Table of Contents
PROFESSIONAL RESPONSIBILITY .......................................................................................................................................................... 3
CORE DUTIES TO CLIENT (IN ADDITION TO ALL OTHER DUTIES) ..................................................................................................................... 3
CH 1: REGULATING THE LEGAL PROFESSIONS [1-4] ....................................................................................................................................... 3
CH 2: PROFESSIONALISM [5-7]........................................................................................................................................................................ 4
CH 3: WHO IS THE CLIENT [9-13] ................................................................................................................................................................... 4
CH 4: COMPETENCE [15-17] ........................................................................................................................................................................... 5
CH 5: CONFIDENTIALITY [19-23] .................................................................................................................................................................... 6
CH 6: CONFLICT OF INTEREST [25-36] READ WITH COI RULE, PP.907-11 ...................................................................................................... 6
CH 7: DUTY TO YOUR CLIENT [37-42] (IN ADDITION TO CORE DUTIES LISTED ON PG.1) ................................................................................. 8
CH 8: FEES AND DISBURSEMENTS [43-48; READ WITH COMMENTARIES PP. 930-36] ....................................................................................... 9
CH 9: MANAGING CLIENT [49-53] ................................................................................................................................................................ 10
CH 10: WITHDRAWAL FROM REPRESENTATION [55-58; READ WITH COMMENTARIES PP. 636-42]................................................................ 10
CH 11: DUTY TO OTHERS [59-66] ................................................................................................................................................................. 11
CH 12: ADVOCACY [67-73] .......................................................................................................................................................................... 12
BUSINESS LAW: CALCULATION, TAX RATES, AND FORMULAS ................................................................................................. 14
BUSINESS LAW: DISCHARGE OF INDIVIDUAL BANKRUPTS ........................................................................................................ 17
BUSINESS LAW: FRAUDULENT CONVEYANCES & TRANSFERS AT UNDERVALUE .............................................................. 18
BUSINESS LAW: PURCHASE AND SALE OF A BUSINESS (TAX) .................................................................................................... 21
BUSINESS LAW: TAX APPEALS CHART ............................................................................................................................................... 22
BUSINESS LAW: TAX TIDBITS ................................................................................................................................................................ 25
PURCHASE AND SALE OF A BUSINESS ........................................................................................................................................................... 25
CORPORATE SHARE REPURCHASES: ............................................................................................................................................................. 25
SECTION 85 ROLLOVERS TO A TAXABLE CANADIAN CORPORATION ............................................................................................................ 26
SECTION 86 SHARE EXCHANGES .................................................................................................................................................................. 27
BUSINESS LAW: TIMELINES ................................................................................................................................................................... 28
ESTATE PLANNING: ESTATES CHARTS .............................................................................................................................................. 34
ESTATE PLANNING – CH. 35................................................................................................................................................................... 34
POWER OF ATTORNEY (CHAPTER 36 P. 453) .......................................................................................................................................... 35
CHAPTER 37- PROCEDURE FOR THE COURT APPOINTMENT OF GUARDIANS FOR MENTALLY INCAPABLE PEOPLE ........................................ 37
SEE PAGES 471-474 for Flow Charts .................................................................................................................................................... 37
TAX ISSUES ............................................................................................................................................................................................... 41
THE IMPACT OF THE FAMILY LAW ACT (CH 41, P 497) ......................................................................................................................... 43
CLAIMS BY COMMON LAW SPOUSES (CHAPTER 44 P. 555) ............................................................................................................ 45
MISCELLANEOUS WILLS & ESTATES LAW CONCEPTS ................................................................................................................... 46
Will Formal Requirements (Signing the Will)—CH. 35, p. 449 .............................................................................................................. 46
Distribution on intestacy—CH 42, p. 527................................................................................................................................................ 46
Incorporation by Reference—CH. 35, p. 445 .......................................................................................................................................... 47
Abatement—CH. 42, p. 530R ................................................................................................................................................................. 47
Ademption—CH. 42, p. 530R .................................................................................................................................................................. 47
Attribution—see CH. 39, p.485 and CH. 40, p. 492L-493R for majority of rules ................................................................................... 47
Lapse/anti-lapse—CH. 35, p. 446............................................................................................................................................................ 47
Survivorship ............................................................................................................................................................................................. 47
REAL ESTATE: REAL ESTATE CHART ................................................................................................................................................. 48
THE LAND TITLES SYSTEM ........................................................................................................................................................................... 48
TITLE SEARCHES .......................................................................................................................................................................................... 48
LETTER ENQUIRY SEARCHES (P. 603) ........................................................................................................................................................... 49
ELECTRONIC REGISTRATION OF LAND T ITLES DOCUMENTS ......................................................................................................................... 50
PROCESS ....................................................................................................................................................................................................... 50
-1-
REAL ESTATE: CONSTRUCTION LIENS & PRIORITY OVER MORTGAGES.............................................................................. 51
CONSTRUCTION LIENS........................................................................................................................................................................... 51
HOLDBACK STRUCTURE p 846 ..................................................................................................................................................... 51
TIME LIMITS FOR ENFORCING A CLAIM FOR LIEN p 847 ....................................................................................................... 51
VACATING THE LIEN p.849 ............................................................................................................................................................... 51
PRIORITY OF LIEN CLAIMS OVER MORTGAGES p. 850 ............................................................................................................. 52
SPECIFIC PRIORITY DISPUTES: p.850 ............................................................................................................................................ 52
LEASEHOLD IMPROVEMENTS (S. 19, CLA) p.848 ......................................................................................................................... 53
REAL ESTATE: ENFORCEMENT OF MORTGAGE SECURITY(REMEDIES) ............................................................................... 54
-2-
PROFESSIONAL RESPONSIBILITY
Core Duties to Client (In addition to all other duties)
1.
Duty of Service to the client
a. To be competent
 Competent to handle the matter without undue delay, risk or cost to the client
 Must have relevant skills, attributes and values appropriate to the matter
 Promptly communicating with clients
 Competence = only 1 aspect of adequate quality of service
b. Maintain client confidentiality
 Duty of confidentiality is perpetual 
new conflicts may always arise
 Exceptions: required by law, to collect fees, client consent, prevent serious harm
c. Duty to avoid COIs
 Extends to all clients 
prospective, current, former
 Law firm disqualification
d. Continue to represent unless there is good cause to withdraw
i. Only for good cause and with appropriate notice
ii. Loss of confidence
e. Charge fair and reasonable fees for services (493-2.08)
f. Manage expectations through communication
Ch 1: Regulating the Legal Professions [1-4]
LSO [1LR]


Rules [2.2LR]

Self-Governing body that governs Ontario’s legal and paralegal professions in the “public interest”
4 Areas
o Convocation and Management; Education, Licensing and Prof Development; Professional
Regulation; Support to paralegals, lawyer, public, Regulating the Legal Professions in the Public
Interest
Determines conduct of lawyers that is acceptable
Lawyer Must

Conform to the Rules regardless of whether the lawyer agrees with them
Competence and
Professional
Development
[3L]
Complaint
[3LR]
Suspensions
[4LR]

The Law Society has developed various initiatives to assist lawyers and paralegals to maintain the
competence required to serve the public.

Failure to respond to a complaint from the Law Society
breach of Rules and grounds for discipline


Disciplinary Reasons: suspended for failing to meet standard of conduct, may be for defined period
Administrative Reasons: automatic and no hearing for failure to meet admin obligations to Law
Society – administrative suspensions are automatically lifted as soon as the administrative obligation is
met.
Law Society Discipline: delivering an oral or written reprimand, placing temporary or permanent
restrictions on the individual’s license (e.g. via an undertaking), suspended the individual’s license,
permitting the individual to give up the individuals license, revoking the individual’s license
o Pay annual fees, insurance, CPD hours, filing of annual reports to law society, pay the necessary
professional insurance premiums or file the necessary forms with the professional liability carrier,
report in the Lawyer Annual Report or Paralegal Annual Report on each mixed trust account,
including interest earned, held at any time during the licensee’s reporting year

-3-
Ch 2: Professionalism [5-7]
Duties [5LR]
[5LR]


[5R]

[5R]

[6L]

[6L]

[6R]

7(R)

