Tuesday, September 23, 2008

Economist: A "Revaluation of the US"

From today's Washington Post:
The dollar took its steepest one-day drop in years as the financial crisis eroded the nation's basic measure of value, helping to drive U.S. stocks sharply lower and the dollar-based prices of oil and gold sharply higher ...

"This is a revaluation of the U.S.," said C. Fred Bergsten, director of the Peterson Institute for International Economics and a top Treasury Department official during the Carter administration. "Growth is going to be slower, the budget deficit higher, but mostly, the whole U.S. financial system has been thrown into question. People around the world are looking at this and saying, 'Holy Toledo.' "

- Garry J. Wise, Toronto

Visit our Toronto Law Firm website: www.wiselaw.net



Sunday, September 21, 2008

"Confessions of a Sub-Prime Mortgage Baron"

From The Guardian's interview with Richard Bitner, "co-founder and president of Kellner Mortgage Investments, a firm which specialised in providing high-risk loans:"

As a sub-prime mortgage lender, Richard Bitner has not done too badly. He lives in a huge mock Tudor house in a wooded suburb on the edge of Dallas, complete with miniature turrets, an oversize fireplace and wood-panelling... Now out of the game, he compares himself to a drug dealer, acknowledging that his trade has achieved pariah status in the public eye.

... Dishonesty became endemic in loan applications. By the end, Bitner reckons that 70% of submissions to the company from brokers were deceptive. Properties, supposedly objectively appraised, were spectacularly overvalued. He estimates that half of loans were on homes over-egged by up to 10%, a quarter had prices exaggerated by 11% to 20% and the rest were "so overvalued they defied all logic".

"The industry lost its mind," says Bitner. "It went from borderline stupid to downright insane." The notion of "acceptable risk" simply went out of the window: "I watched the margins compress in the industry and I realised no one was providing for the risks."

In his book, Bitner recounts a seemingly endless list of tricks used by brokers to push dubious loans. Many simply withheld information, such as the fact that a homebuyer was getting an additional loan to pay for a deposit or that a couple, buying on the basis of joint income, were actually planning to divorce. Others would manipulate figures by knocking up ersatz payslips using desktop publishing programs.

...As a sub-prime lender, Bitner accepts that he was far from blameless. He was, at times, knowingly marketing unrealistic loans. Bitner viewed one common product, providing 95% finance to people with ultra-low credit scores, as "absurd". But he defends the principle of sub-prime lending and maintains that in his five years he did more good than harm.

- Garry J. Wise, Toronto

Visit our Toronto Law Firm website: www.wiselaw.net



Thursday, September 18, 2008

Obama: Fire the Whole "Trickle Down" Lot

Associated press reporter Terence Hunt brings us these fighting words (at long last) from Barack Obama:

Obama also heaped criticism and sarcasm on Republican rival John McCain and mocked his promise to fire the head of the Securities and Exchange Commission if elected president.

"I think that's all fine and good but here's what I think," Obama said. "In the next 47 days you can fire the whole trickle-down, on-your-own, look-the-other way crowd in Washington who has led us down this disastrous path.

"Don't just get rid of one guy. Get rid of this administration," he said. "Get rid of this philosophy. Get rid of the do-nothing approach to our economic problem and put somebody in there who's going to fight for you."

Now that's music to my ears...

Saturday, September 13, 2008

The Political Ad: A Case Study (Video)

A John McCain campaign ad, unwrapped, unplugged and debunked:

Friday, September 12, 2008

The Great Canadian Gas Price Mystery

Are we missing something here?

September 12, 2008 
CNN: Oil drops below $100

NEW YORK (CNNMoney.com) -- Oil prices zig-zagged Friday, briefly dipping below $100 a barrel for the first time in 5 months, as the the fury of a massive hurricane blowing toward refineries on the Texas coast countered .concerns about a global economic slowdown.

U.S. crude for October delivery briefly traded at $99.99 a barrel on the floor of the New York Mercantile Exchange, the first time oil has fallen below the $100 a barrel mark in more than five months.

