RSS FeedOntario Ombudsman on the offensive
Ombudsman slams Ont. government for not keeping closer eye on colleges
Ontario’s ombudsman slammed the provincial government Tuesday for failing to keep closer tabs on publicly funded colleges in a report that found a northern Ontario school left some of its graduates unqualified for jobs.
After a months-long investigation into Cambrian College’s two-year Health Information Management program, Andre Marin concluded it was not formally recognized by the Canadian Health Information Management Association, which controls entry into the profession.
Does The Future Of The Revised US-Swiss Double Taxation Treaty Depend On The Outcome Of The UBS Case?
First posted on Commercial Law International on July 13, 2009.
UBS, the world´s largest wealth manager, has found itself embroiled in a diplomatic row between Washington and Bern. At issue is the interpretation of the current US-Swiss double taxation treaty and at stake is the newly inked, yet to be ratified, revised US-Swiss double taxation treaty.
Does the future of the revised US-Swiss double taxation treaty depend on the outcome of the UBS case?
As much was indicated by Doris Leuthard, the Swiss Economy Minister, as she called for a speedy resolution of the case. What the Minister is expressing in her pronouncements is simply the reality of the situation. Swiss maintain that the issues in the case are diplomatic and ought to be resolved in forum more appropriate to friendly relations between nations – face-to-face closed door negotiations – rather an the public spectacle of a courtroom. Secondly, while the treaty has been finalized it has yet to be ratified by the Swiss Parliament, a parliament that will be slow to give its blessing if it is dissatisfied with the outcome of the case.
So what exactly is going on in this case? This is a very good question for I myself was a bit confused for two reasons. The first is that UBS already plead guilty to assisting thousands of Americans to evade US taxes in a case brought by the Department of Justice (DOJ) in February of this year. In the same case it also paid fines of $750 million and disclosed 250 names of its US clients. So the case ought to be over, right? Well, yes and no. This was the criminal leg of the – and I am going to substitute strategy here for case to avoid any legal confusion – US authorities strategy to gain the names of as many as 52,000 believed to be evading US taxes.
The current case before the courts is the civil leg of the strategy brought by the Internal Revenue Service (IRS). They have served on UBS a John Doe subpoena in an effort to force UBS to reveal the names, so those people can in turn answer to the authorities.
While I know that criminal and civil matters are wholly different creatures, this smacks of double prosecution – persecution if you will. Or is it?
The second thing that was puzzling me was this IRS case seems to have stepped outside the four corners of the existing double taxation treaty. The treaty only requires UBS, through Swiss authorities, to co-operate with US tax evasion investigations if the IRS can provide the specific names of the holders of secret offshore accounts. It is clear from the IRS´s actions, issuing a John Doe subpoena, that it clearly does not know the names of the suspected tax evaders. So that should be the end of it, right. Well, clearly not.
Now, what the IRS is doing is clearly is not only not double prosecution/persecution, it is well within, I believe, the scope of the treaty. In fact I would go as far as saying that it is share genius. This was revealed to me in a brief filed by the IRS in response to one filed by UBS. To see what I mean just take a look at section 2 of the brief, the head tells it all: ¨Nothing in the Tax Treaty Limits the IRS´s Authority to Enforce a Duly Authorized Summons Issued to a Third-Third Party Witness within the United States, or Requires the IRS to Exhaust its Treaty Rights With a Foreign Government Before Seeking to that Summons.¨
Unfortunate for UBS, and as rightly pointed out by the IRS ¨the existence of a treaty….does not limit the rights granted to the United States under the laws of this country¨ (the bold being original). Well, that is in part, it should read doesn’t limit those laws so limited by treaty obligation.
What the IRS has done is not too circumvent the treaty but simply not to bring it into the equation at all. It has kept the issue entirely domestic. As I said, share genius.
In any event the prospects are dim for UBS if a negotiated settlement is not reach soon. If UBS loses, which it looks increasingly probable, it will be faced with either defying US law by refusing to reveal the names or reveal the names and be in violation of Swiss banking law which carries with criminal sanction.
Now that a Floridia judge has agreed to postone the case the excutives at UBS will surely be working over time to reach an amecible resolution of the case.
More on Ontario Ombudsman
Ombudsman urges career college crackdown
The press-release.
Our previous post on Ontario Ombudsman is here.
Australian Securities Regulators In Policy Quandary
First posted on Commercial Law international on July 1, 2009.
The question that faces Australian securities regulators is what to do about two or more Chinese state owned enterprises together owing substantial shareholdings in an Australian company?
