Law Times

Law Times • January 30, 2017 Page 7 www.lawtimesnews.com Access to justice and civil juries BY ALAN SHANOFF J ustice is a concept with many at- tributes. Justice implies fairness to individual litigants as well as equal- ity. Yet too often civil juries provide neither. Complaints about civil juries are not new. My torts law text from law school, published in 1971, discusses the case against civil jury trials. More recently, late last year, Ontario Superior Court Justice Frederick My- ers noted that "[w]hile jury trials in civil cases seem to exist in Ontario solely to keep damages awards low in the interest of insurance companies, rather than to facilitate injured parties being judged by their peers, the fact is that the jury system is still the law of the land." This scathing comment was made in the context of a personal injury lawsuit in which a jury came back with a general damages award of $3,000. It seems that whenever attacks are made upon the use of juries in civil litiga- tion, defence lawyers — and even the odd plaintiff 's side lawyer — defend the use of juries claiming that juries apply common sense and represent the conscience of the community. The corollary of this is that judges do a poor job of representing the conscience of the community and do not apply com- mon sense. If we really think that juries represent common sense and the conscience of the community, why is it that we really don't trust juries? The Courts of Justice Act specifi- cally prohibits jury trials in myriad pro- ceedings, including claims against a municipality, fore- closures, specific perfor- mance of a contract, disso- lution of a partnership, most family law proceedings and for any claim for an injunc- tion or equitable relief. There is no right to a jury trial in Small Claims Court or in Federal Court. Jury actions are prohibited in ac- tions against Her Majesty the Queen in Right of Ontario and Her Majesty in Right of Canada. Jury actions have been limited or abol- ished in other jurisdictions. The right to a civil jury trial has been rescinded in Quebec. England has long since barred the use of juries for personal injury cases. Some states and territories in Australia no lon- ger allow civil jury trials, while others al- low civil jury trials but not for motor ve- hicle litigation. Not only do we not trust juries to de- cide all manner of cases, we hide vital in- formation from juries. =We prohibit counsel from mention- ing the existence of insurance to jurors. Indeed, juries are considered to be so fragile that even the inadvertent mention of insurance by a witness in answering a question may be sufficient cause to dis- charge a jury. We also don't inform jurors there is a deductible that will be subtracted from tort awards of damages for pain and suf- fering made against at-fault motor vehicle owners and operators. That deductible was in- creased to $30,000 in 2003 from $15,000 and, as of Jan. 1 (now that the amounts are adjusted annually), it was in- creased to $37,385.17 on dam- age awards of $124,616.21 or less. The threshold and de- ductible differs for awards un- der the Family Law Act. Then again we don't even inform jurors about the threshold that disentitles any plaintiff from receiving an award for pain and suffering unless the judge is satisfied the injuries meet the threshold of "a permanent and serious impairment of an important bodily func- tion that is physical, mental or psycholog- ical in nature." If we don't really trust juries, why is it that many lawyers still serve jury notices? It is all a matter of tactics. Defence lawyers recognize that jurors often award low damage awards. Jurors seem to have a lot of difficulty with chronic pain and mental health cases. Some plaintiffs' lawyers do the same in cases with overly sympathetic plaintiffs or in certain medical malpractice actions. It isn't surprising that a jury notice was recently served by lawyers for the plaintiffs in a lawsuit against an impaired driver who killed three children and a grandfather after returning to Canada from Miami in a private jet. But shouldn't the results of litigation be predictable, particularly damage awards? Jurors may have common sense, but they lack experience and knowledge of dam- age precedents. Their damage awards, therefore, re- f lect guesswork, sometimes even preju- dice or irrationality. An example of an irrational jury award can be seen in Walker v. CFTO Ltd., 1987 CanLII 126 (ON CA). In the case, the irrationality of a jury award in a libel action was patently obvious. The jury awarded general damages in the sum of $883,000 in favour of a cor- poration that had sustained no financial losses as a result of the defamation. Evidence in the case, however, showed an estimated 883,000 people viewed the program in issue. The jury clearly and irrationally awarded damages at $1 per viewer. In allowing an appeal, the Court of Appeal stated: "[T]he yardstick devised by the jury is an arbitrary measure refer- able neither to the harm caused to the company's business reputation nor to the amount required to vindicate that reputa- tion." But without any experience or access to precedents, any general damage award assessed by a jury is likely to be arbitrary. If we want a justice system that meets the highest standards of justice, a justice system with fairness and equality, we ought to remove the right to tactically elect civil actions to be tried