The last time oil traded below $100 during a session was April 2, when it hit $99.84.

September 12, 2008  
Toronto Star - Gas prices jump by 12.9 cents
Motorists got a rude shock this morning when they pulled into gas stations to fill 'e up: a massive overnight hike sent the average price at GTA pumps to $1.36.6.
The increase – 12.9 cents a litre, and more outside the GTA – is one of the highest single-step price hikes in recent memory, blamed by oil refiners on supply uncertainties posed by Hurricane Ike as it rampages across the Gulf of Mexico.

Turning on the President

Chris Matthews, yet another former Iraq War cheerleader, turns on President George Bush:

Sarah Palin on the Bush Doctrine - Video

"May I have a hint, please, Charlie:"

UPDATE - Sptember 13, 2008:

An Andrew Sullivan reader nails it:

A reader writes:

After watching that interview, can anyone honestly say that they think that Sarah Palin, the person who would take over the country in the event something happens to McCain, has more knowledge of policy than Charlie Gibson, the person giving the interview?

And isn't it supposed to be the other way around?

...Okay, isn't it at least supposed to be close??

- Garry J. Wise, Toronto

Visit our Toronto Law Firm website: www.wiselaw.net



Friday, September 05, 2008

PM Announces Supreme Court of Canada Nominee: N.S. Appeal Court Justice Thomas A. Cromwell

Prime Minister Stephen Harper today announced his nomination of the Honourable Mr. Justice Thomas A. Cromwell of the Nova Scotia Court of Appeal to fill the existing judicial vacancy at the Supreme Court of Canada.

More on the nomination from this Government of Canada press release:

“Thomas Cromwell’s candidacy was highly recommended by judges, lawyers and other Atlantic Canadians,” said Prime Minister Harper. “He is well qualified to serve on the country’s highest court.”

Mr. Justice Cromwell is an eminently qualified jurist.. In 1997 the government of former Prime Minister Jean Chr├ętien appointed him directly to the Nova Scotia Court of Appeal.

CBC also provides its coverage here, and adds the following background:

Cromwell is expected to appear before a parliamentary committee that will interview the nominee before the government appoints him.

Cromwell, 56, from Kingston, Ont., initially studied music but got his law degree in Ontario in 1976. He practised and taught law, including two stints at the Dalhousie Law School in Halifax. He was the executive legal officer in the chambers of the Supreme Court's chief justice for three years.

He first became a Nova Scotia appeals judge in 1997.

- Garry J. Wise, Toronto

Introducing the Wise Law Office Quarterly Journal

Wise Law Office Quarterly Journal

Today, we are very pleased to be launching the Wise Law Office Quarterly Journal, our firm and blog's long-planned newsletter.

Q.J. will be published four times a year, and will feature a compilation of articles on each season's most significant and interesting legal developments, as published here at Wise Law Blog, at Bar-ex, and other locations online and elsewhere.

As I indicated in our inaugural issue, we are glad for the opportunity this publication brings us to stay in better touch with our clients, colleagues and Wise Law Blog readers.

Sign-up is easy. Click on the photo above, or click here to subscribe securely and confidentially.

We're looking forward to reaching you each quarter with Q.J.

Many thanks to Sandra Bekhor and Sarah Halliday for their guidance and direction in this project.

And who knows - we may even be able to do an election special edition soon.

Thursday, September 04, 2008

Ontario Court of Appeal Sets Aside $1.9 Million Award for "Client Poaching:" Restrictive Covenant Unenforceable

In an important decision that reaffirms the limited enforceability of non-competition covenants in Canadian employment agreements, the Court of Appeal for Ontario has reversed a September, 2007 trial ruling of Mr. Justice G.E. Taylor of Ontario' Superior Court of Justice.

At trial in H. L. Staebler Company Limited v. Tim James Allan, et al., two Kitchener, Ontario insurance salespersons and their new employer were ordered to pay damages of $1.9 million to the salespersons' former brokerage, H.L. Staebler Company Limited.

Staebler commenced the action after its salespersons left to join Stevenson and Hunt Insurance Brokers Limited, a competing brokerage. The employees brought their entire books of business to their new employer when they changed brokerages.

