This Document Contains Chapters 1 to 2 Chapter 1 Knowledge of Law as a Business Asset Instructor’s Manual—Answers by Shannon O’Byrne V. Chapter Study Questions for Review, page 16 1. What is the function of law? Answer: The function of the law is to protect persons and their property, facilitate interactions, and provide mechanisms for dispute resolution. 2. How does the law protect members of society? Answer: The law protects members of society in two ways: first, it sets rules with penalties to encourage compliance, and second, it seeks to make those who break the law accountable for their misconduct. 3. How does the law facilitate business activity? Answer: The law facilitates business activity by establishing rules that govern the marketplace. For example, the law of contract provides a way for parties to enter into binding agreements, thereby creating a measure of security and certainty in their business operations. 4. In what ways does the law facilitate certainty in the marketplace? Answer: The law facilitates certainty by providing rules, particularly in the area of contracts, which allow business enterprises to plan for the future and to enforce their expectations. In short, legal rules provide definition and context to doing business. 5. Does the nature of the business relationship affect the enforcement of legal rights? Answer: Yes. Parties to a contract do not always observe their agreement to the letter, preferring to maintain their relationship rather than resort to litigation for breach of contract 6. How does the law resolve disputes? Answer: To avoid litigation, the legal system offers mediation and arbitration. Sometimes those prove unsuccessful and the matter is taken to court. 7. Does dispute resolution always involve going to court? Answer: Going to court is an option, though ordinarily one of last resort, given the time it takes and the uncertainty and expense associated with it. Other methods of dispute resolution include mediation and arbitration. 8. In what way is knowledge of the law a business asset? Answer: Informed owners and managers can protect their businesses by ensuring compliance with legal requirements. They can capitalize on the planning function of law to ensure the future of their businesses by entering into contracts. They can also seek enforcement of legal rules against those who do business or have other interactions with the enterprise. In this way, the property, contractual expectations, and profitability of a business are made more secure. 9. How might a lack of knowledge of the law negatively impact a business? Answer: Business owners can suffer much anxiety, grief, and financial loss through a lack of knowledge of the law. In Lionel’s case, for example, the law holds him responsible for the head injuries suffered by his customer because he was negligent in how he assembled the display case. A lack of legal knowledge may result in a business’s failure to maximize opportunities or to lose out on them altogether. More seriously, however, businesses or business owners who are unaware of (or ignore) pertinent legal standards may find themselves subject to regulatory and judicial sanctions, which could range from being fined to being forced to close down. 10. Why should a business put a legal risk management plan in place? Answer: A legal risk management plan identifies the legal risks associated with a business and seeks to implement concrete measures for managing those risks. Such a plan therefore helps avoid the negative business experience that Lionel created for himself. 11. What is the role of business ethics? Answer: The role of business ethics is to require entrepreneurs to conform to principles of commercial morality, fairness, and honesty. Ethics seek to identify moral principles and values that determine right and wrong in the business world. 12. Why are business ethics important? Answer: Business ethics concern moral principles and values that seek to determine right and wrong in the business world. On this basis, although it is ethical for a business to comply with the law, ethics may demand even more. Business ethics require entrepreneurs to conform to principles of commercial morality, fairness, and honesty. 13. What is spam? Answer: Spam is unsolicited commercial email 14. What is the purpose of regulating spam? Answer: The purpose of regulating spam is to protect the public from unwarranted intrusions in their private affairs, as well as to address the fact that spam costs business lost productivity, poses a continual threat of harmful viruses, and hurts the reputation of legitimate marketers. Questions for Critical Thinking, page 17 1. The law is sometimes made subject to the criticism that it does not necessarily forbid unethical behaviour and is therefore too narrow in scope. What is the relationship between ethics and law? Are ethical responsibilities the same as legal responsibilities? Answer: Although an obvious overlay exists between ethics and law (particularly in the area of criminal law), ethics may dictate that a business do more than simply comply with legal dictates This is because business ethics require entrepreneurs to conform to principles of morality, fairness, and honesty. For example, although it may be legal for Lionel to sell violent comic books to children, it may not necessarily be ethical to do so. 2. When is a lawsuit the best response to a legal dispute? What is at risk? Answer: When timely and informal efforts to settle a legal disagreement fail because, for example, the other side is being tremendously unreasonable, a lawsuit is an important recourse. Bringing a lawsuit risks the business relationship between the parties, but at this point, there is likely little to salvage in any event. The other risks relate to the fact that the legal system is expensive to use, time consuming, complex, and relatively inaccessible. Furthermore, it can be difficult to predict the outcome of a legal dispute. From a business perspective, being involved in the legal system can be particularly disadvantageous, since fighting a lawsuit is an obvious drain on financial and human resources, with no assurance of a positive outcome in return. Note that even when a lawsuit is brought, the parties might still be able to settle out of court and should try to do so. 3. Knowledge of the law is a business asset. How can you acquire this asset short of becoming a lawyer? How is ignorance of the law a liability? Answer: Sources of legal knowledge, often available online, include: • CanLII (Canadian Legal Information Institute) website, which provides free access to the texts of judicial decisions and legislation (see http://www.canlii.org/en/) • Government websites (federal, provincial, and municipal) • Blogs about the law. For a search engine accessing a data base of over 350 law blogs based in Canada, see: http://www.slaw.ca/canadian-law-blogs-search-engine/. • Websites that give legal updates, such as The Court online: http://www.thecourt.ca/ (hosted by Osgoode Law School) and Supreme Advocacy online: http://supremeadvocacy.ca/newsletter-archives/ (hosted by Supreme Advocacy LLP, an Ottawa law firm) • public legal education institutions such as the Centre for Public Legal Education Alberta, online: http://www.cplea.ca/ • courses and workshops • legal publications geared to