by a jury. LT uAlan Shanoff was counsel to Sun Media Corp. for 16 years. He currently is a freelance writer for Sun Media and teaches media law at Humber College. His email address is ashanoff@gmail.com. COMMENT Time to end shareholder primacy BY WARREN RAGOONANAN A s lawyers, we are all acutely aware of the fact that changes to the law are a given. Society changes, technology changes and governments change. Meanwhile, the law needs to keep up. Therefore, as a profession, we must keep up as well. But the greatest challenge may lie where we need to change a paradigm about how the law is interpreted. It is not a problem with a specific rule or regulation. That you can fix with wordsmithing. Instead, the problem is a general point of view widely held by practitioners and regulators that won't go away. Take the notion of shareholder primacy in corpo- rate law. Shareholder primacy is the paradigm that all cor- porations exist solely to maximize shareholder wealth. For those who hold that paradigm, it is considered ab- surdly obvious that all corporate legal rules need to be interpreted with that idea in mind. Take the law governing the fiduciary duty of direc- tors. All business corporation statutes in Canada include language requiring that a corporate director act hon- estly, in good faith and with a view to the corporation's best interests (for example, see s. 134 of Ontario's Busi- ness Corporations Act). The shareholder primacy paradigm holds that the corporation's best interest equals the shareholder's best interest, and the shareholder's best interest is in maxi- mizing its wealth. This means that, in a shareholder primacy world, if a director does not maximize the shareholder's wealth, they can be held personally liable. The problem is that we do not live in the shareholder primacy world. But acting as if we do has terrible con- sequences. To those locked in the shareholder primacy para- digm, corporations do not have to worry about the social and environmental impact of their decisions. Shareholder returns are all that matter. However, shareholder primacy is only an interpre- tive approach. There is nothing explicit in corporate law itself that requires lawyers and policymakers to use it as the background principle for corporate law. As Cornell University professor Lynn Stout argued in The Shareholder Value Myth, "The notion that corporate law requires directors, executives and em- ployees to maximize shareholder wealth simply isn't true." That means that if we want to, we can abandon shareholder primacy for another paradigm better suit- ed to today's challenges. And, there is another paradigm that can counter shareholder primacy. It holds that a board's role in run- ning the company is about balancing the interests of various stakeholders. This means making decisions with a view to maxi- mizing long-term corporate profitability. The board does this by factoring into corporate decision-making the interests of the community, employees, suppliers and government, as well as the environment, along with those of the shareholders. In academia, this is known as a managerialist view and it is not new. The debate between shareholder primacy and man- agerialism can be traced back to as early as 1932, dur- ing the Great Depression in the United States. Colum- bia Law professor Adolf Berle was an early proponent of shareholder primacy. Harvard Law Professor Edwin Merrick Dodd hotly contested Berle's views. Ironically, Dodd won. By 1954, Berle had conceded. Yet, shareholder primacy survived and eventually came to dominate. The managerialist view contains the seeds of what we know today as corporate social responsi- bility. This is the idea that corporations exist simultane- ously in a financial, social and environmental context. In this model, profits are still very important. But prof- its need to be balanced with the planet and with people. The fundamental problem with the shareholder primacy approach is that it behaves as if the only stake- holders in a corporation are shareholders and manag- ers. To address the issues facing business today — di- versity, climate change, living wages, international business and human rights — there is nowhere to be- gin. We need to abandon shareholder primacy think- ing in favour of an approach that embraces CSR. And luckily for us, the Supreme Court of Canada has given us a little help. In BCE Inc. v. 1976 Debentureholders ([2008] 3 S.C.R. 560), the SCC rejected the idea that directors are trapped in a shareholder primacy world. The ruling explicitly states that as part of the busi- ness judgement rule, directors can look to the interests of ". . . inter alia, shareholders, employees, creditors, consumers, governments and the environment to in- form their decisions." That is a start. In corporate law, the shareholder primacy paradigm needs to go. Instead, we need to synchronize corporate legal thinking with corporate social responsibility. The Supreme Court has given us a tiny nudge down that path. By banishing shareholder primacy from corporate law, we can intensify the work the world desperately needs to make corporations environmentally, socially and financially sustainable. LT uWarren Ragoonanan is an international business law- yer with Gardiner Miller Arnold LLP. He can be reached at warren.ragoonanan@gmalaw.ca. u SPEAKER'S CORNER Social Justice Alan Shanoff

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