Integrity – r.2.1-1
Courtesy, Civility and Good Faith rr.5.1-5 and 7.2-1 and commentary must serve public in a manner
that inspires confidence and respect. Where possible, even the appearance of impropriety should be avoided
Advancement of the Legal Profession – r.2.1-2 and commentary: Should be encouraged to engage in
pro bono activities, volunteer positions [commentary p.886-87]
Lawyers and the Ontario Human Rights Code – r.2.1-1 and commentary r.6.3-6.3.1: to recognize the
diversity of the public who they serve 
comply with Human rights code
Discrimination – r.6.3.1 and commentaries - lawyers shall not discriminate based on any of the grounds
set out in the Code [commentary pp.965-67]
Harassment r. 6.3, commentary r.6.3.1-1 and r.6.3.1-3; Lawyers shall not harass a colleague, staff
member, client, or any other person based on a prohibited ground and shall not engage in sexual
harassment
Equity Initiatives and Strategies: best practices and model policies to guide lawyers in promoting equity
and diversity in all areas of their practice.
Discrimination and Harassment Counsel: The Law Society provides a DHC to anyone who may have
experienced discrimination or harassment. It is funded by the Law Society but completely independent of
the Law Society
Ch 3: Who is the Client [9-13]
Prospective Client
[9LR] commentary
at p. 881-82]


Anyone seeking advice on matter invoking a lawyer’s expertise
2 Duties to Prospective Client: 1) To protect any confidential info; 2) to avoid potential COI
Becomes Client
[9R]


Lawyer agrees to render legal services (or client reasonably concludes this)
o Retainer Agreement – formal or informal
o Duty to be Competent
Who can instruct lawyer- 3rd Parties related to Client? [11L]
o Ex: Friend, family member, third party who pays for services, or where lawyer reps more than one client on
same matter
o Ensure no Misunderstanding
 Meet with client privately to obtain direction re: 3rd party
 Confirm in Writing with Client
3rd Party is ALSO a Client or authorized to give instructionLawyer may take instructions or reveal information

Client belonging to entire firm despite if a lawyer handles aspect of matter
duties owed to all clients

Retained to rep 2 or more client in SAME matter 
must ensure NO COI exists
o If conflicts develop: lawyer cannot continue to act for both or may have to withdraw completely
Consent in Writing:
o That client understands Joint Retainer and its limitation:
o Instructions: as to which party is permitted to direct the lawyer (one, some, all)
Limitation:
o even if parties consent, lawyer should not act where it is likely clients will disagree
o Conflict arises After Retainer: if not resolved, lawyer must withdraw, advise client, unless client previously
agreed that lawyer may continue to act for one or some

Firm Client
[10L]
Joint Retainer
[10R-11L];
commentary pp.
911-13


Authorized Reps
[11L]; commentary
p. 900]
Third Party
[11L]
Client is Org
[11LR]
Commentary p. 895]

Person Lacks Legal Capacity: Lawyer must determine who lawful authorized rep is (LG, Attorney, Trustee)
o Confirm with Rep: if acting for individual only or for both (if both, joint retainer rules apply)

Lawyer should meet client privately to obtain direct ion as to how the lawyer should deal with the third party.



Confirm in Retainer Agreement- which officers, directors, shareholders, employees can give instructions
If Change to who can instruct: put this in writing as well
Lawyer acts for Org Not person: but can be the person as well
joint-retainer rules apply
Limited Scope
[11R]

Retained for Limited Services: must advise to nature, extent and scope of services
o Owed same duties of: competence, confidentiality and avoidance of potential COI
-4-
commentary
pp.892-93
Phantom Client
[9R-10L]
Unrepresented
Parties
[11R-12L]
commentary p.
977]
Client
Identification

Document Terms of Engagement


No Retainer- But client believes they are being represented by lawyer and lawyer is oblivious
Protect Yourself: confirm in writing, inform 3rd parties, discourage clients from relaying info to 3 rd parties

Ensure: this person understands you are not acting for them
can’t rep parties on more than 1 side of dispute

Obtain basic info of client and verify identify
o Identification
 Individual: name, address, phone, business address and phone, occupation
 Organization: full name, address and phone number and contact person: name, position, contact
o Verification
 Individual: verify immediately after engaging or giving instructions in respect of the receipt,
payment or transfer of funds. [12R]
 Driver’s license, passport, or birth certificate that is not expired. Not a health card.
[13L].
 Organization: 60 days to verify from time lawyer engages or gives instruction or acts on behalf of
the organization to receive, pay, or transfer funds. [12R]
 Formal records, business registration, obtain written confirmation from Gov’t [13L]
 Verify identity of individual who provides instructions immediately after engaging in the
funds transfer activity [12R]
 Name and occupation of each director unless they are securities dealer [13L]
 Name and Occupation of each person who owns 25% or more shares in org [13L
[12LR]
[12R-13LR]
[Read in
conjunction with
by-law 7.1 Part III
at pp. 999-1008]
Record
[13Rl]
Record Retention: For the longer of
 Duration of professional relationship and for as long as necessary so long its necessary
 6 years following completion of work lawyer was retained for
Withdrawal
[13R]

Illegal or Dishonest: if lawyer knows/ought to know client is shady , lawyer has a duty to refuse to act
Ch 4: Competence [15-17]
Competent
[Commentary pp.
889-91 and 938]
Quality of Service
[see quality of
service
commentary p.
892]



Has and applies: relevant knowledge, skills and attributes on client’s behalf (no standard of perfection)
6 Areas: knowledge, skills, judgment, client service and communication, practice management, and
professional development
Service that is: competent, timely, conscientious, diligent, efficient and civil
o Duty to be: courteous, thorough and prompt
o Competence: is only ONE factor, can be competent and still fail to provide adequate QoS.
-5-
Ch 5: Confidentiality [19-23]
Duty
[commentary pp.
902-907]


Ethical Obligation that is broader than solicitor-client privilege [19LR]
o Covers all info obtained by a lawyer during the course of and for the purpose of the retainer
o Privilege: is a subset of “all info concerning the business and affairs of the client in the course of
the professional relationship”
o Hold in Strict Confidence: all info concerning info of client in course of prof relationship
Duration: it is perpetual (even if client dies) 
both Clients and Prospective Clients [19R-20L]
o Unless: consent from client or required to by law to clients and prospective clients
Not Absolute: lawyer must disclose if required by law (subpoena, warrant etc) [20R-21L]
o To prevent death or serious bodily harm – disclosure is permitted (need reasonable grounds)
not
a mandatory rule [21LR]
o To Defend against allegations [21R]
o To collect fees [21R-22L]
o To secure legal advice about lawyer’s proposed conduct [22L]
o To detect and resolve conflicts of interest [22L]
Document the event and only provide what is necessary 
NOTHING MORE


Information recorded in any form: paper, email, video, audio etc.
Is confidential unless authorized by client to reveal


Duty is to the Organization and NOT any officer, director, employee etc
Whisleblower: cannot rat out corp, try to convince them to STOP, if NOT
WITHDRAW


Inclusions [19R]
Identity of Client
[19R]
Organizations
[22R and
commentary at
p.899-900]
Ch 6: Conflict of interest [25-36] Read with COI Rule, pp.907-11
Recognizing
[25LR]
Avoiding [25R]
Dealing with It
[26L-27R]
Disputes between
clients [27L]
Former clients
[27R]
Joint Retainers in
Estate and Real
Estate Matters
[29L-30R]



Results from competing or incompatible duties to various parties during prof resp. with client
Fiduciary Relationship: means that lawyer has a duty of loyalty to client
“Substantial Risk to Loyalty” – risk is significant and plausible (must be more than possible); rule
addresses the risk of impairment rather than actual impairment
 Must not act or continue to act where there is a COI, except where permitted by Rules
 If COI cannot be resolved: decline retainer or withdraw if already acting
Consent (from client), Independent Legal Advice (from experienced lawyer), Refuse to Act/Withdraw

Lawyer must not represent opposing parties in a dispute, even if they consent.

Duty not to act against former client in same or related matter even where former client’s confidential
info not at risk. To determine existence of conflict of interest, consider whether representing current
client in a matter includes acting against a former client.
Concerns cases where joint clients share primary common interest (e.g. successful transfer of title in
real property between them), but may have differing secondary interests [29L]
o Specifically concerns when these are prohibited and exceptions
Joint wills for spouses or partners [29LR] treat as joint retainer, follow r. 3.4-5 and commentary.
o Special advising must be made to spouses or partners at outset about what happens if one asks
to change the will later; would have to decline such a new retainer (with some exceptions)
Acting for borrower or lender generally prohibited for same lawyer or firm, but some exceptions (SEE
text) (rr 3.4-12 – 3.4-16 and commentaries) [29R]. For exceptions, lawyer must disclose all material info
(see text) before releasing or advancing funds [30L]. Also, may have to withdraw under joint retainer
breakdown (as with other joint retainers)
Acting for transferor and transferee [30LR]: generally prohibited for same lawyer but NOT for same
firm (rr. 3.4-16.7 – 3.4-16.7). Also, some exceptions to two-lawyer rule are listed.
o But even where exception applies and parties consent, lawyer should be cautious in accepting
such retainers, and avoid it when it is likely a contentious issue will arise or client interests will
diverge (high in real estate transaction).