certain professions, such as accountancy • legal columns in newspapers and magazines • the legal profession 4. There has been considerable concern about the safety of Tasers (electroshock weapons) and their possible role in the death of hundreds of people in North America. For example, the danger associated with Tasers was brought to light because of the death of Robert Dziekanski, a Polish immigrant who died at the Vancouver International Airport immediately after being tased by RCMP officers. According to the CEO of Taser International, however, there is “no other device with as much accountability” as a Taser and he maintains that Tasers actually save lives. What is the role of the law in regulating the products sold in the marketplace and ensuring their safety or relative safety? [footnotes deleted] Answer: An important role of the law is to protect persons not just from criminal activity but from dangerous products. Although corporations that produce electroshock weapons may insist on the safety of their products, it is important that government assess this matter independently and regulate or even ban such products as appropriate. In 2007, Taser International lost its first liability suit. It was found liable for the death of a California man and ordered by a jury to pay $6.2 million in damages. See Margaret Cronin Fisk, “Taser loses 1st product-liability suit; jury awards $6 Million,” Bloomberg.com (7 July 2008) at . Liability was based, in part, on Taser’s failure to warn police that prolonged exposure to the weapon could increase the risk of heart attack. Beyond this, press accounts in September 2008 detail a report commissioned by the RCMP that criticizes the RCMP for not doing sufficient independent research on the safety of Tasers. See, for example, Tim Lai, “Taser report criticizes RCMP research,” Vancouver Sun (12 September 2008) at . It also is reported that a significant number of tested Tasers fired at a higher electrical charge than acknowledged by its manufacturer. (For a summary of the results of the Taser test, see “Some tested Tasers fire stronger current than company says: CBC/Radio-Canada probe” (4 December 2008) at . For more recent analysis of the link between industry and conclusions regarding Taser safety, see Samantha Murphy “Questions raised about studies of Taser safety,” NBC News.com (5 October 2011) at . Taser International Inc. was also recently found liable in the death of 17-year-old American Daryl Turner, though the Federal District Court for the Western District of North Carolina reduced the jury award from $10 million to $4.3 million. As reported by CTV News, the American court “ruled that the manufacturer created an unreasonable danger by not telling its customers what the weapon was capable of, a decision that raises questions about stun gun accountability for all who use them.” See CTV News.ca staff, “U.S. court’s Taser liability verdict stuns distributor” (24 July 2011) at . And for further detail and analysis from the manufacturer, see Taser International Inc.’s press release “Court grants Taser’s motion to reduce turner jury verdict from $10M to 4.3 M” (28 March 2012) at . Note that Zofia Cisowski, the mother of Mr. Dziekanski who figures in this Question for Critical Thinking, received an undisclosed amount of money in settlement of her action against the RCMP. See Petti Fong, “RCMP gives cash settlement to Taser victim’s mother” Toronto Star (02 April 2010), online: Toronto Star. 5. Adam Guerbuez, the spammer described in this chapter, was made subject to a judgment of almost $1 billion by an American court. Do you think this judgment is unreasonably large? Should the defendant’s ability to pay be taken into consideration by the court? Why or why not? Answer: There is no doubt that $1 billion is a large amount of money and that Guerbuez would never have the resources to pay it. However, the size of the award makes an important public statement and serves to discourage brazen spammers like Guerbuez. Although Guerbuez’s ability to pay is an important practical consideration, Facebook is entitled to a judgment that reflects the seriousness of the violation. It is the egregiousness of Guerbuez disregard of the law that caused the award to be so high. In this sense, Guerbuez’s wound is entirely self-inflicted and it is hard to find much sympathy for the defendant. 6. Was it a good idea for Maple Lodge Farms (discussed in the Ethical Perspectives Box in this chapter) to fight charges under the Health of Animals Act for failing to prevent undue suffering by exposing chickens to the cold during transport? What are the risks of doing so? What are the risks of admitting guilt? Answer: Maple Lodge Farms (Maple Lodge) received intense media scrutiny when charges under the Health of Animals Act came to light. By refusing to plead guilty to all charges, media focus continued during the trial, right up to sentencing and beyond. Arguably then, it was a poor idea to fight charges because the negative publicity very much hurt Maple Lodge’s corporate reputation. The treatment of the animals was horrific and Maple Lodge looked like it was failing to hold itself to account. On the other hand, the risks of admitting guilt on all charges are also unenviable since it is an acknowledgement by Maple Lodge that it runs an operation that fails to comply with the law on a wide scale and causes undue suffering to animals. However, at least with hindsight, this would have been the better course of action given a finding of guilt by the court in any event. Obviously, strict compliance with the law is the best risk management strategy both for the animals’ sake and for Maple Lodge’s reputation with consumers. For example, Bruce Cran with the Consumers’ Association of Canada is quoted as saying that incidents like those at Maple Lodge are upsetting to consumers and could lead to them not purchasing poultry in the grocery store. See AgMedia Inc. “Court case highlights animal welfare issues” (10 January 2012) Better Farming online Better Farming: . Note too that since its 2013 convictions, Maple Lodge has been accused of further acts of cruelty against animals. See, for example, Adam Frisk, “Maple Lodge Farms launches probe after ‘disturbing’ allegations of animal cruelty” (30 March 2015), Global News online: Global news . Situations for Discussion, pages 17–18 1. Louella Lambast has decided to open a gift store. She intends to offer a wide selection of ever-changing, low-priced giftware, including T-shirts, novelty toys, costume jewellery, and video games. She is tremendously excited about her new venture but cash poor. For this reason, Louella decides to do a lot of the work of setting up the store herself, including assembling a large glass display case. Louella also imports some small table lamps for sale in her shop. When the lamps arrive, she notices that they do not contain labels identifying them as certified by Underwriters Laboratories of Canada or another approved group. (Underwriters Laboratories (UL) is an international, independent, not-for-profit organization whose mandate is to evaluate product safety. The UL mark means that the organization has tested samples of the product in question and concluded that requisite safety requirements have been met.) Because Louella is completely satisfied that the lamps