At first blush it would appear that this is a case of China take over fear, however there is much more to the story than this. Indeed, there is a legal/regulatory story here as well. Now I am not trying to say there is or isn’t a China phobia here, it is a given that all nations have their own xenophobic tendency, however I cannot speak on this as I know very little about Australia and what I do know comes from watching Rugby, Crocodile Dundee and Steve Irwin (may he rest in peace). Moreover, while I am not versed in Australian law, I believe that my legal training and experience thus far permits me an insightful comment or two.
This question has come to the fore because of the increased interest of Chinese companies in Australia´s mineral wealth – this is in fact a global trend and not one peculiar to Australia – just take a look at the recent attempt by Chinalco to increase its stake in Rio Tinto to see my point.
In Australia it isn’t that two or more state entities is per say barred from investing in the same company, as the law currently is, not at all. Then what is the problem, you might ask? The issues here are the concepts of associated entities and substantial shareholdings.
You see in Australia, under their securities regime, two or more entities that are associated – related in some way, namely through ownership and control – that combined own more than 5% of a listed company must declare a substantial shareholding. However, due to a lack of clarity in the law and the absence of a clear policy position the question remains open if two or more Chinese state owned companies would be considered associated and required to declare a substantial shareholding?
The securities regulators face several related sub-problems and they must approach this issue with some degree of sensitively to the political nature of dealing with entities belong to another state. With that in mind regulators have to be cognizant of the fact that they are not dealing with subsidiaries here but foreign state owed companies; state ownership is not equal in all these enterprises; state control is not equal in all these enterprises; and these enterprises while having the same state owner might indeed be fierce competitors with opposing interests.
I do not envy the regulators their task but it will be interesting to watch what if any policy position is developed or if the law is changed to address this issue.
The Swiss Banking Business Model Faces Realignment
First posted on Commercial Law International on June 29, 2009.
The world economic down turn has had many knock on effects, many of which unexpected. It seems that bad times has the uncanny effect of making the once unthinkable, unsayable and undoable all very much possible.
The Swiss banking model can be best characterized with one word: Secrecy.
This don’t ask, don’t tell attitude is more than just a business model – it is enshrined in Swiss law. The high protection that client confidentiality receives in Switzerland has made it a favorable destination for the money of my high net worth individuals wishing to shield their money. Also it doesn’t hurt that it also has a very favorable tax policy as well.
This Swiss shield unfortunately is not very discriminating – it basically protects all comers. It makes no distinction between those who wish to shield their money for legitimate or illegitimate purposes. Moreover, it doesn’t even a make a distinction between rightfully and ill gotten gains. This hands off approach while very profitable has lead to some very tragic and embarrassing incidents for Switzerland. Specifically, I am mainly speaking of Nazi accounts filled with plunder during their rise and fall but generally I am also referring to Swiss banks being the preferred destination for the money of certain criminal elements and many a dictator.
Please don’t get me wrong, I am not trying to say that the Swiss actively seek out ill gotten gains – to my knowledge they do not – nor am I saying that they have done nothing to try and rectify ill gotten gains ending up in their banks, I am not trying to say that at all. Then what am I trying to say?
What I am trying to say is simply this: any system predicated on secrecy will have its limits on how well it can tackle the twin issues of legitimacy and source of funds.
However, times they are a changing.
This change is evidenced by four things. The first is a long and as yet to be resolved battle between UBS and US authorities over the names and identities of some of the banks US clients and with it opposing interpretations of the US-Swiss Tax Treaty. The second is the OECD´s tax haven black list, talk of G20 nations developing a sanctions regime aimed at tax heavens and the drive by OECD countries and in particular the US to conclude double taxation agreements. The third is the revised US-Swiss double taxation treaty. And lastly is the current economic climate.
All of this has forced the Swiss into re-think mode. As reported in the Financial Times: leading members of the Swiss Private Bankers Association have recognized they may have to raise tax compliance with clients and, if necessary encourage them to declare previously hidden assets.
Does this mean an end to secrecy as the cornerstone of the Swiss banking model?
Highly unlikely. However, it does mean a few rays of light into the otherwise dark room of secrecy called the Swiss banking model.
Privy Council In Bank Ruling Wraps Jamaican Judiciary On the Knuckles, Part II
By: Ainsley Brown
The claims advanced by Olint, though ultimately would proven to be groundless is very important because it, gave us a brief glimpse into the subtleties of judicial politics. Before I go any further some context by way of an example I believe would be useful. The words with all due respect, seem quite mundane or you could even say respectful, however, not so in a court room – it is quite disrespectful. The respect for a judge and his or her court room flow naturally from their position and there is no need to remind the judge that you are being respectful. This is something that lawyers and judges know alike, so whenever such words are uttered it is code for hey, judge I am right and you are just full of it – like I said disrespectful.