-6-
Short-term,
limited legal
services (pro
bono) [30R-31L]
Transfer by
lawyer between
law firms [31L32L]

Conflict rules modified to allow short-term, limited pro bono services without need for conflict checks.
o Where firm resources used, client becomes firm client, normal conflicts rules apply.
o Knowledge of actual conflict of interest will disqualify the lawyer (no waiver).

Conflict may occur by lawyer transferring firms (brings confidential info) (rr. 3.4-17 – 3.4-23 and
commentaries); see text for when they occur [31L]. The risk is that info may be used against former
client. Where conflict exists, must take precautions per rules.
Where transferring lawyer actually has confidential info, firm must withdraw unless former client
consents or reasonable steps are taken to prevent disclosure by new lawyer [31R]. No exhaustive set of
“reasonable measures”; must use professional judgement. See r 3.4-20 for more detailed guideline.
Transferring lawyer shall not, without former client consent, participate in relevant matter, or disclose
any confidential info except as r. 3.4-20 requires to determine existence of conflict [31L]
Lawyers must use due diligence to deal with conflicts for new employees, lawye r or not [32R].
Restrictions on ability to enter financial transactions with clients: “transactions with a client” are any
transaction where lawyer and client are parties (rr. 3.4-27 – 3.4-28) [32L].
Borrowing from clients: prohibited with two exceptions: (1) when borrowing from regulated lender
(e.g. bank, insurance company, etc.), or (2) from related person (rr. 3.4-27 and 3.4-28.1) [32LR]
Indirect transactions: cannot indirectly participate in a transaction you cannot participate in directly (r.
3.4-28.2 and commentary) [32R]
Requirements for permissible transactions with clients: when lawyer enter transaction with clients,
can only do so where fair and reasonable to client (rr. 3.4-28, 3.4-29, and commentaries) [32R]. Lawyer
must also disclose any conflicting interest, obtain client consent, and (where appropriate) recommend
independent legal advice or representation.
Independent legal advice or representation: whether required depends on client and nature of the
transaction (see r. 3.4-29(b)(i)-(v) for scenarios; see text) [32L-33R]. Client must consent. Rules require
written confirmation that independent advice or representation was received or declined.
Lawyers in mortgage or loan transactions: prohibition on certain such transactions and on certain
direct and indirect participation in them (r. 3.4-33.1 and commentary, and r. 3.4-33.2-3.4-33.3) [33LR].
o Lawyer must adhere to a duty of care in selling or arranging mortgages or loans [33L].
o The lawyer must disclose all relevant material information to the client.
o Such transactions may give rise to a conflict of interest, and may require disclosure, client
consent, and (where appropriate) independent legal advice or consent).
Acting for clients in transactions with clients: should be cautious in accepting such retainers, as may
have self-interest conflict with client’s interest (r. 3.4-29, commentary [2]). Where lawyer doubts they
can put client interest first, should decline retainer (because “substantial risk” conflict rule in Rules).
Payment of legal fees: lawyer can receive fee payment as share, participation, or other interest in
property or an enterprise so long as lawyer recommends independent legal advice before accepting
retainer (rr. 3.4-34 – 3.4-35) [34L].
Guaranteeing debts: Lawyers prohibited form personally guaranteeing or securing client debts, with
three exceptions (see text).


Transactions with
Clients [32L-34L]










Other conflicts of
interest [34L-36L]


Personal relationships: no absolute prohibition on representing friend or relative; but be cautious, as
may impair professional judgement (r. 3.4-1 commentary) [34L].
o If can’t fulfil duty to provide disinterested & objective advice, should decline such client.
Professional judgment may also be impaired by sexual or intimate personal relationships with client;
o Must consider nature of client, relationship, risk lawyer will be called as witness [34R]. If
emotional ties risk impartiality, must avoid acting for them.
Affiliations and multi-discipline practices: ordinary conflict rules apply to affiliated entitles (rr. 3.411.1 – 3.4-11.3 and commentary, and r. 3.4-16.1) [34R]. Must check conflicts as if both practices were
-7-




Conflicts checking
systems [35R36L]

one. Before accepting, lawyer has special obligations (outlined in text). After meeting those, need client
consent to act. For multi-discipline practices or partnerships, lawyers must ensure non-licensee members
follow conflicts rules, whether the client consults for a legal matter or non-legal matter [35L].
Outside interests & public office: no prohibition, but can’t allow such interests to jeopardize integrity,
independence, or competence; be mindful, take appropriate action (ss. 7.3 and 7.4) [35L].
Gifts and testamentary instruments: Two more potential conflicts in estate law (rr. 3.4-38 – 3.4-39)
[35L]: (1) where a will has clause stating drafting lawyer must be retained for administration of estate.
o Must advise trustees in writing that clause is unenforceable, they may retain other counsel.
(2) where client requests that lawyer prepare a will giving lawyer or lawyer’s partner or associate a gift
or benefit from the client.
o Unless the lawyer or the lawyer’s partner or associate are family of the client, the lawyer must
not prepare such a will or cause it to be prepared.
Judicial interim release: Lawyers for accused in criminal matter may facilitate release from custody,
there are limits on what they may do (e.g. they can’t put up bail or act as supervisor unless they are
accused’s family and accused is represented by someone else) (rr. 3.4-40 – 4.4-41) [35LR].
Unrepresented persons: special duty to ensure unrepresented person does not think their interests will
be protected by the lawyer, and knows lawyer has sole duty to their client (r. 7.2-9) [35R].
Lawyers should use and maintain an up-to-date firm database against which all names (e.g. clients,
prospective clients, and adverse and associated parties) are checked [35L].
o Should update everytime prospective client contacts or consults firm.
o Should perform conflict checks before consulting prospective client, before accepting retainer,
and when new person becomes involved in the matter or a new lawyer joins the firm [35R -36L]
Ch 7: Duty to Your Client [37-42] (in addition to core duties listed on pg.1)
Fiduciary [37LR]
Fiduciary Relationship (most important) – trust and loyaltyneeds of client before their
ownSELFLESS
Agency Relationship – agent of the client
Business and Contractual Relationship – contract for legal services
Professional Relations – lawyer’s dealings with client are subject to the Rules
When Advising
[37R]
Duties When Advising Clients
 Honesty and Candour 
essential in order to build trust from client (r. 3.1-2, r 32-2
and commentary) [37R-38L]
 Encouraging Compromise or Settlement
where it is possible to do so on reasonable basis (r. 3.24 and commentary) [38L]
a. Must present ALL SETTLEMENT OFFERS to client ASAP
b. Cannot accept/reject – without advising client on offer and obtaining clear instructions
i. Confirm client instructions IN WRITING
 Threatening criminal, quasi-criminal or regulatory proceedings: lawyer not permitted to do this
or advise client to [38LR]
 Dishonesty or Fraud by Client [38R-39L]]: not knowingly assist (rr. 3.2-7 – 3.2-8
and commentaries) 
cannot be willfully blind
a. Tell client to stop (even if you are in-house), if not then withdraw
 Client with Diminished Capacity [39L] – ensure needs are met, take steps to have Rep
appointed (joint ret)
 Client under Duress or Undue Influence [39LR] – be alert to client duress or undue influence
when receiving instructions
a. Satisfy self client is acting voluntarily
b. In some cases, where lawyer believes client not acting voluntarily, may be unable to
follow instructions.
 Medical-Legal Reports- b/c of sensitive info, do not order UNLESS LAWYER HAS CONSENT
(rr. 3.2-9-1 – 3.2-9.3 and commentary) [39R]
 Title insurance [39R-40L]: in real estate conveyance, must advise that title insurance is
not mandatory (rr 3.2-9.4 – 3.2-9.7 and commentaries).
a. Not substitute for lawyer competence
-8-
b.



Client Property
[41-42];
commentary pp.
928-929; By-law
9 p. 1021]



In real estate insurance, lawyer has certain assessment and disclosure duties
before recommending title insurance.
c. Lawyer is barred from receiving compensation for recommending any insurer.
Reporting on mortgage transactions [40L]: special duties where lawyer represents lender where
the loan is secured by a mortgage on real property (rr. 3.2-9-8 – 3.2-9.9)
a. Lawyer must disclose duplicate registered mortgage and final report of transaction within 60
days or other time set by client.
Errors and Omissions – if lawyer has made that may be damaging to client (s. 7.8) [40LR]
a. Promptly inform client
b. Recommend client get Independent Legal Advice
c. Advise of potential need to withdraw
d. Promptly notify profession liability insurer
Official Language Rights- inform client of this if French Speaking or speaks indigenous language
(rr 3.2-A – 3.2-2B and commentary) [40R]
a. Be aware of language rights laws in jurisdiction.
Money, valuable property, client file (s. 3.5 and commentaries; By-Law 9) 
Lawyer should not
hold property unrelated to Retainer
Obligation to: care for property as a careful and prudent owner would
SCP applies to Client Property 
but it is limited by law 
ex: CRA search warrant
Ch 8: Fees and Disbursements [43-48; read with commentaries pp. 930-36]
Engagement with
Prospective Client
[43L]
Retainer [43LR]
Disbursements
[44L]
Timely Disclosure
[44L]
Written
Confirmation
[45L]
Statement of
Account [45R]
Funds in Trust
[45R-46L; see also
by-law 9 p.1028]
Securing Payment
[48R; commentary
pp. 923-25]
1.
2.
Scope of Legal Services
Costs of Service (fair and reasonable)
Means: the act of retaining a lawyer, the contract, the initial deposit/fee
 Deposited: into lawyer’s trust account at the start of the relationship
 Disbursements: can be paid out of retainer with consent from the client
 Cannot profit and they must be fair and reasonable




Disclose to client the cost of services in a “timely fashion” and confirm this in writing
No hidden fees
Retainer Agreement (signed by client), Retainer/Engagement Letter; or Confirming Memo to Client
Non-Engagement Letter – when lawyer does not accept client matter 
AVOIDS Phantom Clients

Lawyer should sign it to confirm that it was reviewed by lawyer before it was sent.