pose no risk, she decides to attach some counterfeit labels on the lamps to reassure customers. A few months later, Louella’s world is falling apart. A customer suffers a head injury when the glass display case that Louella had improperly assembled suddenly collapses. A group of demonstrators has begun picketing Louella’s business premises, protesting the violent kind of video games she sells. Underwriters Laboratories has learned that lamps in Louella’s store contain counterfeit UL labels. Louella’s lawyer has explained that she will likely face prosecution for counterfeiting those UL labels. What has gone wrong in Louella’s business and why? Answer: Louella has neglected to inform herself as to how the law affects her business and the penalties for non-compliance. Louella, obviously, must not affix counterfeit labels to the lamps she sells. It is contrary, for example, to section 42 of the Copyright Act. Section 42 provides as follows: 42. (1) Every person commits an offence who knowingly (a) makes for sale or rental an infringing copy of a work or other subject-matter in which copyright subsists; (b) sells or rents out, or by way of trade exposes or offers for sale or rental, an infringing copy of a work or other subject-matter in which copyright subsists; (c) distributes infringing copies of a work or other subject-matter in which copyright subsists, either for the purpose of trade or to such an extent as to affect prejudicially the owner of the copyright; (d) by way of trade exhibits in public an infringing copy of a work or other subject-matter in which copyright subsists; (e) possesses, for sale, rental, distribution for the purpose of trade or exhibition in public by way of trade, an infringing copy of a work or other subject-matter in which copyright subsists; (f) imports, for sale or rental, into Canada any infringing copy of a work or other subject-matter in which copyright subsists; or (g) exports or attempts to export, for sale or rental, an infringing copy of a work or other subject-matter in which copyright subsists The fact that Louella believes that the lamps are safe and pose no risk is entirely beside the point. A case which served as inspiration for this aspect of Louella’s situation is R v San Francisco Gifts Ltd [2004] AJ No 1608 (Prov Ct). In this case, San Francisco Gifts Ltd pleaded guilty to charges under section 42 of the Copyright Act for selling lamps bearing counterfeit UL safety labels. The presiding judge stated during sentencing that this breach of copyright was particularly concerning. In his decision, Judge Steven-Guille stated that the defendant’s conduct was despicable: “We’re talking about electrical appliances causing fires….The exercise of getting cheap stuff somewhere else and dressing it up with false labels and false safety certificates causes me great pause….Quite frankly, this should be described as nothing less than a despicable fraud on the public, bordering on a massive scale” at para 85. Beyond this, Louella is responsible for the head injuries suffered by her customer because she was negligent in how she assembled the display case (negligence is discussed at length in text Chapter 11). She should have hired someone to do this work as she was not fit to do the assembling herself. And though Louella may be free to sell any kind of legal product she sees fit—including extreme violent video games—her choices are not automatically sanitized as a result. Indeed, skirting ethical norms can lead to lost revenue, bad publicity, publication demonstrations, and condemnation for contributing to social injustice. 2. The Privacy Commissioner’s Annual Report (2011) criticized Staples Business Depot for not taking better steps to protect the privacy of customers who returned computers and USB hard drives. These returned items had undergone a “wipe and restore” process before resale, but the Privacy Commission’s audit found that sensitive data, such as social insurance numbers and tax records, had not been erased in all cases. What should Staples Business Depot do to ensure better compliance with privacy legislation? Would it be sufficient, for example, to ask customers to sign a form saying that they have wiped the returned electronic device clean prior to its return? Answer: For the news article on which this Situation for Discussion is based, see Emily Jackson, “Staples cited for failing to delete data,” The Globe and Mail (21 June 2011), online: . For the audit report on Staples by the Privacy Commission, see . As reported in The Globe and Mail story cited above, the Privacy Office did a one-year assessment, inter alia, of Staples procedures in cleaning returned devices and found a one-third failure rate. This result is clearly unacceptable given the risk to privacy this poses to customers and because it increases the chance of identity theft. It is crucial that Staples improves its process, which can be accomplished by seeking expert help. Compliance monitoring going forward will be absolutely critical. Though wiping returned product can prove costly—The Globe and Mail reports that wiping a hard drive can cost up to $100 a computer—this is simply the cost of doing business. Staples has no choice. The Situation for Discussion asks if it would be sufficient to ask customers to sign a form saying that they had wiped the returned electronic clean. Clearly, this would not be sufficient because Staples has the legal obligations under privacy law and such a form would not exonerate it. Put another way, even if the customer signed the form, this would not provide a defence to Staples should the customer have been in error and not wiped clean the electronic in question. The buck stops with Staples. 3. Peter is a fudge maker of some renown and obviously requires a reliable supplier of sugar. His current sugar supplier has been very dependable but recently, is delivering late—sometimes days at time. Peter is concerned that the supplier has entered into too many supply contracts with a variety of businesses and cannot fill his orders on a timely basis. Peter knows the sugar supplier is in breach of his contract for delivering late but wants to avoid a full-blown legal battle. What alternative approaches might address Peter’s problem more effectively? Answer: While there is no single approach to how Peter should solve this delivery issue, it stands to reason that contacting his supplier and directly expressing his concerns would be the place to begin. Depending on the explanation he receives for late delivery, Peter can offer solutions. If the entire explanation is simply that the supplier has taken on too many other contracts, Peter can suggest that a certain percentage of them be wound down. If there are other causes—perhaps too many deliveries being grouped on the same day, Peter can suggest a better system for scheduling. If informal dialogue fails to produce a solution, Peter can request that the two seek mediation or arbitration. Perhaps a solution suggested or mandated by an independent third party will bear fruit and resolve the problem. Given that his supplier has otherwise proven reliable, Peter is best advised to try to salvage that relationship rather than immediately seek to terminate his contract and sue for damages. 