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Law Times • may 31, 2010 Toews' pitch to revive rape charge P ublic Safety Minister Vic Toews wants to bring back rape as a separate crime. Rape was taken out of the Crim- inal Code in 1983 and put inside a broader term, sexual assault, which also includes a wide variety of sexu- al offences from the most minor to the most severe. The change was intended to help victims maintain a greater measure of dignity by eliminating the stigma at- tached to the term "a raped woman." The 1983 change also made it easier to convict rapists because it eliminated the previous onerous re- quirement of having to define rape in technical terms. Until then, rape had been defined as penetration of a woman with a pe- nis. That meant that in order to secure a rape conviction, penetration had to be proven in court, sometimes even in terms of inches. In some cases, the duration of the assault also had to be defined in precise minutes. It was often difficult, technical, and humiliating both for the lawyers and judges, as well as for victims. Rapists often walked as a result. At the same time, rather than hav- ing to give that kind of testimony, many victims chose not to report rape. In addition, some rapists were able to prove they were sexually im- potent and couldn't physically pen- etrate a woman. Society breathed a sigh of relief when rape became part of sexual as- sault, which covers everything from acts as minor as pinching a woman on the backside on the subway to the most violent and horrific sexual crimes imaginable. Everybody agreed it was the way to go — the courts, judges, lawyers, police, social workers, jurists, and law professors. But Toews says we should "call a rape a rape" and wants to reopen the debate. He told a recent Senate com- mittee hearing that eliminating rape as a crime was "perhaps the biggest mistake in criminal law that the Par- liament of Canada has ever made." Hello? The biggest mistake? Which law school did Toews go to? (Actually, it was the University of Manitoba, and Justice Marshall Rothstein was his teacher.) Does Toews realize what bringing back the "raped woman" syndrome would mean for women? Oh, but he does! Toews explains: Letters to the Editor JPs DESERVE RESPECT I wish to clarify my remarks in Law Times on April 19 in a story about bail in domestic violence cases (see "Courts still failing abused women: watchdog"). As reported in that story, the decisions made about bail are among the most difficult and important in our justice system. There may be a lack of reliable information about the accused and his propensity for reoffending at that stage of the process. Further, the balancing of concerns about the protection of al- leged victims and the public with concerns about the liberty of a person not convicted of an offence can be very challenging. While there are many serious concerns about bail and pretrial detention, our justices of the peace take their responsibilities very seriously and deserve the respect of all of those concerned with the justice system in the province. Professor Nicholas Bala, Queen's University, Kingston, Ont. The Hill By Richard Cleroux "I understand the desire not to victimize especially women again in the court system, but that's some- thing that might have to be looked at in the future." Great. Now it's back to the fu- ture with Toews. So where does Prime Minister Stephen Harper find guys like this? "I know why the law was changed," Toews said, still going strong with no clue about when to stop talking. Toews noted it was because the courts didn't want to revictimize women. "And I understand that." So why is he doing it? The an- swer is in ideology and politics. Toews, like the rest of the Conser- vative cabinet, wants to crack down on easy pardons for prisoners, mak- ing them more difficult to obtain and impossible in some cases, such as for murder convictions and other serious crimes. Toews says there'll be no more par- dons for rapists. It's a guaranteed vote- getter in the "penal-right" chorus that supports the Conservative party. But Toews and his buddies in cabinet noticed only after they an- nounced their recent crackdown on pardons that they can't include rape among unpardonable crimes because rape is defined as sexual assault. That would mean making all sexual as- saults an unpardonable crime. Toews isn't bringing back rape because he loves women less but be- cause he hates pardons going to rap- ists more. Because the definition of sexual assault is so encompassing, the government sees itself forced to leave sexual assault off of its list of "unpar- donable" crimes for the time being. But Toews admits he's having trouble. "The whole concept now of rape and minor sexual assaults, if I can use that term, has been all wrapped up in one bundle, and it's very confusing," he said. Toews should have consulted a good lawyer beforehand. LT Richard Cleroux is a freelance re- porter and columnist on Parliament Hill. His e-mail address is richard cleroux@rogers.com. COMMENT PAGE 7 Court offers guidance on valuating insolvent companies BY BRUCE ROHER For Law Times claim dealing with the tortious conduct of the defendants and a breach of contract. The case involved Raywalt Feed Sales Ltd., which was established in 1991 as an exclusive Ralston Purina Canada Inc. dealership operat- ing in Halton County. Walter Kasamekas and his brother Raymond Jackson were the principals of Raywalt and plaintiffs by counterclaim. In January 1992, Raywalt was insolvent, just one year after it had opened. Purina's claim was for recovery of a debt owing from the two brothers. T The pair made counterclaims that includ- ed allegations that Purina had breached its dealership agreement with Raywalt and that this beach was a direct cause of its business failure. The plaintiffs by counterclaim also made conspiracy allegations against Purina and other parties. The court found Purina had breached the agreement. It also ruled the conspiracy claims against Purina