When lawyer receives funds from client
directly into trust account
Limitations of withdrawal



Holding and registering a mortgage against client property
Obtaining a charging order on client’s property
Asserting a common-law solicitor lien on client’s property (on client’s file) already in their possession
-9-
Ch 9: Managing Client [49-53]
Managing Client
Relationship
1.
2.
3.
4.
Managing Client
Expectations
1.
2.
3.
Screening [49LR]- decide if competent, if can meet client expectation, and if can fulfill duties
(encompassing)
Engagement/Non-Engagement [49R-50R] – outlines specifics in the letters
put everything in writing
and get confirmation
Implementation [51L]- timely, conscientious, diligent, efficient and civil 
core duties
Disengagement [51LR] – document and confirm in writing with the client Termination Letter
a. Obtain confirmation receipt
What does client want? [52LR] Confirm with client their expectations and what they are seeking services
for
Difficult Clients:[52R] must fulfill duties regardless, but may withdraw where there is a LOSS of
confidence
Client Communication:[53LR] Use plain language and consider the needs of different clients
Ch 10: Withdrawal From Representation [55-58; read with commentaries pp. 636-42]
Lawyer v Client
[55LR]
Optional [55R56L]
Criminal
Proceedings [56L57L]
Mandatory [57L]
Client: Can withdraw at any time and for any reason
Lawyer: cannot withdraw at any time and is restricted; need to meet two criteria
1. Good Cause; AND
a. Nature and stage of the matter
b. Relationship with client
c. Lawyer’s expertise and experience; and
d. Any harm pr prejudice to the client
2. On Reasonable notice to the client
a. If rules of court or tribunal apply, they will govern
b. If not, lawyer should protect client’s interest to best ability and should not abandon
c. Client should have adequate time to retain another lawyer
 Serious Loss of Confidence
o Trust between lawyer-client has diminished and it becomes difficult for client to serve client
o good cause + reasonable notice – both apply
o Cannot threaten to withdraw 
 Non-Payment of Fees
o Can withdraw if no serious prejudice would result
o Before withdrawal give client notice in writing of outstanding payments (must be reasonable)
o Subject to: discretion court or tribunal where it applies
1. Withdrawal Permitted
a. No prejudice to client would result
b. For non-payment of fees; or
c. Some other adequate cause
…if the interval between withdrawal and trial is ENOUGH TIME to get a new lawyer
d. Notify client in writing (preferable), provide statement of account to client, notify Crown counsel
in writing, notify Clerk/registrar, comply with applicable rules of the court
2. Withdrawal Not Permitted 
if there is insufficient time to allow client to retain other legal rep
3. Withdrawal with Permission of Trial Judge
a. If the interval between trial date and intended withdrawal is not sufficient, lawyer may withdraw
for adequate cause (other than non-payment) with the permission of court
 Client has discharged the lawyer
 Client’s instructions require lawyer to act contrary to Rules 
may amount to prof misconduct
 Lawyer not competent to continue
-10-
Leaving a Law
Firm [57L-58L]



Manner of
Withdrawal
[58LR]









Client has the option to
o Continue with the lawyer
o Remain with the firm
o Retain new legal representation
Lawyer and remaining lawyers must
o Ensure affected clients are given reasonable notice
o Advise affected clients of option to retain new legal representation
o Obtain instructions from affected clients re: whom affected clients wish to retain
Joint notification of lawyer and remaining lawyers preferable. Where not feasible, consider:
o Extent of lawyer’s work for affected client
o Affected client’s relationship with remaining lawyers
o Access to affect client’s contact information
Where no agreement as to who should provide notification 
both to provide notification
If client decides to remain with lawyer 
get written authorization for transfer of files
If client decides to remain with firm 
consider whether to charge client for time spent on transfer
Dissolution of firm: all of the above requirements apply
Government, Crown corporation, or other public body: all of the above requirements do not apply
Lawyer Must
o Notify the client in writing that lawyer is withdrawing and the reasons
o Deliver all papers and property to which client is entitled
o Give client all information that may be required
o Account for all funds of the client (including any refunds)
o Promptly render account for outstanding fees and disbursements
o Cooperate with successor legal practitioner to minimize expense and avoid prejudice to client
o Comply with all applicable rules of court
Effect a smooth transfer
o Can assert solicitor lien on file if there has been non-payment
o Obligations do not change when lawyer is leaving firm/firm dissolving
Duty of confidentiality = perpetual [58R; commentaries pp. 902-4]
o Cannot reveal reason for withdrawal to the successor lawyer, opposing party, court or tribunal
Written Confirmation of withdrawal and obtain further direction re- transfer of file [58R]
Ch 11: Duty to Others [59-66]
The Law Society
[59L-61L]
The Legal
Profession
[61L-62R]
To Lawyers and
Others
[62R-64R;
commentaries
pp.971-78]
Duty to:
 Focus is on measures to protect the public from inappropriate lawyer and paralegal conduct.
 Respond promptly and completely to LSUC
 Assist LSUC in preventing unauthorized practice of law [commentaries p. 981]
 Get permission to work with/employ person who is no longer authorized to practice law
 Submit to LSUC’s disciplinary authority [commentary pp. 886, 986]
o Professional Misconduct – conduct that tends to bring discredit to upon legal profession [60R]
o Conduct Unbecoming a Lawyer – same as prof misconduct
 Lawyer’s conduct in private personal capacity would impair the client’s trust
Duty to:
 Lawyer must inspire confidence, trust and respect in the community
 Report lawyer or paralegal misconduct [61LR] [commentary pp. 719-20]
 Encourage client to report lawyer/paralegal misconduct [61R] [commentary pp.970-71]
 Report criminal charges [61R-62L] – that have been laid against the lawyer or paralegal
 Report errors and omissions – advise client and LawPro [62LR; commentary pp.984-85]
Duty to:
 Courtesy and good faith- be courteous, do not take advantage of a lawyer’s slip [62R-63L]
 Communications – cannot be abusive, offensive, or otherwise unprofessional [63L]
 Communications with rep. person – prohibited except to provide 2nd legal opinion [63L-64L]
 Undertakings – do not give one that cannot be fulfilled 
it is a trust condition [64LR]
 Financial Obligations – on behalf of clients and to third parties [64R]
-11-
Uphold Integrity
of Profession
[64R-65R]
Administration of
Justice
[65R-66R;
commentaries pp.
958-59, 971]
Duty to
 Participate in activities related to: outside interest, public office, public appearance, multi-discipline
Duty to





Encourage respect for admin of justice
Disclose interest being advanced
Maintain the security of court facilities
Remain neural and supportive to all parties
Preserve impartiality of justice system when returning to practice from the bench
Ch 12: Advocacy [67-73]
Advocate [67R68L;
commentaries pp.
949-50, 954]
Defence Counsel
[68L, 73LR;
commentaries p.
949-50]
Prosecutor [68R;
commentary
p. 953]
Tribunal
[68R-70R;
commentaries pp.
950-51
Jury [72LR]
Duty to:
 Represent the client resolutely and honourably
 Raise every issue, advance every argument, ask every question to help client’s case
 Endeavour to obtain for the client the benefit of every remedy and defence authorized by law
 Never waive or abandon client’s legal rights without client’s informed consent
 Avoid frivolous or vexatious claims or strategies
 Avoid/discourage client from using strategy designed to harass or delay the other side
 Not conceal, destroy or alter incriminating physical evidence



