGA Systems International Ltd. v. Valcom Ltd. supports this proposition. Although tort and fiduciary law may result in similar duties, they deal with obliga- tions imposed for different reasons. Tort law deals with the impact of conduct between people pur- suing their own individual interests without any necessary relationship between them. Fiduciary law, meanwhile, operates to sanction conduct amounting to a breach of a trust or confidence not generally found in an arms-length relation- ship. Therefore, in the equitable parlance, the la- bel for such cause of action is knowing assistance in a breach of a fiduciary duty. The liability for the equitable doctrine of knowing assistance is fault-based. The case in point is the Supreme Court of Canada decision in Air Canada v. M & L Travel Ltd., in which two directors caused their corporate travel agency, a trustee of ticket revenues for Air Canada, to Editorial Correspondence FRIGHTENING PROSPECT I find it frightening that making a statement like you are "speaking nonsense" would be the basis of a complaint. It would permit a certain kind of person who excels at playing victim in order to get their way to have a field day. Comment on lawtimesnews.com by David Brown about "LSUC civility crusade sparks debate." NO NEED FOR AGGRESSIVE LANGUAGE Ardent advocacy does not require inappropriate comments. In fact, the best lawyers are those who can maintain their composure in the face of opposing counsel who are behaving in an un- civil manner. It sounds as though too many of the lawyers discussed in this article have been www.lawtimesnews.com COMMENT Parsing the law of fiduciary duties BY NIKOLAY Y. CHSHERBININ For Law Times he law of fiduciary duty evolved from the jurisdiction of the Court of Chancery over trusts and confidences. A fiduciary wrongfully deposit its trust monies in a general operating account. The deposits were made in breach of trust and were lost when the company's creditor, a bank, seized funds from the account to pay a line of credit guaranteed by the directors. The central issue was whether the directors were personally responsible to Air Canada for di- recting the company to breach its trust. The top court accepted that a stranger could be liable by assisting in a breach of trust while knowing of a dishonest or fraudulent design of the fiduciary. The knowledge requirement for this type of li- ability is actual knowledge. Notably, recklessness or wilful blindness will also suffice. Air Canada is a binding authority for the proposition that fiduciaries may be liable for knowingly allowing their corporations to dishon- estly participate in breaches of trust. To succeed in the claim for knowing assistance in a breach of a fiduciary duty, the four essential elements must be present: fiduciary relationship; fiduciary fraudulently or dishonestly breaching an equita- ble duty; the stranger having actual knowledge of the misconduct; and the stranger assisting in the fraudulent or dishonest design. The Air Canada approach provides a stark contrast to the approach expressed in Said v. Butt, which stands for the proposition that corporate fiduciaries could escape the common law liability for the deliberate breach of a contract between their corporations and a stranger if acting bona fide within the scope of their authority. While many believe the rule in that case offers fiduciaries an exemption from tortious liability, it may be argued that it instead provides them with an equitable defence rooted in their fiduciary ob- ligation to act in good faith with a view to the best interests of the corporation. Given that gov- ernments have enshrined this equitable obliga- tion in ss. 122(1)(a) and 134(1)(a) of the Canada Business Corporations Act and Ontario Business Corporations Act, a corporate fiduciary's equita- ble duty to a corporation is more important than the common law duty to a stranger. Notably, when equity and common law appear to produce inconsistent results, the equitable result prevails. It's clear, then, that fiduciary obligations are equitable obligations, which are not compati- ble with common law concepts. As such, there is no tort of inducing or knowingly assisting in a breach of fiduciary duty. While corporate fiduciaries may be liable for breaches of their fiduciary duties, remedies arise from equity, not the common law. LT Nikolay Y. Chsherbinin is an employment lawyer at Grosman Grosman & Gale LLP in Toronto. He can be reached at 416-364-9599 or nikolayc@ grosman.com. subsumed by mainstream U.S. legal dramas. Comment on lawtimesnews.com by Anonymous about "LSUC civil- ity crusade sparks debate." DON'T FIGHT WITH A PIG David Brown has it correct. I value and promote civility as much as any- one in this profession. I also put a premium on having a thick skin. Incivility is effective only when it evokes an uncivil response. Sensitive clients should be shielded from abusive lawyers. Sensitive lawyers should not be involved in dispute resolution. The law society should rarely prosecute incivility unless it occurs in the courtroom. Finally, as my father once told me, "Don't fight with a pig. You'll just get dirty, and the pig likes it." Comment on lawtimesnews.com by Michael Head about "LSUC civility crusade sparks debate." LT PAGE 7

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