4. Several provinces across Canada, including Ontario, Manitoba, and Saskatchewan, have proposed or passed legislation that prevents children from buying or renting video games that are expressly violent or sexual, as determined by a ratings board. Businesses found selling these games to minors face penalties that range from fines to having their business licences revoked. How effective do you think government regulation is in limiting children’s access to violent video games? Are there better ways of achieving these types of goals? Is it the role of governments to provide legal consequences for the underage renting or purchase of violent video games? [footnotes deleted] Answer: Similar to other areas in which the government has used regulation to limit minors’ access to certain products, the proposed legislation will be effective but not to the extent the government would like. Minors are still able to get video games, just as they have been able to get alcohol or cigarettes. However, the obligations placed on the businesses, and the potential licence revocation and fines, will go a long way to preventing minors from having easy access to such video games. The government has tried other methods to achieve these goals, but experience shows that the most effective method is to regulate the businesses that distribute the material. Whether or not it is the government’s role to provide legal consequences for the underage renting or purchase of violent video games is debatable. Obviously, parents can regulate what goes on in their homes but only government can regulate the activities of businesses. 5. Olivia owns a convenience store and has invested a lot of money in gambling machines for the store. Recently, the government passed a law banning the machines from the store immediately, although pubs are allowed to continue operating these machines. Is this law fair? Does it violate any of the common values associated with the law? Would it make a difference if the law applied only to new businesses? Would it make a difference if the government provided compensation to the convenience stores affected or phased in the law to allow for a period of adjustment? Answer: This problem is intended to stimulate discussion as to what the characteristics of a “good” law would be, versus an unfair one. There were a number of unfortunate—even unjust—factors in the new law: • It is retroactive and applies to businesses that have already set up on the basis of such machines being permissible. • It appears to be arbitrary in that gambling is still permitted in bars—why, therefore, ban them from convenience stores? • It has features of expropriation surrounding it. Will the storeowner be compensated? On what basis? When the government makes laws that regulate business, some party will likely be hurt financially. The law generally does its best to regulate the marketplace by allowing businesses to make money while ensuring that the public is protected. The law must change and adapt to the evolving requirements of society. In some situations, when the law is undergoing a change, legislators will grandfather-in certain groups as this prevents drastic financial losses and gives established businesses time to adjust changes in the law. Compensation and phased-in periods allow businesses to find alternative methods of income. However, those that cannot do so will eventually go out of business. 6. When her husband died of a heart attack in 2001 after taking the painkiller Vioxx, Carol Ernst sued the pharmaceutical manufacturer, Merck & Company (Merck). In 2005, a Texas jury awarded her $253.5 million after concluding that Vioxx had caused Mr. Ernst’s death. In 2008, a Texas appeals court reversed Mrs. Ernst’s victory. The court concluded that there was no evidence that Vioxx had in fact caused the death of Mr. Ernst and, as a result, Mrs. Ernst has been left with no compensation whatsoever for her husband’s death. According to news reports, Merck has taken an aggressive stance on lawsuits against it and has spent more than $1 billion on legal fees to date. Merck has observed that the plaintiffs are required to prove that Vioxx caused the heart attack in question. Given that heart attacks are the most common cause of death in the United States, Merck would have faced “an essentially unlimited pool of plaintiffs” without taking such a hard line, according to an American law professor. Merck has also taken steps to resolve some of the cases brought against it, however. In 2007, it funded a $4.85 billion settlement, the goal of which is to bring to a conclusion a majority of the remaining Vioxx lawsuits. According to press accounts, more than 97% of eligible claimants (48,550 out of 49, 960) have enrolled in the proposed settlement. Payments are to be made according to a complex formula that factors in the seriousness of the individual claimant’s injury, how much Vioxx that individual took, and other risk factors associated with that individual. Beyond this, a $37 million settlement of a Canadian class action has recently been approved and will be enforced across the country. Do you agree with Merck’s approach to the lawsuits that have been brought against it? [footnotes deleted] Answer: Merck cannot simply pay out the claims of everyone who has sued it. It is reasonable for Merck to insist that the plaintiffs prove their case, including that those who allegedly died from taking Vioxx actually took Vioxx before having the heart attack and that the heart attack was not caused by high cholesterol or other medical conditions, for example. Mediation and arbitration might be an effective way of settling some of the claims, particularly as Merck itself has acknowledged, according to The New York Times, that Vioxx can cause heart attacks in those who take it for longer than 18 months. Since settlement discussions are generally not public, it is hard to know whether Merck is actually trying to settle claims outside those included in the $4.85 billion pool, but Merck has settled many claims out of court already. As noted in the question, a national class action in Canada against Merck has recently been settled. For the September 4, 2012, decision by Justice Leitch approving the settlement, go to http://vioxxnationalclassaction.ca/pdfs/Vioxx%20Reasons%20for%20Settlement%20Approval%20Ontario.pdf. Chapter 2 The Canadian Legal System Instructor’s Manual—Answers by Shannon O’Byrne V. CHAPTER STUDY Questions for Review, page 42 1. What is the key idea upon which the Canadian Constitution is based? Answer: The Canadian Constitution is founded on the idea of individual freedom, which is associated with the political philosophy known as liberalism. 2. What does “jurisdiction” mean? Answer: Jurisdiction refers to the power that a given level of government has to enact laws. 3. What is an example of a constitutional convention? Answer: An example of a constitutional convention relates to the office of prime minister. This office is not mentioned anywhere in Canada’s written Constitution, yet no one doubts that the federal government is headed by such an officer. 4. Which document determines whether a government has the jurisdiction to pass a law or not? Answer: The Constitution Act, 1867, formerly known as the British North America Act. 5. What is the doctrine of paramountcy? Answer: The doctrine of paramountcy provides that federal laws prevail when there are conflicting or inconsistent federal and provincial laws. 6. Which level of government does paramountcy seem to favour? Answer: Paramountcy seems to favour the federal government because when there is a conflict between federal and provincial laws, the federal law will prevail. 