Protect client as far as possible from being convicted of an offence (unless justified by evidence)
Don’t put forth a defence that is FALSE or FRAUDULENT
Client Admits Elements of Offence
o They must be made voluntarily to the lawyer and lawyer is convinced they are true
o limits the defences lawyer can put forward
Agreement on Guilty Plea [ 73 LR, r. 5.1-7-5.1-8]
 Advise client about prospects of acquittal or finding of guilt
 Explain how guilty plea may affect client’s life
 Inform client court not bound by any agreement on a guilty plea
 Admission is voluntary – admits both factual and mental elements
 Instructs lawyer to enter agreement of guilty plea
o Get in writing from client
Cannot enter guilty plea if:
 Client denies involvement but hopes for a lesser sentence from entering the guilty plea


advocate for the public and administration of justice
See that justice is done through fair trial
Lawyer Shall NOT:
 Abuse the tribunal process [68R-69L]
 Mislead the tribunal [69L]
 Influence the tribunal [69LR]
 Engage in dishonest conduct [69R]
 Mistreat or influence witnesses; and [69R]
 Appear under the influence of alcohol or a drug [69R]
 Shall not counsel or participate in concealment, destruction or alteration of incriminating physical
evidence [69R-70R]
 R. 5.5-2 and R. 5.5-4
 A lawyer is prohibited from communicating with or causing another to communicate with anyone the
lawyer knows to be a potential or actual juror—applies before and during trial
 Duty to notify the court if the lawyer believes that she has information that discloses improper conduct
by a juror.
-12-
Witnesses
[70R, 72R]





Sympathetic
Witness [71R;
commentaries pp.
956-57]


Unsympathetic/
Adverse in
interest [71R-72L;
commentaries pp.
956-57]




R. 7.2-6
Communication with witnesses is governed by r. 5.4-2
Neutral Party- neither party ‘owns’ or has control over a witness
Witness does not have to speak to lawyer if they do not wish
Lawyer—s. 5.2—rules do not permit a lawyer to represent a client in a matter and appear as a witness
in the same matter.
Witnesses whose testimony supports the cause of the lawyer’s client
During cross-exam by lawyer of sympathetic witness, lawyer may only discuss with witness any
matter that has not been covered in the examination up to that point
During re-examination by opposing legal practitioner of sympathetic witness, the lawyer should not
discuss evidence to be given by that witness during re-examination
During examination-in-chief by another legal practitioner of unsympathetic witness, lawyer may
discuss the witness’s evidence with that witness
During the lawyer’s cross-exam of another party’s witness who is unsympathetic to the lawyer’s cause,
lawyer may discuss witness’s evidence with that witness
During re-examination by an opposing legal practitioner of a witness who is adverse in interest, the
lawyer may discuss the evidence with that witness
-13-
BUSINESS LAW: CALCULATION, TAX RATES, AND FORMULAS
Income Tax Calculation Formulas
Capital Gains 147LR:
Capital Gain = [Proceeds of Disposition – Aggregate ACB (Initial Adjusted Cost Base + Cost of Sale)]
 If X > 0 there is a gain, if X < 0, there is a loss.
 Taxable Capital Gain = 50% (0.5) x CG.
Capital Losses 147R
 Capital Losses = [ACB + Expenses] – POD.
 Capital Losses – can be carried forward to other years, back 3 years, forward INDEFINITELY. Only offsets capital gains.
 ABIL – can deduct against any income. 10 years, if expired, becomes net capital loss – NCL deductible only against CG. (154R)
Shares: Corporate Paid-up Capital Calculation 200R:
 CURRENT PUC/share = [Consideration in Stated Capital of Shares + (Number of new shares issued x Price of New Share)]/TOTAL NUMBER OF
SHARES.
 Current PUC = [Consideration in Stated Capital of Shares + (Number of new shares issued x Price of a New Share)]
Purchase or Redemption of Shares – Tax consequences for SHAREHOLDER - Income Tax Consequences 204L-205L
 Deemed Dividend = Redemption proceeds – PUC
 Capital gain/loss on deemed disposition = Adjusted proceeds (equal to redemption proceeds – deemed dividend) – Adjusted Cost Base
o Note: “adjusted proceeds” prevents double taxation: taxpayer is already taxed on the deemed dividend and should not be taxed a second time;
deducting the deemed dividend prevents that money from being taxed again as a capital gain
o Note also: taxpayer can deduct capital losses against capital gains
Reducing Stated Capital: deemed paid dividends to SH
CCPC/Private corp: 210R-211L
 Deemed Dividend to Shareholders = Redemption price – PUC of the shares
o Pro Rata Inclusion: All shareholders of the class are deemed to receive this deemed dividend
 Shareholder’s deemed dividend = [% ownership of class of shares] x [total deemed dividend distributed by corp]
o Corresponding ACB Reduction: Shareholder receiving a deemed dividend also sees his/her ACB reduced
 ACB reduction = [% ownership of class of shares] x [PUC reduction (i.e. tax-free return of capital)]
-14-