In ruling against the employees, the trial court enforced a two-year non-solicitation covenant that precluded them from "doing business" with the clients of their former brokerage for a two year period following any termination of their employment with Staebler. The court also held that Stevenson and Hunt was liable for inducing the salespersons to breach their employment agreements with Staebler.
On appeal, Madame Justice Eileen Gillese, for the Court, reviewed the law applicable to non-competition and non-solicitation agreements in Ontario. The Court unanimously ruled that the restrictive covenants in this case were unreasonable in scope, given the non-managerial roles of the salespersons involved and the "overly broad" restraints imposed by the covenants upon the salespersons' ability to freely compete in the industry:

[33] There is no dispute about the legal principles that apply when determining whether a restrictive covenant in an employment contract is enforceable, as those principles have long been settled. Several decades ago in Elsley, the seminal Canadian case on this matter, Dickson J. described the principles as “well-established”.[2] He stated the test in plain terms: such a covenant is enforceable “only if it is reasonable between the parties and with reference to the public interest”.[3]

[34] This test reflects the competing principles that must be balanced when a court is called on to decide the validity of such a covenant. On the one hand, there is the “important public interest in discouraging restraints on trade, and maintaining free and open competition unencumbered by the fetters of restrictive covenants”.[4] Open competition benefits both society and the affected employees. Society benefits from having greater choice and employees benefit as they have greater employment opportunities. On the other hand, however, “the courts have been disinclined to restrict the right to contract, particularly when that right has been exercised by knowledgeable persons of equal bargaining power”.[5]

[35] While an overly broad restraint on an individual’s freedom to compete will generally be unenforceable, the courts must recognize and afford “reasonable protection to trade secrets, confidential information, and trade connections of the employer.”[6] In the present case, there is no suggestion that trade secrets or confidential information is involved. It is Staebler’s “trade connections” that warrant protection.

[36] Reasonableness is the mechanism by which a court decides whether a covenant is “overly broad” or is only that which is reasonably required for the employer’s protection. But how is a court to determine whether any given restrictive covenant is “reasonable”? Elsley offers a framework for making such a determination. The starting point is “an overall assessment of the clause, the agreement within which it is found, and all of the surrounding circumstances”.[7] Thereafter, three factors must be considered. First, did the employer have a proprietary interest entitled to protection? Second, are the temporal or spatial features of the covenant too broad? And, third, is the covenant unenforceable as being against competition generally, and not limited to proscribing solicitation of clients of the former employer?[8]

...[54] My view that Staebler has not discharged the burden of establishing that the Restrictive Covenant was reasonable[11] as between the parties is reinforced on a consideration of the third factor.

[55] A non-solicitation clause is sufficient in conventional employer/employee situations.[12] The Employees were two of ten commercial insurance salespeople that worked for Staebler. They did not play an exceptional role in the Staebler business – they were ordinary salespeople. They were not managers, directors or key employees. They did not stand in a fiduciary relationship with Staebler.

[56] Although the Employees had close personal relationships with their clients, that is the industry norm. Those relationships were not exclusive; other Staebler employees served the clients in various capacities. This is an important difference between the role that the Employees played at Staebler and that of Mr. Elsley who “was the business”.[13] Another significant difference between the present case and Elsley is that the Employees had no special knowledge of or influence over the Staebler business whereas Mr. Elsley “had control of [the employer’s] trade connections”.[14] Furthermore, and again in contradistinction to Elsley, there was an imbalance of bargaining power between the Employees and Staebler when the employment contracts were negotiated whereas Mr. Elsley bargained as an equal when selling his business and then carried on as its general manager.