7. How does the authority of a municipal government come into existence? Answer: All municipalities are created by provincial legislation. Their powers are given to them by the provincial government. 8. What is the difference between a regulation and a bylaw (or ordinance)? Answer: The term “bylaw” is often used to refer to municipal law. Regulations come from the political executive of the federal or provincial level of government and are created pursuant to legislation. 9. What is the executive branch of government? Answer: The executive branch of government has both a formal function and a political one. Its formal function includes the giving of royal assent to legislation (by the queen’s representative). Its political function includes performing day-to-day operations: formulating and executing government policy, as well as administering all departments of government. Cabinet—all the ministers of the various government departments, as well as the prime minister or premier—is often empowered by legislation to pass regulations that provide detail to what the statute has enacted. 10. How is the executive branch different from the legislative branch? Answer: The executive branch of government is responsible for the ceremonial features of government, and the legislative branch is concerned with lawmaking.
11. What is precedent? Why is a system of courts essential to its creation? Answer: Precedent refers to an earlier case that is used to resolve a current case because of its similarity. Since only a higher court can bind a lower court according to precedent, a system of courts is essential to the creation of precedent. 12. What are the two types of trial courts? Answer: The two types of trial courts are inferior courts, in which judges are appointed by the provincial government, and superior courts, in which judges are appointed by the federal government. 13. What is the common law? Who creates it? Answer: The common law comprises rules that are formulated or created by the judiciary. 14. What is the Canadian Charter of Rights and Freedoms? Answer: The Canadian Charter of Rights and Freedoms is a guarantee of specific rights and freedoms enshrined in the Constitution and enforceable by the judiciary. 15. What can a judge do if he determines that a piece of legislation is unconstitutional? Answer: The judiciary has considerable discretion in fashioning a remedy in the face of unconstitutional legislation. The remedy focused on in this text is the court’s power to strike down the legislation, that is, declare the law to be of no force or effect. 16. If a law is found to violate a person’s freedom of expression pursuant to the Charter, is it automatically struck down? Is there something in the Charter that might allow the government to justify violating that person’s freedom of expression? Answer: A law is not automatically struck down just because it violates a freedom guaranteed by the Charter—for example, if a violation of the right to freedom of expression under s. 2(b) of the Charter is found, it is not the end of the inquiry. Section 1 of the Charter provides that “[t]he Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.” This section stipulates that once a protected right is violated, the government is required to justify why it is infringing a right, as well as to demonstrate that in doing so, it is restricting the right in question in a reasonably measured, controlled, and appropriate way. If the government is unable to do so, only then will the law in question be struck down. 17. What is the difference between public law and private law? Answer: Public law concerns areas of law that relate to, or regulate, the relationship between persons and governments at all levels. Private law concerns dealings between persons. 18. Which Canadian province operates under a civil law system? Answer: Quebec is the only province that relies on a civil law system. 19. What is the role of equity? Answer: Equity provides rules that focus on what would be fair given the specific circumstances of the case, as opposed to what the strict rules of common law might dictate. 20. What is one important function of administrative law? Answer: Administrative law refers to rules created and applied by those having governmental powers. These laws are applied by administrative bodies to address a specific activity, from licensing to zoning and subdivision. Questions for Critical Thinking, page 43 1. Women pay higher prices for certain products and services compared to what men are charged—from dry-cleaning to haircuts. This is known as gender-based pricing. Is gender-based pricing objectionable? Should government regulate price when it is discriminatory or should that be left to the free market? Answer: Although government regulation is often mandated to fight discrimination, gender based pricing is not necessarily one of those cases. A good argument is that pricing should be left to the marketplace and companies who overcharge their customers will see the market consequences in the form of reduced patronage. For example, the Globe and Mail reports on a 2009 study that assessed 50 randomly selected American drycleaners. The study determined that, on average, women paid 73 percent more to have their shirts laundered than men. A separate study from the previous year reports that 75 percent of women who shopped in the past year said they avoided buying clothes that would require dry cleaning. See Michael Kesterton, “Social Studies: Women and dry cleaning” Globe & Mail (29 July 2011) L7. The other view is that gender-based pricing is so entrenched that businesses are unlikely to ever change unless forced to do so by law. If this is the case, the only way women will be treated equally as consumers is for anti-gender pricing legislation to be passed. Women’s haircuts are typically more costly than men’s haircuts, doubtless because they are more time consuming for the stylist to produce. This seems to be a reasonable justification for an increased price. It is considerably less convincing to suggest, as some in the dry cleaning industry have done, that automated technology is geared to larger items of clothing and therefore women’s blouses need to be touched by hand, driving up the service cost in that circumstance. (See Jack Kohane, “‘Gender Tax’ in Ontario’s Crosshairs: Backbencher’s Bill Would Eliminate Unequal Pricing” Business Edge 1 (26 May 2005), online: Business Edge News Magazine . Some critics have argued that automated technology could be geared to smaller items of clothing, however. Put another way, are smaller people (more likely to be women) being forced to subsidize larger people (more likely to be men) because of a technology “bias”? As author Joanne Thomas Yaccato notes in The 80% Minority: Reaching the Real World of Women Consumers: “…If the technology is there for men’s apparel, it must be there for cleaning women’s garments.” 