Note: If the ACB reduction produces a negative number, the taxpayer realizes a capital gain equal to how much the ACB
reduction exceeds taxpayer’s original ACB
Public Corp: 211LR
 KEY DIFFERENCE: deemed dividend = total amount paid to shareholders [i.e. not redemption price - PUC]
o Since there is no tax-free reduction in PUC, there is also no reduction in ACB for the shareholders
Share Prices - Merger/Amalgamation p. 225LR
 Aggregate ACB of old shares (regardless if preferential or common) is carried over after the amalgamation to NEW SHARES (aggregate of all series,
class, types of new shares) (225R)
 FMV/ACB of Old Shares is distributed on a pro rata basis to the new shares, the respective distribution of the FMV is done on a pro rata basis – e.g.
100 shares worth $200, 50 common, 50 preferential, then FMV of 50 common shares is $100, FMV of 50 preferential share = $100. Likewise, ACB
respectively is distributed on a pro rata basis as well: $50 ACB of CS, $50 ACB of PS, total of original $100 ACB of old shares.
 Principle: PUC of New Share = PUC of Old Share
PUC – Merger/Amalgamation p. 225R
 IFF Corp A and Corp B do not own any shares in each other  PUC Amal = Corp A PUC + Corp B PUC
 IFF Corp A and/or Corp B is a subsidiary of the other  PUC Amal = PUC of non-subsidiary corporation (PUC of subsidiary corp is not taken into
account)
Corporate Arrangement of Share Capital s.86 ITA: p.227LR
SH cost of New Shares = ACB of old shares - FMV of non-share considerations
 If there is more than one class of New shares issued, the ACB is pro rated based on FMV of the New Shares.
 FOR NEW CLASS OF SHARES: [IF THERE IS NO NON-SHARE CONSIDERATION] Same Disposition Calculation Result as the Former
Shares. E.g. if old FMV to ACB ratio is 2:1, then the new shares in EACH class will also have a 2:1 FMV to ACB ratio.
Calculation w/ Non-Share Considerations (227R)
 Former Shares: ACB = 100, FMV = 300 (50 non-share consideration)
 ACB of New Share: (ACB of old share – FMV non-share consideration) = 50
 Capital gain on new share = 250 – 50 = 200.
s.86 ITA Inapplicable (228L): FMV of Former Share > FMV of New Corporate Consideration
 FMV of new share is deemed to be less than FMV of no-share consideration +FMV of former shares.
 Thus, no capital losses are possible.
-15-
Corporate Windup – Disposition of Shares Calculation: 232LR
Dividend on Disposition = FMV (cash + other assets) – PUC of shares reduced by distribution
POD (proceeds of disposition) for shares = Component of Redemption Proceed NOT TREATED AS DIVIDEND (FMV – Deemed Dividend) – Original ACB
Example: PUC = 100, ACB = 200, FMV of assets received from corp = 250
1. Dividend on Disposition = 250 – 100 = 150
2. Component of Redemption Proceed NOT TREATED AS DIVIDEND  (250 FMV – 150 Dividend) = 100
3. POD = 100 CRP-NTD – ACB (200) = -100 CAPITAL LOSS.
Windup – Subsidiary- ITA s.88  Wind-up of a wholly-owned subsidiary into parent p. 233LR
s. 88(1) allows a rollover where a subsidiary (taxable Canadian corporation) is being wound up into a parent (90%+ shares)
No capital loss possible, only capital gain is possible (233R)
ONLY WHERE Parent’s ACB cost of acquisition of subsidiary shares/property is GREATER than Aggregate (cash on hand – all debts) ACB of
subsidiary PROPERTY
 Formula for parent’s increase in ACB (234L): Parent’s ACB – (cost of all property + total tax-freed dividends received by the parent on subsidiary
shares)
Example – Increase ACB is allowed for non-depreciable property owned by subsidiary (e.g. land)
 Parent acquires subsidiary share for ACB = $800  Condition to trigger this rule: Parent ACB > Subsidiary original ACB
 Subsidiary share original ACB = $500
 Subsidiary owns land FMV = $700  ONLY ASSET
 S.88 Rule permits $200 increase in Parent’s acquisition cost in land.
UCC Calculations: 410
 CCA = % (fixed, determined by class) x UCC (undepreciated capital cost – NOT FIXED) at the year end.
 Recaptured CCA = Original ACB – UCC, taxable at ordinary rate.
 Taxable Capital Gain/Loss = (FMV – ACB) x 50%
Estates Planning:
Estate Probate Tax: $5 per $1,000 = 0.5% on first $50,000; 1.5% for value on any left excess of $50,000. (p. 439L)
 EXCLUDED: property outside of Ontario, property owned jointly with Right of Survivorship, proceed of life insurance payable, benefits payable
under a “plan.”
-16-
BUSINESS LAW: DISCHARGE OF INDIVIDUAL BANKRUPTS
Automatic: not a personal
income tax debtor
First time bankrupt (i.e. never
bankrupt before) & NO s. 68
payments ordered
First time bankrupt & s. 68
payments ordered
Second time bankrupt & NO s.
68 payments ordered
Second time bankrupt & s. 68
payments ordered
Also: Bankrupt can apply for
discharge hearing
Non-automatic: bankrupt more
than twice + not personal
income tax debtor
Trustee apply for discharge
hearing
Bankrupt apply for discharge
hearing
Personal income tax debtor*:
can NEVER be automatically
discharged
First time bankrupt & NO s. 68
payments ordered
First time bankrupt & s. 68
payments ordered
Second time bankrupt & NO s.
68 payments ordered
Second time bankrupt & any
other case (e.g., s. 68 payments
ordered)
When entitled automatic discharge
Page
9 months from bankruptcy order (unless
objection filed)
282LR
If NO automatic discharge has occurred after 9
months then will be automatically discharged
21 months from date of bankruptcy (unless
objections filed)
24 months from date of bankruptcy (unless
objections filed)
36 months from date of bankruptcy (unless
objections filed)
Anytime before date of automatic discharge
282R
282L
282R
282R
282R
Not earlier than 3 months and not later than 1
year after date of bankruptcy
Anytime after bankruptcy commences
282R
282R
282R -283L
9 months after date of bankruptcy
282R -283L
21 months after date of bankruptcy
282R -283L
24 months after date of bankruptcy
282R -283L
36 months after date of bankruptcy
282R -283L
*A personal income tax debtor is a bankrupt with $200,000 or more in personal income tax debt and whose personal income tax
debt represents 75% or more of the bankrupt’s total proven unsecured debt.
-17-
BUSINESS LAW: FRAUDULENT CONVEYANCES & TRANSFERS AT UNDERVALUE
Jurisdiction
Elements
required to attack
as fraudulent
conveyance
Elements
required to attack
as unjust
preference
Presumptions
FRAUDULENT CONVEYANCES AND PREFERENCES AND TRANSFERS AT UNDERVALUE
Fraudulent Conveyancing Act (FCA)
Assignment and Preferences Act (APA)
Bankruptcy and Insolvency Act (BIA)
Ontario
Ontario
Federal
Set out in s. 2 of Act [285L]:
Set out in s. 4(1) of the APA (286R-287L):
Set out in s. 96 of the Act, “Transfers at Undervalue” are
open to attack. Elements needed to establish (290L). Note
Conveyance (includes gift,
Gift, conveyance, assignment transfer, payment
that different depending on whether dealing with an arm’s
grant, alienation, charge or
Of real or personal property
length or non-arm’s length party. In any case, both elements
encumbrance)
Made by a person when insolvent or unable to pay the
apply:
Real or personal property of
person’s debts in full or when the person knows that he is
disposition of property/provision of services;
the debtor (excludes property
“on the eve of insolvency” (biggest dif. between FCA and
held in trust and exempt
APA)
debtor received nothing OR Conspicuously less
property under s. 2 of the
With intent to defeat, hinder, delay, prejudice creditors
than FMV
Execution Act)
If “Arms Length”:
Made with the intent to
Transfer at under value established. if all of: w/in 1
defeat, hinder, delay or
yr of “Initial Bankruptcy Event”, debtor was
defraud creditors or others
insolvent @ transaction or made insolvent by it,
intended to defraud
- If “Non-Arms Length”:
est. if w/in 1 yr of “Initial Bankruptcy Event”.
ALSO est. if insolvent/rendered at the time and/or
intended to defraud
N/A
Set out in s. 4(2) of the Act, (287R):
Set out in s. 95 of the Act, (288R):
Gift, conveyance, assignment transfer or payment was made
conveyance; provision of services; charge on
by the debtor
property; payment made; obligation incurred OR;
judicial proceeding suffered
Transfer was made when the debtor was in insolvent
circumstances, unable to pay debts in full or with
debtor-creditor relationship
knowledge that debtor was on eve of insolvency
debtor was “insolvent person” at time of
Transfer must have been made with intent to give the
transaction
transferee an unjust preference over other creditors
For arm’s length transfers, trustee must prove that
the bankrupt intended to prefer transferee over
other creditors.
For non-arm’s length parties, no requirement for
bankrupt to have intended to prefer transferee
N/A
As per s. 4(5) of the Act, persons who are related are deemed
If action commenced within 60 days, transfer presumed to
not to deal at arm’s length  rebuttable presumption (applies
have been made with fraudulent intent and to be an unjust
to both preferences and transfers under value)
preference
Presumption in favour of plaintiff (short window)
As set out in s. 95(2) of the Act (289L):
Pressure cannot be used to rebut presumption
Where arm’s length transaction entered into w/in
3 months of initial bankruptcy event, and transfer
had the effect of giving preference to a creditor,
-18-
-
presumption arises that transaction was entered
into w/ requisite intent to prefer
Note that initial bankruptcy event on 289R.
Presumption is rebuttable (pressure is not grounds
for rebutting)
Also, see 289L-R for what constitutes a preference
(some dealings with secured creditors will not
constitute preferences, e.g.)
Unlike preferences, the BIA does not make a presumption
of fraudulent intent based on the fact of a transfer below
market value. Trustee would have to rely on the common law
to prove fraudulent intent.
Intent/Concurrent
Intent
On plaintiff (trustee, creditor) to prove
requisite intent. See badges of fraud p.
285R
See badges of fraud 285R
Exemptions
Conveyance can be saved by s. 3 of the
Act. Must satisfy both elements:
Property conveyed upon good
consideration; and
Conveyance made in good
faith to person who at the
time did not have notice or
knowledge of the intent to
defeat, hinder, delay or
defraud the creditors (ie. NO
concurrent intent) (See
286L)
For fraudulent conveyances, any one of these establishes an
exemption under s. 5(1) of the APA (287L):
Sale or payment made in good faith in ordinary course of
business to innocent purchaser
Payment of $ to creditor
Conveyance made in good faith in consideration of a present
actual payment of $
Conveyance by way of security for a present advance of $
Conveyance made in consideration of a present actual sale
or delivery of goods or other property where the $ paid or
the goods or other property sold or delivered bear “fair and