Though totally unrelated to the case, this example illustrate the point nicely, that words matter and that in the politics of the courtroom they often have much greater meaning than they seem at first glance. Now back to the case.
Olint´s first argument would provide the ground for strongest rebuke by their Lordships of the Jamaican Court of Appeal. Lord Hoffmann even went as far as calling out the reasoning or better yet lack thereof of one of the judges of the Court of Appeal – a one Morrison JA. In the Court of Appeal Morrison JA criticized Mr. Justice Jones, at first instance for disposing of the matter by way of mini-rail, holding that the matter gave rise to a serious issue and ought to be tried. However, Lord Hoffmann goes on to point out, saying of Morrison JA that ¨ he did not explain what the issue would be and their Lordships consider that one has only to read section 4(3) (c) to see that it is irrelevant to any issue in this case.¨
This is Lord Hoffmann´s way of saying: your work is sloppy and you don’t know what you are talking about. Like I said a strong rebuke.
The claim, by the way, was that s. 4(3)(c) of the Banking Act had modified the bank´s contractual right to terminate the banking relationship by giving reasonable notice. Unfortunate for Olint s. 4(3)(c) of the Banking Act is part of the general fit and proper licensing provisions of s.4, under which the Bank of Jamaica grants licenses. It therefore does not take a legally trained mind to see that Olint is simply fishing and that there is not only no serious issue here but no issue at all – no wonder the strong rebuke.
The second argument advanced by Olint was that NCB by closing its accounts was abusing its market position. As I like to call it, and to put it in the Jamaican vernacular: dem a fight gainst man (translated: they are opposed to us) argument. This argument while it has great cultural resonance, and it could be argued reflects a commercial reality; it however has no basis in law.
Firstly, no evidence was furnished that NCB did indeed have a dominant position in the commercial banking sector in Jamaica. However, their Lordships did take judicial notice that NCB was ¨the second largest in Jamaica, with 34-37% of total loans and 30-35% of total deposits, but the Bank of Nova Scotia is larger and there are four other commercial banks in Jamaica, to say nothing of the foreign banks. They are all in competition with each other. It is not easy to acquire dominant position in the banking market.¨ Secondly, even if NCB had a dominant market position the refusal to continue be Olint´s banker does not procure for NCB some market advantage. If anything it does quite the opposite by enabling ¨competitors to pick up another customer if they felt inclined to do so.¨
The third claim by Olint, was that NCB was attempting to induce breaches of contract between itself and its club members. Inducement of breaches of contract is a tort (a civil wrong) that would require not only that NCB knew that it would cause the breach of contract but that it intended to so ( OBG Ltd v Allan 2008). This by far was Olint´s strongest argument I think. However, their Lordships described it as a ¨hopeless proposition.¨ It will be remember from Part I that it was the refusal of Olint to furnish its audited books that kicked off this sequence of events. NCB could not without proper knowledge of the relationship of Olint and its members know or set out to cause breaches of contracts. What Olint was in fact saying was that NCB knew its actions would cause the breach and with this certain knowledge set out to cause the said breach of contractual arrangements. But how can you set out to cause or much less know that a breach would be caused in a contract that you haven’t even seen?
Stay tuned for Part III as it will deal with the injunction issue.
Don’t Let Cybersquatters Steal Your Name
It would be an embarrassing surprise if you woke up one day to find that your personal website was now a dating service, or worse, selling porn or prescription drugs. Well that’s precisely what has happened to two Canadian MPs, and it highlights the importance of preemptively guarding your online identity in a situation where legal recourse will prove difficult if not futile.
As reported by the blogs Michael Geist and Canadian Trademark Blog, and now even The Sun, the domain names of two MPs have been snatched up by cybersquatters after the politicians failed to re-register them. Liberal whip Rodger Cuzner, Member of Parliament for Cape Breton-Canso, had his domain www.rodgercuzner.ca taken over by a bizarre dating-based entity. And at www.keithashfield.ca – former web home of Keith Ashfield, Conservative MP for Fredericton – one can order drugs such as the highly addictive oxycontin.
Cybersquatting, also known as domain squatting, refers to “bad faith registration of a domain name containing another person’s brand or trademark in a domain name.” Benefits for the cybersquatter come in the form of per-click revenue from ads on the repossessed site. Since 25% of all Internet traffic comes from direct navigation – i.e. people directly typing the domain name into the browser – cybersquatting can seriously damage the business and/or reputation of companies and individuals.
So what do you do when someone snags your domain? In Canada, notes Canadian Trademark Blog, one possible recourse is to try to take the name back through the Canadian Internet Registration Authority Dispute Resolution Policy. The problem for Mr. Ashfield and Mr. Cuzner, however, is that the complainant in this case must prove that his/her name qualifies as a “Mark,” and the definitions of “Mark” generally pertain to businesses and institutions, not individuals.