2. The Supreme Court of Canada in Saskatchewan Federation of Labour v Saskatchewan, 2015 SCC 4, ruled that public sector employees (that is, employees who work for government) have a constitutionally protected right to strike. More specifically, it ruled that labour reform legislation from Saskatchewan was unconstitutional because it interfered with the right to strike in a way that went beyond what was reasonably required. For example, the legislation prohibited government employees who performed essential services from participating in a strike but provided that the public sector employer alone had the right to determine who those employees would be. Do you think the employer should have the absolute right to decide who provides essential service? What would such absolute power do to the right to strike?] Answer: Under legislation passed by the government of Saskatchewan (The Public Service Essential Services Act ss. 2008 c. P42.2), any category of worker identified by the government as providing an essential service would be denied the right to strike. The first question the court had to establish was whether the right to strike was constitutionally protected. The majority said that is was. As Justice Abella notes at para 54, Through a strike, workers come together to participate directly in the process of determining their wages, working conditions and the rules that will govern their working lives (Fudge and Tucker, at p. 334). The ability to strike thereby allows workers, through collective action, to refuse to work under imposed terms and conditions. This collective action at the moment of impasse is an affirmation of the dignity and autonomy of employees in their working lives. The majority concluded that the right to strike was protected by s. 2(d) of the Canadian Charter of Rights and Freedoms (freedom of association) because of the significant role it plays in the collective bargaining process. Therefore, the government’s legislation limiting that right would have to meet the strictures of s. 1. There were several problems with the legislation causing it to fail s. 1 scrutiny. At para 90, the court observed that Saskatchewan had offered no evidence supporting its position that “ensuring the continued delivery of essential services requires unilateral rather than collaborative decision-making authority.” At para 92, the court noted with concern the absence of “an impartial and effective dispute resolution process to challenge public employer designations under…the legislation.” Also problematic was the legislative absence of a “meaningful alternative mechanism for resolving bargaining impasses, such as arbitration,” at para 93. In short, at para 96: Given the breadth of essential services that the employer is entitled to designate unilaterally without an independent review process, and the absence of an adequate, impartial and effective alternative mechanism for resolving collective 2015 SCC 4 (CanLII) bargaining impasses, there can be little doubt that the trial judge was right to conclude that the scheme was not minimally impairing. Quite simply, it impairs the s. 2(d) rights of designated employees much more widely and deeply than is necessary to achieve its objective of ensuring the continued delivery of essential services. On the other hand, the government employer has to ensure that the public is properly served and not placed in danger, for example. According to the dissenting Justices Rothstein and Wagner, the majority of the court fell into error by relying on a “19th century conception of the relationship between employers and workers,” enshrining “a political understanding of this concept that favours the interests of employees over those of employers and even over the public” at para 125. Note, however, that the majority was not opposed to legislation limiting the right to strike per se. Its concern was that this particular piece of legislation failed the minimal impairment and proportionality tests. 3. Under a common law system, judges follow precedent when making decisions or resolving disputes. What are the advantages of following precedent? Describe a situation where it might be inappropriate to follow precedent. Answer: A system of precedent (stare decisis) is intended to promote certainty, predictability, consistency, and uniformity in the law—its informing principle being that “like” cases are to be treated alike. One disadvantage is that the application of precedent in a given case may create an injustice. A related problem is that, given the slowness with which the common law evolves, the legal system fails to keep pace with social, political, and economic change. It is inappropriate for a judge to follow a precedent when that precedent has lost its reputation or flies in the face of public policy. For example, courts no longer apply the discredited view of equality set forth in Bliss v A.G. Canada [1979] 1 SCR 183. In Bliss, Mr. Justice Ritchie ruled that the Unemployment Insurance Act did not discriminate against pregnant women, though it required them to have a longer qualifying period for benefits than anyone else under the Act. According to Mr. Justice Ritchie, if the impugned provision in the Act treats unemployed pregnant women differently from other unemployed persons, be they male or female, it is, it seems to me, because they are pregnant and not because they are women ... any inequality between the sexes in this area is not created by legislation, but by nature. An ironic way of encapsulating the flaw in Ritchie’s analysis is to observe that the Unemployment Insurance Act does not violate equality rights because it treats pregnant women and pregnant men in exactly the same way. Bliss was overturned by the SCC in Brooks v Canada Safeway Ltd, [1989] 1 SCR 1219, which confirms that discrimination on the basis of pregnancy is discrimination on the basis of sex. For further discussion of the rules governing stare decisis, see Edmund Kwaw, Guide to Legal Analysis, Legal Methodology and Legal Writing, 2nd ed. (Toronto: CCH, 2008). 4. Review Figure 2.3 on page 34. In your opinion, how has the Charter affected business activity? Answer: The Charter has • made business subject to less legislative and regulatory intervention in several instances • permitted professionals to more easily communicate with the public, in face of unreasonable restrictions by their governing bodies • permitted business to operate more freely, including the freedom to open on Sundays In other cases, however, the Charter has affirmed the right of the legislature to restrict business, including, in Quebec, how it advertises to children. 5. Do you think that the Charter strikes a good balance between protecting the rights of individual citizens and allowing governments to legislate for the benefit of larger groups, or even all members of society? Is section 1 of the Charter necessary, or should an individual’s fundamental rights and freedoms be absolute? Answer: Section 1 allows the courts to strike the balance between protecting the rights of the individual and allowing governments to legislate for the benefit of larger groups or even all members of society. Section 1 of the Charter is necessary. Otherwise, if rights were absolute, a person could slander and hide behind the concept of freedom of speech, to name just one example. 