[57] The 50 mile radius clause which Staebler had with five of its other commercial salespeople is significant. Under its terms, those employees could solicit their clients and customers and conduct business with Staebler clients so long as they did so outside of a 50 mile radius of the Waterloo region. No explanation was given to justify this differential treatment among Staebler’s commercial insurance salespeople which leads me to conclude that Staebler itself viewed the 50 mile radius clause as sufficient protection of its interest. Clearly, the terms of the Restrictive Covenant are far more restrictive than are those of the 50 mile radius clause.[15]

[58] Other provincial appellate courts have affirmed that suitably restricted non-solicitation clauses are likely to be found to be reasonable for “ordinary” salespeople in the insurance brokerage industry whereas non-competition clauses are not. See, for example, Valley First Financial Services Ltd. v. Trach, [2004] B.C.J. No. 1127 (C.A.).

[59] It follows from my determination that the Restrictive Covenant is not enforceable that Stevenson & Hunt are not liable for inducing a breach of contract.

For the full text of the Court of Appeal's ruling, see: H.L. Staebler Company Limited v. Allan, 2008 ONCA 576 (CanLII)

- Garry J. Wise, Toronto

Visit our Toronto Law Firm website: www.wiselaw.net



Canada's Spousal Support Advisory Guidelines: Final Version Online

The final version of Canada's Spousal Support Advisory Guidelines has been published online at the federal Department of Justice website.

For the sake of easy access, I am reproducing the Guidelines' table of contents, with links embedded, below:





1.1 The Legislative Framework
1.2 Judicial Interpretation
1.3 The Problem of Spousal Support and the Need for Guidelines
1.4 Why Guidelines Now?


2.1 The Nature of the Guidelines: Informal and Advisory
2.2 The Challenges of the Project
2.2.1 Theory and practice
2.2.2 Reflecting current practice, changing current practice
2.2.3 National guidelines and local spousal support cultures
2.3 The Development of the Guidelines and the Release of the Draft Proposal
2.4 The Second Stage of the Process: Information, Feedback and Revision
2.5 The Response to the Advisory Guidelines
2.5.1 Widespread use of the Advisory Guidelines
2.5.2 Criticisms of the Guidelines
2.5.3 The Advisory Guidelines in the courts
2.5.4 Results of the feedback: "the ranges are about right"
2.5.5 Unsophisticated use


3.1 Income Sharing
3.2 Preliminary Issues — The Applicability of the Advisory Guidelines
3.2.1 Form and force
3.2.2 Entitlement
3.2.3 Application to provincial/territorial law
3.2.4 Application to agreements
3.2.5 Interim orders
3.2.6 Review and variation
3.3 The Formulas
3.3.1 Two basic formulas
3.3.2 Determining income
3.3.3 the without child support formula
3.3.4 The with child support formula
3.3.5 Length of marriage
3.3.6 Ranges
3.3.7 Ceilings and floors
3.4 After the Formulas Have Been Applied
3.4.1 Using the ranges
3.4.2 Restructuring
3.4.3 Exceptions


4.1 Entitlement as a Threshold Issue: The "No Entitlement" Cases
4.2 Entitlement at Other Stages of the Guidelines Analysis
4.3 Entitlement Issues on Review and Variation


5.1 Application to provincial/territorial law
5.2 Application to agreements
5.3 Interim orders
5.4 Review and Variation


6.1 The Starting Point for Income Determination
6.2 Social Assistance Is Not "Income"
6.3 The Child Tax Benefit and Other Child Benefits
6.4 The Universal Child Care Benefit (UCCB)
6.5 Benefits for Children Other Than Children of the Marriage
6.6 Non-Taxable Incomes
6.7 Time for Determining Income

7 The without child support formula

7.1 The Basic Structure of the without child support formula
7.2 Merger over Time and Existing Theories of Spousal Support
7.3 Determining the Length of the Relationship
7.4 The Formula for Amount
7.4.1 The equalization of net income cap
7.4.2 The problem of amount in short marriages
7.5 The Formula for Duration
7.5.1 The tendency to ignore duration
7.5.2 The meaning of "indefinite" support
7.5.3 The "rule of 65": the age factor and indefinite support
7.5.4 Time limits in short marriages
7.5.5 Lowering the threshold for indefinite support?
7.5.6 The problem of time limits in medium length marriages
7.6 Making the Formula Concrete — Some Examples
7.6.1 A short-marriage example
7.6.2 Some medium-length marriage examples
7.6.3 Some long-marriage examples
7.7 After the Formula

