Legal Blog:

Your Profession, Your Future: A Presidential-Style Debate on the Future of the Legal Profession

Just Another Puff Piece

This year, 4/20 feels different to me; not so taboo.  Canadians appear, to me, to be ready for legalised-recreational cannabis use. According to a recent Globe and Mail/ Nanos poll, the majority of Canadians (nearly 70% of those sampled) believe that cannabis should be legalised.

Based on a quick review of pot-related headlines in 2016, Canada is headed towards legalised-recreational cannabis use.[1]

This led me to wonder: why, how, and when was the use of pot prohibited? Let’s start at the beginning.

Deposit

All standard agreements of purchase and sale contemplate a deposit being paid upon the execution of the agreement – and perhaps a second deposit at a later date – with the balance being paid on closing of the transaction. The standard agreements, however, do not specify what happens when a contemplated deposit is not paid. Does the vendor have a right to terminate – even when, typically, time is made of the essence of the agreement? As usual, it depends. The analysis of that termination right is set out in Reserve Properties Ltd. v. 2174689 Ontario Inc. (2015) 56 R.P.R. (5th) 133 (Ont SCJ).

Trust Garns, Revisited

Garnishment cases keep coming. In our February 2016 newsletter (Garnishing a Lawyer’s Trust Account), we discussed an unsuccessful garnishment of a tax refund cheque that lawyers held in trust for a debtor, subject to a direction to pay other parties. We now have a variation on this theme in Building Solutions International Inc. v. Benazzi, a 2015 Ontario Superior Court decision.

Foiled

A creditor issued a notice of garnishment to lawyers, seeking to garnish money and mortgages that the lawyers held in trust for the debtor. Upon receiving the garnishment, the lawyers paid to the sheriff the money held in trust although, for reasons set out in our previous newsletter, we are not convinced that the lawyers ought to have done that. The lawyers, in their garnishment response regarding the mortgages, claimed that the mortgages held in trust were not debts.

Consumer Reporting and Expiry of Limitation Period

Credit reporting agencies often have to fend off allegations of negligent reporting or worse. However, there are times when they have done absolutely nothing wrong and still find that they are dragged into court. Grant v. Equifax Canada Co., a 2015 Ontario Superior Court of Justice case, was one of those times.

General

The Ontario Consumer Reporting Act (the “Act”) governs consumer reporting agencies. The Act (section 9(1)) requires consumer reporting agencies to adopt procedures necessary to ensure the accuracy and fairness of their consumer reports. This is good. Reports should be accurate and they should fairly set out the information in them. Credit grantors, including financial institutions, use these reports to determine the creditworthiness of an applicant applying for credit.

Section 9(3) of the Act sets out a list of matters that cannot be included in a report; anything not set out in the list can be. Paragraph (f) prohibits any information regarding a debt or collection if more than 7 years have elapsed from the date of the last payment on the debt or collection or, if none, from the date of default. However, the 7 years can be exceeded – if the creditor confirms that the debt is not barred by statute, which would primarily be the Limitations Act.

The Limitations Act, in a nutshell, does not allow an aggrieved party to commence a court proceeding to enforce a claim if more than 2 years have passed from the date that the aggrieved party knew or ought to have known that it had a claim.

Specific 

A debtor checked his credit reports from Equifax and Trans Union (the “Agencies”). He claimed that a debt he owed to the Family Responsibility Office (FRO) had been paid. The Agencies checked and, surprise, FRO responded that the debtor still owed $167,000, as reported. The Agencies refused to remove that debt from the debtor’s reports because, although older than 2 years, it was more recent than 7 years.

The debtor argued that, because the Limitations Act precluded FRO from commencing a court proceeding, the Agencies had no right to report the debt.

The debtor’s argument fell on deaf ears and his appeal for assistance to the Minister of Government Services was rejected. The Minister responded that the 2-year limitation period did not apply to the Act.

Not to be denied, the debtor, acting for himself, commenced an application against the Agencies and the Minister to force the Agencies to remove the debt from his credit report.

Purposes  

The application judge noted that, in interpreting a statute, “The words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.” He noted that there was nothing in the Limitations Act to extend its application to the Act and there was nothing in the Act that contemplated the application of the provisions of the Limitations Act.

We would go even further. Section 9(3)(f) of the Act states that the 7-year cut-off period under the Act can be exceeded if the creditor confirms the debt is not barred by statute. Accordingly, the Act does account for the Limitations Act, but in a manner that is most unhelpful to the debtor. If it allows credit reporting agencies to report on a debt older than 7 years, if not proscribed by the Limitations Act, then a credit reporting agency must be able to report a debt that is less than 7 years old.

The judge also noted that the Limitations Act and the Act had two entirely different purposes: one governs the enforcement of debts in civil proceedings (e.g. actions, applications, etc.) and the other governs reporting of consumer debts. The one has nothing to do with the other.

The judge also noted that the Ontario Court of Appeal had ruled in another case that consumer reporting agencies could report on a person’s credit history regardless of whether the indebtedness had even resulted in a judgment. If so, the inability to commence a proceeding to obtain a judgment should also be irrelevant.

Finally, the judge noted that the debtor was not challenging the constitutional validity of either the Limitations Act or the Act and was not seeking any relief against the Minister. Accordingly, the debtor could not claim relief under the Charter of Rights and Freedoms.

Upshot

The judge dismissed the application against all respondents and the debtor’s credit rating remains tarnished – as it should be. The judge invited submissions as to costs, but there has been no reported decision in this regard so we cannot report on whether the debtor now has two more blemishes on his credit rating.

SNF’s 2016 Spring Food Drive and Community Volunteer Event

In the spirit of giving back to the Mississauga community, SNF held a spring food drive to support the Mississauga Food Bank. We are pleased to report that the food drive was a tremendous success! SNF collected 40 grocery bags of food equivalent to 256 pounds of food!

As well, on March 30, 2016, several members of SNF, including lawyers, law clerks and legal assistants, volunteered their time at the Mississauga Food Bank to help feed those in need in our community. Through our efficient teamwork, we were able to sort food equivalent to 3,389 meals!