and other parties were proven. Purina, in fact, had offered a new dealership to Raywalt in part because it had terminated another one. As a result, it needed to have a new dealer in place to maintain its business. However, the evidence established that only weeks after Raywalt started up, Kasamekas learned Purina was permitting the previous dealership to continue to purchase feed at dealer's cost while promoting that it would continue distribution of Purina products with the company's full support. Accordingly, the court decided the plaintiffs were entitled to damages against all of the de- fendants. But the two key issues that arose in the quantification of damages were as follows: • Should liability and the resulting damages be limited to two years as the dealership agreement had a fixed term of just two years and provided for termination on 60 days' notice? • How should Raywalt's damages be quan- tified? Is there a difference between dam- ages under a breach of contract and a tort claim? On the first question, the expert for Purina prepared damages calculations based on Puri- na's assertion that the dealership agreement had a fixed term of only two years and allowed for termination on 60 days' notice. But the expert for the two brothers prepared damages calcu- lations based on the assumption that future damages would extend until the retirement of the principals of Raywalt in 2020. The court rejected Purina's position to limit liability to two years. Regardless of the words in the dealership agreement with respect to notice, the court decided the "preponderant weight of the evidence" leads to the conclusion that Puri- na dealerships were typically business relation- ships of long duration." It found that based on the evidence, the dealership agreement would likely have continued indefinitely. An important principle in damages for breach of contract is that they're to be quanti- fied on the assumption that defendants will perform the contract in a manner that's most beneficial to themselves rather than to the plaintiff. This principle was reaffirmed in the Supreme Court of Canada's decision in Ham- ilton v. Open Window Bakery Ltd. In the case at bar, the court didn't question this principle but stated that its foundation is that the par- ties are presumed to be acting honestly and www.lawtimesnews.com he recent case of Agribrands Purina v. Kasamekas raised several interest- ing valuation and damages issues in a Speaker's Corner in good faith. Accordingly, it said Open Win- dow didn't apply here since "the foundation of good faith that was present in that case is evidently absent in this case." In calculating damages, the expert for Purina used a capitalized-earnings method to quantify them under two scenarios. Under the first, if Raywalt was expected to be in a loss position at the end of its first full year when the con- spiracy was in existence, they claimed no dam- ages would be payable because the business would be valueless. Un- der the second scenario, if Raywalt had earned a small profit of $73,651 at the end of what would have been its second year of operations, they used a multiple of three to claim the value of the business would be $220,952. The expert for the brothers claimed an amount for damages in the range of $3.1 mil- lion to $4.2 million. This claim was based on the premise that the business would have con- tinued at least until the pair retired in 2020. Accordingly, damages were based on a projec- tion for 28 years from 1992 to 2020, calcu- lated as the present value of the future income stream Raywalt would have earned. Counsel for the brothers argued Raywalt failed because of the conspiracy and that on the basis of tort principles to make the plain- tiffs whole, the court should impose no time limitation to the damages. The court agreed the plaintiffs were entitled to be made more or less whole. But while there were projec- tions prepared by both parties in this matter, the court didn't agree that the plaintiffs were entitled to "collect for damages that are largely the product of conjecture, that have been pro- jected forward for a period of almost 17 to 18 years to this point and beyond to the proposed damages termination date at retirement and that are based on assumptions for which there can be no known answer or certainty." In response, the court decided to reject both expert opinions and concluded that the appropriate methodology to adopt was a multiple-of-earnings approach that took into account what was realistically achievable had Raywalt survived; the assumption that Purina would have honoured its dealership agree- ment; and the assumption that no unlawful conspiracy was undertaken by the defendants. Based on this approach, it awarded damages of $2.1 million inclusive of prejudgment in- terest. It also provided for punitive or exem- plary damages against one of the defendants, Purina, of $30,000. This case is relevant to lawyers because it raises a number of issues in matters involving the assessment of damages in both tort and contract. First, it's important to note that the court found that in the absence of effective contractual language limiting liability, the as- sessment of damages in both tort and contract should essentially be the same. Second, in tort or breach of contract matters in which the plaintiff corporation doesn't survive, lawyers should keep this case in mind as a precedent as it utilized a business-valuation approach to quan- tify damages instead of a lost-profits approach. Finally, damages can indeed be quantified in the difficult circumstances where the court has to predict what would have happened to an insolvent business had the tort of the defen- dants or the breach of contract caused by their conduct not occurred. LT Bruce Roher is a partner at Fuller Landau LLP in Toronto and practises exclusively in the areas of business valuations, damages quantification, and forensic accounting investigations. He can be reached at broher@fullerlandau.com or (416) 645-6526.