Law Times

Page 4 February 13, 2017 • Law Times www.lawtimesnews.com NEWS NEWS NEWS assets in Ecuador, refused to pay the judgment, the plaintiffs filed their action in Ontario. Chevron then challenged whether Ontario courts had jurisdiction to enforce the for- eign judgement. The Supreme Court of Can- ada found in 2015 that the courts did have jurisdiction in the matter, but it stopped short of determining whether Chev- ron Canada is an asset of Chev- ron Corp. The Canadian subsidiary then brought its summary judg- ment motion to have the action against it dismissed. The motion judge found that the assets of Chevron Canada could not be seized pursuant to the Execution Act to satisfy the Ecuadorian judgment, saying the act does not give the par- ent company any interest in the shares of the subsidiary and that it does not create any rights that override the principle of corpor- ate separateness. Hainey also found that Chevron Canada's corporate veil should not be pierced, as the parent did not have complete control over the subsidiary. In their Notice of Appeal, the plaintiffs argued Hainey erred in his interpretation of the Exe- cution Act, saying the act is of wider reach than his procedural interpretation. Lenczner says the judge also misapprehended a Supreme Court decision, BCE Inc. v. 1976 Debentureholders, in his deter- mination that Chevron Canada is not an asset of Chevron Corp. Hainey cited a line from the decision that said, "While the corporation is ongoing, shares confer no right to its underlying assets," but Lenczner says this line was taken out of context and that the judge's conclusion was at odds with what the SCC said. The plaintiffs also argued that Hainey had erred by apply- ing the principle of corporate separateness to a judgment debt of a parent company to "shield from execution the assets of its wholly owned subsidiary" and that the Supreme Court has au- thorized the piercing of the cor- porate veil when failing to do so "would result in injustice." Corporate lawyers, however, have said that the decision's confirmation of the principle of corporate separateness is im- portant. Arlene O'Neill, of Gardiner Roberts LLP, says that allowing the corporate veil to be pierced in this case would have set a dan- gerous legal precedent. "I think corporations have to have comfort in their corporate structures," says O'Neill, who did not act in the case. "This is a case where you have a substantial business in Can- ada, completely operating on its own healthily, respecting its corporate structure, [with] its own board of directors, real live assets and employees. "And how can it just be available for judgment debtors against the parent?" She adds that there must be some consistency in legal prin- ciples among Canada's jurisdic- discuss these cases with the new hire," says Lerner, who still does some per diem work for the Crown but was not involved in this case. "And they need to make sure it's all properly documented and that it's all very clear," he adds. Lerner, who has moved back and forth from Crown work to defence a number of times, says there was no policy to put safe- guards in place when the Crown last employed him in 2013. The Ministry of the Attor- ney General did not respond to questions about whether the ministry plans to put such a pol- icy or procedures in place after the decision. In the Mandamin case, Jou- bert represented the accused from when he was charged up through the preliminary inquiry. Mandamin was facing 10 counts in his indictment, including as- sault with a weapon, aggravated assault and sexual assault. His trial was scheduled to begin July 11, 2016, but Joubert accepted a job with the Kenora Crown attorney's office on July 6. Joubert was then removed from being defence counsel to Mandamin on the first day of the trial. But there were no instructions given to other as- sistant Crown attorneys not to communicate with Joubert about the case when he joined, the decision said. When Mandamin's new counsel, Robert Sinding, moved to have the Kenora Crown at- torney's office barred from pros- ecuting the case, the Crown sub- mitted an affidavit from Joubert, saying he had no involvement in the prosecution of the case and had not discussed it with the as- sistant Crown on the file. The affidavit also said that Joubert had not shared any confidential information about his former client and did not have access to the prosecution file. Shaw found this was not enough. The judge used a test devel- oped by the Supreme Court of Canada in MacDonald Estate v. Martin that asked whether the lawyer received confidential information attributable to a solicitor-client relationship and whether there was a risk that it would be used to prejudice the client. Shaw found that not enough had been done by the Crown's office to rebut the possibil- ity that confidential information could be disclosed. The Crown also argued that different standards should be applied to the office of the Crown Attorney than to a pri- vate law firm, saying the Crown does not prosecute on behalf of a particular client or party and does not win or lose. Malcolm Mercer, a bencher with the Law Society of Upper Canada, says it should not make a difference whether a lawyer is working for the government or working for a private firm. "I don't really understand the reasoning of the Crown's position. It seems to be that we should trust lawyers in public service more than we should trust lawyers in private practice and I'm not sure what the logic of that is. It doesn't seem right to me," says Mercer, who was not involved in the case. Mercer noted that a recent decision at the Ontario Court of Appeal, Ontario v. Chartis In- surance Company of Canada, showed that even when all ethi- cal guidelines are followed, law firms can still be disqualified in some circumstances. In that case, a law firm was disqualified from acting for an insurance company in a dis- pute, as one of its lawyers had previously worked for another firm on the other side of the dis- pute. While the firm had put up an ethical screen, the court de- termined that it was not enough to rebut the presumption that confidential information could be disclosed, as the lawyer worked so closely with counsel on the file. It is unclear whether MAG intends to appeal the decision in Madamin, as the ministry did not provide comment before deadline. LT tions if it wants to attract inter- national business to invest in it. "And for Ontario or Canada to become a jurisdiction where everybody who has a claim against a multinational entity — and they get a decision outside of Canada — can all of a sudden just come and seize the assets of an affiliate, a separate corporate legal entity, does run afoul of the common law corporate law principles, but also would not bode well for Canadian busi- ness," she says. A spokesman for Chevron Corporation said the company is confident that any court that rules on the case will rule in its favour. "The Ontario court rightly found that Chevron Corp. and Chevron Canada Limited are two separate and distinct en- tities," he said in an emailed statement. "We are confident that any court that reviews the facts pre- sented in this case will come to a similar conclusion." Hainey also recently refused to grant a request by the plain- tiffs to add another subsidi- ary, Chevron Canada Capital Company, as a defendant to the action. LT Continued from page 1 Dangerous precedent set if corporate veil pierced Different prosecutor to handle case Continued from page 1 17th Annual TLA Awards Reception Honouring: Dale R. Ponder, recipient of the TLA Award of Distinction Stephen Thiele, recipient of the Honsberger Award THURSDAY, MARCH 2, 2017 Reception at 6:00 p.m. Presentation at 7:00 p.m. OMNI KING EDWARD HOTEL Vanity Fair Ballroom 37 King Street East, Toronto Hors d'oeuvres and food stations. Business attire requested. Tickets available online at www.tlaonline.ca/events • $125 (HST incl.) per person • $1,125 (HST incl.) for a package of 10 Please RSVP by Wednesday, February 22, 2017 Untitled-2 1 2017-02-07 4:18 PM

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