8 THE with child support formula

8.1 The Compensatory Rationale for Spousal Support
8.2 Background to the Basic Formula
8.3 The Basic Formula
8.3.1 Calculating individual net disposable income
8.3.2 The Basic Formula: Dividing Individual Net Disposable Income
8.4 Amounts of Spousal Support: Examples of the Basic Formula
8.5 Duration under the Basic Formula
8.5.1 The creation of a range for duration in the basic formula
8.5.2 The length-of-marriage test for duration
8.5.3 The age-of-children test for duration
8.5.4 The use of the two tests for duration: whichever is longer
8.5.5 The problem of short marriages with young children
8.6 Shared Custody
8.6.1 Adjusting for rotating child benefits
8.6.2 Adjusting the ranges for child support that departs from the set-off
8.6.3 Adjusting the limits of the range
8.7 Split custody
8.8 Step-Children
8.9 A Hybrid Formula for Spousal Support Paid by the Custodial Parent (The Custodial Payor Formula)
8.10 A Hybrid Formula for Adult Children and Section 3(2)(b)
8.11 Crossover to the with child support formula


9.1 Strength of Any Compensatory Claim
9.2 Recipient’s Needs
9.3 Age, Number, Needs and Standard of Living of Children
9.4 Needs and Ability to Pay of Payor
9.5 Work Incentives for Payor
9.6 Property Division and Debts
9.7 Self-Sufficiency Incentives


10.1 The General Concept: Trading Off Amount Against Duration
10.2 How Does Restructuring Work? Some Examples
10.2.1 Example 1: restructuring by front-end loading
10.2.2 Example 2: restructuring by extending duration and reducing amount
10.3 When Should You Think About Restructuring?
10.3.1 Restructuring under the without child support formula
10.3.2 Restructuring under the with child support formula
10.3.3 Restructuring under the custodial payor formula


11.1 The Ceiling
11.2 The Floor
11.3 Payor Income Above the $350,000 Ceiling
11.4 Payor Income Below $20,000/$30,000


12.1 Compelling Financial Circumstances in the Interim Period
12.2 Debt Payment
12.3 Prior Support Obligations
12.3.1 Prior support under the without child support formula
12.3.2 Prior support under the with child support formula
12.3.3 Prior children in the spouse’s care
12.4 Illness and disability
12.5 The compensatory exception in short marriages without children
12.6 Property Division, Reapportionment of Property
12.6.1 Reapportionment of property (British Columbia)
12.6.2 An exception for high property awards?
12.6.3 Boston v. Boston
12.7 Basic Needs/Hardship: Without Child Support, Custodial Payor Formulas
12.8 Non-Taxable Payor Income
12.9 Non-Primary Parent to Fulfil Parenting Role under the Custodial Payor Formula
12.10 Special Needs of Child
12.11 Section 15.3: Small Amounts, Inadequate Compensation under the With Child Support Formula


13.1 Entitlement
13.2 Imputing Income
13.3 Using the Ranges
13.4 Restructuring
13.5 Time Limits: the without child support formula
13.6 Time Limits: The with child support formula
13.7 Review Orders
13.8 Indefinite Support Is Not Permanent Support
13.9 Real Incentives for Self-Sufficiency


14.1 Material Changes, Reviews and Issues of Continuing Entitlement
14.2 Applications to Reduce Spousal Support Because of Changes in Income
14.3 The Payor’s Post-Separation Income Increase
14.4 The Recipient’s Reduced Income After Separation
14.5 Crossover Between the Two Formulas
14.6 The Payor’s Remarriage or Re-partnering
14.7 The Recipient’s Remarriage or Re-partnering
14.8 Second Families


15.1 The Definition of Income
15.2 Length of Marriage Under the without child support formula
15.3 Child Support and the with child support formula
15.4 The Current State of the Advisory Guidelines in Quebec


Finally, a "user's guide" to the final verison of the Guidelines is also online.  See: "Spousal Support Advisory Guidelines: A User's Guide to the Final Version."