Audit, Compliance and Risk Blog

Appeal Court Rejects Intention to Resign Reasoning in Directors’ Tax Liability

Posted by Ron Davis on Tue, Feb 07, 2017

The Federal Court of Appeal granted the Crown’s appeal from a Tax Court decision excusing two directors from liability for unremitted income tax deductions because there was evidence of their subjective intention to resign as directors (Gariepy v. Canada, 2016 FCA 236). Donna Elizabeth Gariepy and Sally Anne Chriss were directors of 1056922 Ontario Ltd. (“105”), a company whose affairs and business was managed by their respective spouses. The spouses had previously operated another company that had become insolvent and owed significant amounts to the Canada Revenue Agency. The spouses were aware that they could be liable as directors of the previous company for a two year period and prevailed on Gariepy and Chriss to become 105’s directors for those two years, despite their lack of involvement in the previous company and their reluctance to act as directors.

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Tags: Business & Legal, Canadian, directors, directors & officers

“Boss, I Need A Week Off"

Posted by STP Editorial Team on Thu, Feb 02, 2017

Every province and territory in Canada provides that an employee may take leave from work pursuant to legislated leaves of absence, and thereafter be reinstated to his or her former position or comparable employment. Some of the leaves commonly given across many provinces include: maternity and paternity leave, adoption leave, bereavement leave, sick leave, and jury duty leave. Other types of leave that may be less known but which are nonetheless recognized in some provinces include emergency leave, leave for reservists, organ donation leave, and, most recently, leave for victims of domestic violence.

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Tags: Employer Best Practices, Employee Rights, Canadian

Corporation’s Failure to Bid on Project Does Not Excuse Director

Posted by Ron Davis on Wed, Dec 21, 2016

A recent appeal before the Manitoba Court of Appeal highlights the strictures placed on directors with respect to corporate opportunities. In Matic v. Waldner (2016 MBCA 60), the dispute concerned the opportunity to bid on a construction project for one of Manitoba’s First Nations. Ante Matic (Matic) and Paul Waldner (Waldner) agreed to purchase Springhill Lumber Wholesale Ltd. (Springhill) from its previous owners, with Waldner having a 70% interest, and Matic having a 30% interest and acting as Springhill’s general manager. Springhill’s main customers were First Nations, primarily in northern Manitoba. In addition to supplying construction material, Springhill would sometimes also act as general contractor for construction projects for the First Nations.

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Tags: Canadian, directors & officers

Ontario Court Rejects Employee’s Claim That Director Owed Duty of Care to Employee

Posted by Ron Davis on Thu, Oct 27, 2016

The Ontario Psychological Association is a not-for-profit voluntary association that aims to advance the practice and science of psychology through advocacy and education. Charlotte (Carla) Mardonet was hired by the Association in 1990 to manage its affairs and administer its finances and money. In Ontario Psychological Assn. v. Mardonet (2016 ONSC 4528 (Ont. S.C.J.)), the Court granted the Association’s motion to strike the part of Mardonet’s counterclaim alleging that the Association and its officers and directors owed Mardonet a “duty of care and a fiduciary duty which they breached as a result of their failure to provide her with the supervision, management, support and guidance that was part of their responsibility” and claiming full indemnity and contribution from the directors for any amounts that Mardonet might be liable to the plaintiff. The defendant’s counterclaim was issued in response to the plaintiffs’ lawsuit alleging the defendant had “misappropriated the funds [$1.6 million] and converted them to her own benefit and the benefit of her family members and friends,” with the assistance of her immediate family.

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Tags: Employer Best Practices, Employee Rights, Canadian, directors, directors & officers

Think Drinking Water Issues Only Exist in Places like Brazil?

Posted by Jane Dunne on Thu, Aug 18, 2016

We often see pictures in the media of places where the environment is being abused. During the Rio Olympics, we’ve seen many visual images of garbage-laden rivers and dirty beaches and it’s easy to think that if that were in our country, it would be under control, but a recent Harvard study took a closer look at water quality at home and found that it comes up short in many U.S. states.

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Tags: Health & Safety, Environmental risks, Environmental, EHS, Canadian

Constructive Dismissal Claims Due to Employer Conduct

Posted by STP Editorial Team on Thu, Jul 21, 2016

Managers who abuse employees and employers who tolerate such abuse may be subject to law suits and face significant financial penalties if their actions are found to constitute constructive dismissal.

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Tags: Employer Best Practices, Employee Rights, Canadian, directors, directors & officers

Director’s Liability Insurance Does Not Cover Personal Guarantee Given By Director

Posted by Ron Davis on Thu, Jul 14, 2016

In Great American Insurance Co. v. Ramsoondar (2016 ABQB 73), the Alberta Court of Queen’s Bench was asked to declare that a director and officer liability insurance policy did not cover the losses claimed against Fredy v. Ramsoondar pursuant to a personal guarantee he granted to Faunus Group Inc. (FGI), a client of United Protection Services Inc. (UPSI). UPSI was a wholly owned subsidiary of United Protection Services Group Inc. (UPSG), and UPSG obtained a director and officer liability policy from Great American Insurance Co., and listed Ramsoondar as its chief financial officer on the policy.

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Tags: Insurance, Insurance Claims, Canadian, directors, directors & officers

Employee Suspension: A Legitimate Disciplinary Measure?

Posted by STP Editorial Team on Thu, May 05, 2016

Supreme_Court_Canada_cropped.jpgIf you are an employer and are considering using suspension as a disciplinary measure, be aware that the Supreme Court of Canada has indicated that employers do not have unfettered authority to withhold work from their employees and that legitimate business reasons must be shown in the context of any administrative suspension. Absent such reasons, an administrative suspension—even with pay—may be found to be a constructive dismissal.

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Tags: Business & Legal, Employer Best Practices, Employee Rights, Canadian

Super Priority Charge Over Insolvent Corporation’s Assets Despite Existing Insurance Coverage

Posted by Ron Davis on Tue, Mar 01, 2016

The Ontario Superior Court of Justice issued an initial order in an insolvency proceeding under the Companies’ Creditors Arrangement Act (CCAA) providing a $3.1 million director’s charge even though the directors were covered by an existing D&O liability insurance policy and indemnities from the company (Re P.T. Holdco Inc., 2016 ONSC 495). The CCAA proceedings involved various corporate entities involved in the Primus telecommunications service business in Canada and the United States. Primus’ business was failing and it had arranged to sell its business to another company and wished to use the CCAA to finalize the sale and distribute the sale assets while its creditors were stayed from enforcing their claims.

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Tags: Corporate Governance, Insurance, Canadian, directors, directors & officers

Ontario Fights to Protect Bees by Regulating “Neonics”

Posted by Thomas Walker on Thu, Feb 18, 2016

Ontario is the first jurisdiction in North America to regulate the sale and use of neonicotinoid-treated seeds, which have been implicated as a significant factor in recent and alarming declines in bee populations. Ontario’s new restrictions on “neonics” came into effect on July 1, 2015, and Jeff Leal, Minister of Agriculture, Food, and Rural Affairs, hopes that the restrictions will reduce use of the treated seeds by 80% by 2017.
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Tags: Environmental risks, Environmental, EHS, Hazcom, Canadian