reasonable” relative value to consideration provided
Remedy
-
Void as against creditors or
“others of the transferor”
Property becomes available
for execution or seizure by
creditors
For unjust preferences:
Exemptions summarized above also protect certain
transactions from attack under s. 5(1)
Payment of $ to creditor creates broad exception
As per s. 5(5)(c) Good faith exchange of security of one
kind for another as long as debtors estate is not lessened in
value
As per s. 5(5)(d), security given to creditor for pre-existing
debt where creditor made advance on the basis that advance
would enable debtor to continue in business
Same
Conveyance is void
-If outside of 1 yr/not insolvent, as above, T must prove
intent
- NO presumption when sale under market value, see 290L
- C/L: Badges of Fraud 285R
-Preferences: security given for new advances to the extent of
the new advance; preferred claims with priority over
unsecured creditors under s. 136 BIA (see 269a) and;
payments to secured creditors deemed not preference
For preferences, remedies available (see 290L):
Transfer found to be a preference is void as against
the trustee
If transfer was $ - trustee will be entitled to
judgment against creditor in amount received
-19-
-
-
Proper Parties
-
-
Limitation Period
Notes
-
-
Typically, an order is made by
court directing the transferee
to make the property available
to satisfy claims
Surplus remains with
transferee
See 286R
Creditors or others (judgement
creditors, secured creditors,
creditors with liquidated
claims, persons with
contingent or unliquidated
claims
Whether claims arose before,
at or after the time of the
transaction
Limitations Actions Act 2002
-
If transfer was goods – trustee entitled to judgment
in amount of value of goods (at time returned)
If preference was giving security, security is void
as against the trustee
For transfers under value, court may:
Decide that transfer under value is void as against
trustee
Order that party to transfer and privy to transfer,
pay to estate difference value of consideration
given by debtor and value received by debtor
-
Plaintiff must have been a creditor of the transferor at the
time the alleged fraudulent conveyance or unjust
preference was made
NB: unlike the FCA, persons who become creditors of the
transferor after the impugned conveyance or preference cannot
claim under the APA
Note: Remedies under BIA are only available to a trustee or
to creditors who have taken an assignment of the trustees
rights under s.38 (see 284R)
Trustee to challenge Transactions of the Debtor (could likely
be creditor though if acting as Trustee)
- Creditor can make creditor’s application under s. 38
(creditor’s application usually required to be on notice to all
other creditors)
-
- Limitation Actions Act for Preference from recent case 
so trustee in bankruptcy must commence a proceeding under
s. 95 w/in 2 years of the day on which the claim was
discovered by the trustee
Easiest to establish because no requirement to
prove fraudulent intent of the transferor and the
concurrent intent of the transferee
Preferred over provincial routes
Limitations Actions Act
APA requires challenging party to prove at the time of the transaction,
the debtor was insolvent, unable to pay debts in full or knew that it
was on the eve of insolvency
-20-
BUSINESS LAW: PURCHASE AND SALE OF A BUSINESS (TAX)
TAX NOTES
Purchase and Sale of a Business
Asset Purchase Considerations (406-410) - Allocating the Purchase Price: (407L)
Note: Vendor will try to minimize tax liability in the year or sale, purchaser will try to minimize tax liability in subsequent years
Vendor’s Preference (order)
1. Non depreciable capital property (land)
2. Depreciable capital property  little or no
recapture of CCA
3. Eligible capital property
4.
5.
Depreciable capital property
Inventory and other assets that will give
rise to a full income inclusion
Purchaser’s Preference (order)
1. Inventory
2. Depreciable capital property (classes that
have a higher rate of CCA)
3. Depreciable capital property (classes that
have a lower rate of CCA
4. Non depreciable capital property (land)
Inventories
● Usually sold at book value and ITA consequences are minimal
● Vendor: Gain or loss is on income account, not capital account
● Purchaser: Cost of inventory is deductible
Building
● Vendor: Include CCA recapture in income. Recapture = difference between building’s UCC and the lesser of (i) the
portion of the purchase price allocated to building, or (ii) the capital cost of the building.
● Vendor: If sale price > capital cost = capital gain; If capital cost < UCC = terminal loss
Land
● Vendor: Capital gain or loss  sale price – ACB
● Vendor: ½ of capital gain is taxable; ½ of capital loss is deductible
Machinery and Other Depreciable Property
● Recaptured CCA (ordinary income) = original cost – UCC
● Capital Gain = purchase price (FMV) – original cost
Asset Purchases from Shareholders: Section 85 Election (214R-216R)
1. Eligibility Criteria
a. Parties
i. Transferor = any taxpayer qualifies (includes persons, corps and trusts)
● s. 85(2) permits a partnership to transfer
ii. Transferee = Corporation incorporated in Canada or corporation resident in Canada
b. Which assets qualify?
i. Any capital property (depreciable and non-depreciable, excluding real property except as per (v))
ii. Canadian and foreign resource properties
iii. Inventory (except real property that is inventory, an interest or an option in respect of real property)
iv. Goodwill and intangible property (until December 31, 2016)
v. Real property (owned by a non-resident that is used in a business carried on by the non-resident)
c. Share Consideration
i. Transferor must receive at least one share in capital stock of purchasing corporation
ii. Can also receive non-share consideration (e.g. cash, promisory note, mortgage, etc.), but this cannot exceed
“tax cost” of transferred asset
2. Claiming the Rollover
a. Transferor and transferee must jointly execute and file the prescribed election form.
b. Must specify an elected amount. Generally equal to vendor’s cost amount
c. The earliest of the days on or before which the transferor and transferee corporation is required to file taxes
Note: corp tax return must be filed within 6 months of year end (s.150(1)(a))
-21-
BUSINESS LAW: TAX APPEALS CHART
Tax Decisions APPEALS CHART for business and estates law
*For income tax appeals to the TCC (exclusive jurisdiction) see pg. 170 (informal procedure vs. general procedure).
Decision-maker
Minister of Revenue
(Ontario) or CRA
Type of decision
Appeal mechanism and
reviewing body
Leave requirement, timelines &
parties to appeal
Reference
Ontario CORPORATE TAX
ASSESSMENTS made after April
3, 2008
Appeals and objections go to CRA
FIRST; however, appeals that were
already in progress on that date (April
3, 2008) remain with the Ontario
Ministry of Finance, while objections
in progress are finalized by the CRA.
*If objection and appeal has been
dealt with by CRA, can file appeal
with Ont. Superior Court of Justice
(see below )
With respect to appeals of Ontario
corporate tax assessments to COURT,
corporate taxpayers will continue to file tax
appeals with Ontario Superior Court of
Justice. Copy of notice of appeal is to be
served on the Minister of National Revenue
(MNR) (via registered mail to Assistant
Commissioner, CRA). Filing and service
must be completed within 90 days from the
date the CRA confirmed an assessment or
has reassessed the taxpayer.
Business
Pg. 165-166 (1.2)
**For income tax appeal notice of
objection (step 1) or appeal to the
TCC (step 2) see pg. 167-171 (2.4 &
2.5).
CRA
DISPOSITION ON APPEAL or
objection to Ontario
CORPORATE TAX
ASSESSMENTS
Superior Court of Justice
Must have first filed an objection and appeal
with the CRA (dealt with by TCC); serve
notice of appeal on the federal Minister of
National Revenue via registered mail within
90 days of a confirmed assessment or
reassessment
Business
Pg. 165-166 (1.2)
Minister of Revenue
(Ontario) [Minister of
Finance]
[ESTATES] Assessment for
additional estate administration
tax owing
The estate trustee is entitled to
challenge an assessment for
additional estate administration tax &
if the Minister confirms the
assessment, to appeal the assessment
to the Superior Court of Justice
No leave requirement mentioned; estate
trustee may appeal
Estates
Pg. 521 (2.7.1)
-22-
Minister of National
Revenue (federal)
(MNR)
MNR issues a nil assessment (no
tax, interest, or penalties payable)
No appeal available
N/A. However, a taxpayer may request the
MNR to determine the amount of certain
losses (notice of determination (see below
))
Business
Pg. 166-167 (2.2)
MNR
Determination in respect of any
non-capital loss, net capital loss,
restricted farm loss, or limited
partnership loss
CRA Appeals Branch
“Afterwards, the provisions of the ITA
dealing with taxpayers’ appeals from
assessments apply to the MNR’s
determination.”
Business
Pg. 166-167 (2.2)
MNR
Assessment (taxpayer is an
individual or a GRE)
Notice of objection to the assessment
(CRA Appeals Branch). Must be
served on the MNR.
Notice of Objection must be filed on or
before the later of: (A) the day that is one
year after the balance-due day of the
taxpayer for the year AND (B) the day that is
90 days after the day of mailing of the notice
of assessment.
Business
Pg. 167-168 (2.4.1).
*See pg. 168 for how/where to file notice &
applications for extension of time (2.4.2)
MNR
Assessment (taxpayer is e.g. trust
or testamentary trust other than a
GRE)
Notice of objection to CRA Appeals
Branch
Notice of Objection must be filed on or
before the day that is 90 days after the day
of mailing the notice of assessment.
Business
Pg. 167-168 (2.4.1).
MNR
Refusal of application for
extension of time to file notice of
objection
Apeal to Tax Court of Canada (TCC)
However, NO APPLICATION for an
extension may be made after the expiration
of 90 days after the day on which
notification of the decision was mailed to the
taxpayer.
Business
Pg. 168 (2.4.4)
(or failure of MNR to respond to
such application after 90 days)
MNR
Failure to provide disposition (i.e.
decision) on objection to
assessment within 90 days
Appeal to Tax Court of Canada
MNR
Notice of confirmation,
reassessment or additional
assessment in disposition of
objection of assessment
Appeal to Tax Court of Canada
Business
Pg. 168 (2.4.5)
Notice of objection to assessment or
reassessment NOT required; direct appeal to
TCC within 90 days of mailing of
notification of decision. Can apply to TCC
for extension of time for appeal within 1
year of said date.
Business
Pg. 168-169 (2.5.1)
-23-
Tax Court of Canada
(TCC)
Judgment under informal
procedure