6. Dozens of administrative tribunals, such as the Labour Relations Board, the Canadian Radio-television and Telecommunications Commission, various human rights tribunals, and the Occupational Health and Safety Commission, have been established by both the federal and provincial governments. Why do you think administrative tribunals are such a predominant feature in Canada? Why have they been established? Answer: There are a number of reasons for the proliferation of administrative tribunals in Canada: • the need for expertise in a particular area like atomic energy • the need to take pressure off the judicial system • the need for ADR in general • the need to take care of a certain group in society, like workers injured on the job, regardless of fault There is no unifying vision behind all the administrative tribunals operating in Canada. Historically, they simply appeared on a piecemeal basis in response to needs identified by government, such as those given above. Situations for Discussion, pages 43–44 1. The government of Alberta has passed regulations that include requirements that home inspection businesses be provincially licensed and carry $1 million in errors and omissions insurance. Beyond this, the province has mandated educational standards for home inspectors with the goal of improving the quality of work done by the home inspection industry. Then Opposition Liberal MLA Hugh MacDonald endorsed the regulations as a means of clamping down on fly-by-night home inspectors, observing: “If I’m making an important decision to purchase a home based on information I’m getting from a home inspector, that person should be licensed and have minimum credentials.” [footnotes deleted] Do you agree that government should regulate such an industry? What are the costs and benefits of such regulation to the consumer? Answer: A housing purchase is one of the most expensive purchases most individuals make in their lifetime. An unregulated housing inspection industry means that consumers are more likely to run up against an incompetent or a dishonest home inspector and buy the wrong house. This can have utterly devastating financial consequences. As reported by Karen Kleiss (“Home buyers get more protection,” Edmonton Journal (14 May 2011), online: Edmonton Journal , Terry Fikowski (of HouseMaster Home Inspections) welcomes home inspector regulation, because “a lot of the requirements in the regulation are things that home inspectors already do. Those that don’t probably shouldn’t be in the industry.” He adds: “A lot of operators do not have any formal training of any sort, so training is a big thing. It’s going to make sure those people get the proper training and have the proper insurance.” On this basis, the benefits of regulation therefore include an increased likelihood of keeping members of public out of harm’s way. The downside of the regulation, of course, is that home inspection will cost more. Presumably, the home inspector will pass on to customers the expenses related to regulatory compliance, including insurance and training. 2. A brawl at a popular Halifax nightclub called the Dome resulted in 38 arrests and the suspension of the Dome’s liquor licence. Government officials believe that one-dollar drinks offered by the Dome are one factor contributing to such violence. “This has blown into a cultural problem, and one of the issues we have identified is low-price, deep-discount drinks,” said Barry Barnet, then Nova Scotia’s Minister of Health Promotion and Protection. The Nova Scotia government expressed its hopes to develop recommendations to address problems associated with excess alcohol consumption. From a risk management perspective, how should local bar owners approach governmental concern over bar violence? [footnotes deleted] Answer: Though a full risk management model is not presented until Chapter 3, students should still be able to suggest ways in which bar violence can be reduced or eliminated: • The industry might consider voluntarily ending discount drinks pre-emptively. This may help to reduce violence as it will help to reduce the number of people who are intoxicated. An industry-wide change deals with the problem of only some bars eliminating discount drinks. • Bar owners should consider better control and security within bars and nightclubs. • Bar owners should consider better training of their security personnel to prevent violence from occurring or escalating. • Bar owners should consider lifetime bans for troublemakers. • Bar owners should increase the number of video surveillance cameras. • Bar owners should ensure that service is cut off to those who are impaired (which is already required by law). The idea is to proactively address the problem identified by government and work to eliminate or reduce it. The CBC reports that as part of getting its liquor license back, the Dome committed to ending the practice of one-dollar drinks, installing more video cameras, handing out lifetime bans to trouble makers, and doing the following: • Limiting the number of patrons to 80 per cent of bar capacity. • Hiring at least four off-duty police on a busy night, up from two. • Doubling security staff inside the bar. • Hiring a consultant for security training. • Doubling the number of video cameras to 64 and giving police access to them. When it comes to the lifetime ban for known troublemakers, the bar hopes to set a precedent. See CBC News, “Bar to stop selling $1 drinks after brawl” (28 December 2007), online: CBC News . Note that several jurisdictions, now including Nova Scotia and Alberta, have enacted legislation on the same point. For analysis of Nova Scotia law and related commentary, see Rachel Boomer, “Nova Scotia introduces minimum drink prices,” Metro (19 December 2008), online: Metro . For analysis of Alberta law and related commentary, see CBC News, “New rules for Alberta bar patrons kick in” (1 August 2008), online: CBC News . 3. With the goal of reducing childhood obesity, the Ontario government in 2014 introduced a bill to require restaurants to post calorie counts beside menu items so consumers would know, for example, that a “raisin bran muffin from Tim Hortons has more calories than a cheeseburger” in the words of then Health Minister Deb Matthews. The Canadian Restaurant and Foodservices Association (CRFA) has dismissed the initiative as too simplistic as well as confusing. “There could be 10,000 ways to make a pizza. How do you put that out there?” said James Rilett, the CRFA’s vice-president for Ontario. “It’s not simply just stick a number up there and people will understand it.” Do you agree with the proposed legislation? Why or why not? [footnotes deleted] Answer: Ontario’s Bill 45, the Making Healthier Choices Act, passed third reading on May 26, 2015 with all three parties voting “overwhelmingly” in favour. See Robert Benzie, “Ontario bans flavoured tobacco, forces calorie count on fast-food menus,” The Toronto Star (26 May 2015) online: Toronto Star . It comes into force on January 1, 2017. As summarized by Wendy Glauser, Jill Konkin, and Sachin Pendharkar, “Do calories on restaurant menus make a difference?” Healthy Debate (9 April 2015), online: Healthy Debate , the legislation requires restaurants, supermarkets and other vendors that sell ready-to-eat food to display the total calories alongside menu options. the law will only apply to vendors with 20 locations or more, due to the expense of measuring calories and