Another avenue of action is to go to the Uniform Domain Name Resolution Policy (UDRP) process administered by the Internet Corporation for Assigned Names and Numbers (ICANN), the nonprofit organization that oversees domain name registration. This process is cheaper than legal action against the cybersquatter, but unlike legal action it cannot grant recovery of damages to the complainant. And there is the chance that the domain name in question will not be within the category of UDRP-affected top-level domain names (such as .com, .org, and some country codes).
The obvious solution to cybersquatting is to not let it happen in the first place. The plight of Mr. Ashfield and Mr. Cuzner is a reminder to regularly re-register your domain name before it’s seized by Cialis-peddling opportunists.
$300M Suit Follows Toronto Propane Explosion
Just days after a massive explosion at a propane transfer facility in Toronto, a $300 million class action lawsuit is being launched.
On August 10, 2008, in the early morning hours, a massive explosion at Sunrise Propane Industrial Gases in Toronto shook people from their sleep. The blast sent fireballs into the sky which could be seen as far away as Niagara Falls.
While firefighters raced to get the flames under control, thousands of neighbourhood residents had to be evacuated. The blast injured numerous people and have left at least one firefighter and one civilian dead; the latter’s charred remains were found at the site of the explosion.
While most evacuees have returned to their homes, several buildings remain closed to residents over concerns of structural stability.
Stevensons LLP and Bogoroch & Associates have announced their intention to file a class action suit against Sunrise Propane, the City of Toronto, and the provincial government.
The bases of the claim, according to the suit’s website, are:
negligence, nuisance, trespass, strict liability (Rylands v. Fletcher) and liability pursuant to the Occupiers’ Liability Act, R.S.O. C. O.2., the Environmental Protection Act, R.S.O. 1990, c. E.19 and the Family Law Act, R.S.O. 1990, c. F.3.
According to the Globe and Mail, about 20 years ago Toronto passed a regulation restricting zoning for propane transfer facilities. However, the city had to repeal the by-law in 1995 after a similar regulation of the City of York was defeated by propane companies. The Ontario Court of Appeal ruled that the by-law was in conflict with provincial law:
“The terms of the by-law are consistent with the intention to give effect to safety concerns.
… First, there is the operative conflict to which we have referred. Second, the authority of the municipality relates, generally, to land use planning and not safety respecting propane handling.”
(Superior Propane Inc. v. York (City) (1995), 23 O.R. (3d) 161 (C.A.))
Not surprisingly, the City of Toronto and the Province of Ontario are playing the blame game with each other. In light of the above Court of Appeal decision, Toronto contends that it was the responsibility of the provincial regulatory boards to ensure the safety of propane transfer facilities.
Both the City of Toronto and the province have been named as defendants in the pending suit. Responsibility for the blast will again be left to the courts to sort out.
New Alcohol Regulations Target Binge Drinking in Alberta
Amendments to the Alberta Gaming and Liquor Commission policies come into effect today.
The new rules, which are explicitly aimed at curbing binge drinking, will create a number of changes to how alcohol is served in licenced establishments throughout the province.
As of today, there will be new minimum prices established for booze:
- Spirits: $2.75 per ounce
- Wine: $0.35 per ounce (works out to $1.75/glass)
- Draught beer: $0.16 per ounce (works out to $3.20/pint)
- Canned/Bottled Beer and coolers: $2.75 per 12-ounce bottle or can
These minimum prices will eliminate cheap drink specials being offered by bars that the Alberta government says contribute to irresponsible drinking.
In addition to minimum drink prices, limits will be imposed on happy hours. Bars will not be allowed to sell drinks for less than their regular price after 8pm. Of course, at no time will the bar be allowed to reduce its price for alcohol below the established minimums.
Perhaps most significantly of all, the rules will place limits on how much patrons will be allowed to purchase before last call. Bars will not be allowed to sell or serve more than one bottle of beer or two ounces of liquor to a patron after 1 a.m.
Despite the potential effect on revenues, representatives of the affected industry are getting behind the new rules. This is because of the annoying habit of drunk people creating disturbances inside and outside of their establishments, which pose a threat to employees, patrons, and the general public.
The CBC News quotes Mike Shimka, vice-president of the Alberta Hotel and Lodging Association, as saying:
“These changes have great potential to reduce the public order problems associated with binge drinking … Most of us would never guzzle a tray full of cheap highballs just before closing time, but many of us have shared a sidewalk with someone who has. These new changes should make closing times outside bars a lot more peaceful.”
The CBC says that impetus for the new limits on alcohol consumption in bars came after two police officers in Edmonton were attacked several months ago while trying to break up a fight outside a bar.