the requirement of a very standardized menu. though the current bill doesn’t describe the method that restaurants use to measure calories, inspectors will be able to investigate to ensure accuracy. companies in violation of the act would face hefty fines. The entire bill can be found at: . One the one hand, the legislation is designed to assist consumers in a landscape where a food item that is seemingly low in calories is, in fact, tremendously and unexpected caloric. In this sense, the education is a good thing. According to a government press release, an important object of the bill is to help consumers chose more wisely by “giving them caloric information when eating out or purchasing take-away meals.” See Government of Ontario, “New Legislation Passes to Help Reduce Smoking and Obesity Rates” (26 May 2015) online Government of Ontario: . In this same press release, the government notes that “According to a 2011 Ipsos Reid study, approximately 95 per cent of Ontarians support requiring fast food restaurants to list nutrition information on their menus.” On the other hand, the legislation might be considered draconian and unnecessary. As reported by Glauser et al., James Rilett, vice president for Canadian Restaurant and Foodservices Association, Ontario, “states that his members prefer voluntary programs but also said restaurant owners go out of their way to respond to nutritional transparency requests from the public. They want customers to be happy,” he explained. While it is possible that customers may be confused by calorie count postings, this remains to be seen. Once the legislation is proclaimed in force, more will be known about its effectiveness. A 2011 study done in the United States and reported on by Stanford Business GSB, concluded that when restaurants post calories on menu boards, there is a reduction in calories per transaction. Based on transaction data provided by Starbucks, researchers from Stanford GSB found that calorie-posting in New York City in 2008 led to a 6% reduction in calories per transaction. According to the study, beverage choices at Starbucks are unaffected by calorie posting. However, calorie posting leads consumers to buy fewer food items, and to switch to lower calorie food items. See Stanford Business GSB, “Researchers: How Does Posting Calories Affect Behavior?” (1 February 2011) online Standard Business GSB . In sum, the legislation may help to fight obesity by providing education and is tremendously popular with Ontarians. However, it undoubtedly interferes with how chain restaurants may want to run their business. It is worth noting that now that the legislation has passed, however, business criticisms of the concept have become more muted. 4. Liberal leader Justin Trudeau is in favour of ending the prohibition on marijuana, noting that it costs $500 million a year in law enforcement, has caused 475,000 Canadians to have criminal records since 2006, and pumps money into organized crime and crime gangs. The Conservative government is on the record as being opposed to decriminalization but is considering a softening in the current laws so that police could simply ticket those found with small amounts of marijuana instead of laying charges. Should marijuana be decriminalized? Why or why not? If a province wanted to legalize marijuana, would it have the power to do so? [footnotes deleted] Answer: The content of this Situation for Discussion provides some analysis to get students started. The biggest point in favour of decriminalization is simply this: it is unduly harsh and punitive to give someone a criminal record for a relatively minor infraction. Other possible reasons for decriminalization include providing government with another product to tax; providing government with the opportunity to regulate the sale and production of the drug, thereby increasing safety; and freeing the police to investigate more serious crimes. Reasons against legalization include the view that legalization is contrary to a law and order agenda; marijuana is a gateway drug, leading the user to more serious and dangerous drugs; the drug is carcinogenic and linked to a host of illnesses, including lung cancer, and that the state should not be seen to condone drug use of this kind. One purpose of the debate this question is intended to spark is to illustrate the policy analysis that goes into legislative decision-making as well as ideological underpinnings informing both sides of the divide. Of course, a province cannot legalize marijuana since jurisdiction over such a matter falls to the federal government under its criminal law power. 5. An accounting student is researching the deductibility of business expenses. She has found an amendment to the federal Income Tax Act that states that certain expenses are not deductible. However, she has also found case law that states that the expenses are deductible. Which law prevails? What additional information do you require to answer this question? Answer: First, the accounting student must first work out a chronology. Which is most recent: the statute or the judicial decision? Second, is the judicial decision interpreting the relevant provision of the most current legislation or a repealed version? Statute law trumps a common law decision provided the statute law is constitutional, both under the division of powers and under the Charter. Hence, if a judge says that an item is deductible but Parliament then passes a law saying that is it not deductible, then the statute prevails. 6. Several provinces have passed legislation that restricts the sale of violent video games to children. How could this legislation be challenged under the Charter? Explain. Are there any ethical considerations when contemplating such a challenge? Answer: Such legislation could be challenged under s. 2(b) of the Charter (freedom of expression) but the challenge would likely fail under s. 1. As an article in the Lawyers Weekly points out, The protection of children from the potentially adverse effects of exposure to video game violence might be enough to support a s. 1 argument. Section 1 jurisprudence in Canada has not required definitive proof of actual harm; potential harm has been sufficient in the past—especially when children are involved. The best example of this is Irwin Toy Ltd. v. Quebec [1989] S.C.J. No. 36, decided by the Supreme Court of Canada. The issue in that case was the constitutionality of Quebec consumer protection legislation which prohibited commercial advertising to children under the age of 13. The court ruled that the advertising was protected by section 2(b) of the Charter, but the Quebec limitations were justified under s. 1. The court’s decision was not based on definitive proof that the advertising actually harmed children (there was conflicting evidence on this point), but the court was influenced by a report which concluded that children are not capable of recognising the persuasive intent of advertising. See Chris Metcalfe and Chris Bennett “Commentary: Anti-violence legislation on video games passes easily under Charter,” Lawyers Weekly (9 March 2007). Solution Manual for Canadian Business and the Law Philip King, Dorothy Duplessis, Shannon O'byrne 9780176570323, 9780176509651, 9780176501624, 9780176795085
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