Decision not open to question or
review except on a limited appeal
under the Federal Courts Act.
Business Pg. 170
(2.5.3(a))
[Informal Pro APPLIES when: (1)
aggregate of tax and penalties is
equal to or less than $25,000; (2)
amount of loss is equal to or less
than $50,000 OR (3) subject
matter is only re: interest and
taxpayer has elected to use
informal procedure.]
Tax Court of Canada
Judgment under general procedure
[General Pro APPLIES to all
other income tax appeals institute
after Dec 31, 1990 (except for
trial de novo appeals in the FC)]
Decision can be further appealed to
the Federal Court of Appeal; and with
leave any further appeal to the SCC
Must be filed within 30 days of the TCC
judgment or order.
Business
Pg. 170 (2.5.3(b))
-24-
BUSINESS LAW: TAX TIDBITS
Tax Tidbits That a Commercial Lawyer Should Know
Purchase and Sale of a Business
1. The Vendor likes a share sale (404R-405L):
a) No recapture of capital cost allowance (CCA) on depreciable assets.
b) If shares are qualifying small business corporation shares, the Vendor may be able to claim the
$800,000.00 capital gains exemption. The definition of qualifying small business corporation shares is
complicated, but essentially they are shares of a Canadian controlled private corporation at least 90% of
the assets of which are used to primarily carry on an active business in Canada (primarily = at least 50%).
2. The Purchaser likes to purchase assets (405R):
a) No hidden liabilities.
b) Stepped up cost base for assets (therefore a larger depreciation/CCA claim).
c) Usually has to pay a higher price than when purchasing shares because of the tax advantage.
*BUT see 405R – when preferences of each may change
3. Sale of non-depreciable assets (e.g. land, shares) to a third party give rise to a capital gain to the extent that the
proceeds of disposition (PD) exceed the adjusted cost base (ACB) + selling costs. Capital gain is ½ taxed (147L).
PD
$100
CG = $75 (1/2 taxed)
ACB
$25
4. A sale of depreciable assets (e.g. buildings and equipment) to a third party will give rise to a capital gain to the extent
that the proceeds of disposition exceed the original cost, and to recapture of CCA (which is fully taxed) to the extent
that the original cost exceeds the undepreciated capital cost (UCC) of the asset. Recapture brings back into income
capital cost allowance (the tax equivalent of depreciation) that has been claimed where the sale price shows that the
asset has not actually depreciated. (162R-163L)
PD
Original cost
UCC
$100
$75
$25
CG = $25 (1/2 taxed)
Recapture = $50 (fully taxed)
Corporate Share Repurchases:
1. Creates a deemed dividend, to the extent that the repurchase price exceeds paid up capital (PUC), regardless of
what the adjusted cost base is (204LR).
2. A repurchase/redemption/purchase of share for cancellation is treated as a sale or disposition of property by the
shareholder for income tax purposes (204R).
-25-
3. The capital gain or loss that will be realized by the selling shareholder is equal to the amount by which the proceeds
of disposition (sale price) exceed or are exceeded by the aggregate of the selling shareholder’s ACB of their shares +
costs/expenses of disposing shares (204R)
4. Paid up capital is the tax equivalent of corporate stated capital. However, there are circumstances where PUC will be
less than stated capital (eg. where shares of a corporation are issued in exchange for the corporation receiving property
– 160R)
5. If ACB is higher than PUC there could also be a capital loss (which can only be offset against capital gain, not
ordinary income), because the amount of the deemed dividend is deducted from proceeds of disposition for tax
purposes so as not to create double taxation. For example, this would happen if shares were issued to A for $1, he later
sold them to B for $50, and later still, when the shares were worth $100, the corporation repurchased them from B.
(204R)
Calculation of B’s capital loss
Redemption proceeds (or proceeds of disposition)
$100
Less: Deemed dividend*
(calculated by formula in bullet 1)
$99
Adjusted proceeds
$1
Less: ACB
$50
Capital loss
$49
*because the amount of deemed dividends ($99) is deducted from the proceeds ($100) in calculating capital gain or loss, there
is no double taxation
6. Similarly if “hi-lo” (high redemption value, low PUC) shares, such as those issued on many rollovers, are redeemed,
there will be a deemed divided to the extent that the redemption price exceeds PUC.
7. PUC and stated capital are averaged across the share class, so if shares of the same class are issued at different times
with different stated capital, the whole class is affected (200LR).
Section 85 Rollovers to a Taxable Canadian Corporation
1. “Rollover” means a transfer on a tax deferred basis without triggering capital gain or recaptured CCA. The transferee
takes the asset at the same tax values as they had in the hands of the transferor (161R-162L).
2. Can roll eligible property which includes the following: any capital property, Canadian and foreign resource
properties, inventory (except real property that is inventory, an interest in real property, or an option in respect of real
property) and real property (or an interest in real property/an option in real property owned by a non-resident used in a
business carried on in Canada) to a taxable Canadian corporation under section 85 of the Income Tax Act (ITA)
(215L). As of January 1, 2017, goodwill and incorporation costs are no longer eligible capital property for rollovers
(216, Figure 1). Taxpayer transferring assets or property to the corporation must receive at least one share as part of the
consideration (215L).
3. Parties must make a joint election as to the proceeds of disposition for tax purposes by jointly executing and filing the
election form (Form T2057). The election form must specify the elected amount for each asset transferred. See 216L217L for limits on the elected amount (3.5). Generally, to fully achieve a tax-deferred rollover (neither income,
recapture, nor capital gain), parties would select an elected amount equal to the vendor’s cost amount in the
transferred assets (215R). See 216, Figure 1 for a cost amount table.
a. e.g. Roll shares with a fair market value of $100 and an adjusted cost base of $25 into a holding company and
elect $25 as the transfer price. Take as consideration redeemable preferred shares of the holding company with
-26-
a redemption value of $100 and the same stated capital as the shares that were rolled in (cannot step-up the
stated capital on a non-arms length sale like this without creating tax problems). There will be no capital gain
to report. The adjusted cost base of the rolled shares will still be $25 in the holding company’s hands and the
adjusted cost base of the preferred shares issued to the transferor will be $25. When those preferred shares are
redeemed there will be a deemed dividend of $75.
b. e.g. Roll land (capital property) with a fair market value of $1,000,000 and adjusted cost base of $25,000 into
the corporation. Take as consideration a promissory note of $24,999 and one redeemable preferred share with
a redemption value of $975,001 and paid up capital of $1. The elected amount is $25,000 and no capital gain
needs to be reported.
4. Usually the elected amount equals tax cost (ACB or UCC) of the transferred asset. The paid up capital (PUC) of the
shares received plus the amount of non-share consideration cannot exceed the elected amount (217L). But on nonarms length share rollovers the non-share consideration plus the PUC of the share consideration cannot be greater than
the PUC of the shares rolled in (218L) (otherwise you create a deemed dividend under ITA section 84 – 211R-212L).
5. On a purchase of a business the Vendor could receive share consideration and the parties could do it as a section 85
rollover, but the corporation (purchaser) would inherit the Vendor’s tax cost of the asset (217R).
6. Because land inventory cannot be rolled into a corporation (215L), but can be rolled into a partnership under ITA
section 97(2), limited partnership structures are frequently used when land inventory is involved (132L).
Section 86 Share Exchanges
1. In the course of a reorganization of the capital of a corporation, a shareholder can exchange all his shares of a class for
property of the corporation for consideration that must include other shares of the same corporation (and may include
non-share consideration) without triggering tax (tax is deferred – 227L).
2. Often used for estate freezes (149L): e.g. fixed value redeemable preferred shares are created in the authorized capital
(so that it qualifies as a “reorganization”), Dad exchanges his common shares for fixed value preferred shares of equal
value and with a stated capital (PUC) equal to that of the shares that he gives up, and then the adult children (or a trust
for them) subscribe for new common shares that will increase in value as the corporation increases in value above the
value of Dad’s preferred shares.
-27-
BUSINESS LAW: TIMELINES
Element
Unpaid Suppliers: Written Demand
Timeline
Bankruptcy (see discharge chart)
15 days after bankruptcy or receivership begins [unless
extended].
Page
272LR
Note: Only goods delivered within 30 days prior to the commencement of
bankruptcy or receivership will be subject to right of repossession (only
applicable if goods are in possession at time written demand is received).
Service of Notice of Bankruptcy
Application (on debtor)
10 days before hearing
Notice of Dispute (debtor disputes the
bankruptcy application)
Notice of Bankruptcy (and notice of
first meeting)
First Meeting of Creditors
At least 2 days before hearing
275L
Sent by trustee to all creditors within 5 days of their
appointment
Within 21 days of appointment of trustee & No earlier
than 10 days after notice sent
Trustee may occupy for up to 3 months
277L
Occupy Leased Premises
Limitation Period
If Advanced Ruling Issued
Waiting Period (for notifiable
transaction)
Initial Return (i.e. post-incorporation,
amalgamation or continuance)
Initial Return for Extra-Provincial
Corporations
Notice of (Information) Change
Annual Return
Shareholder Meeting (first annual)
Shareholder Meeting (subsequent
annual meetings)
Notice of to Directors re: Directors’
Meetings
Financial Statements to Shareholders
Auditor’s Report to Shareholders
275L
Note: a bankruptcy application under the BIA is commenced in the Ontario
Superior Court of Justice
Competition Act
No application re: a merger can be made 3 years after
a merger has been substantially completed
If transaction is substantially completed within 1 year
of ARC, Commissioner cannot apply to the Tribunal
for review.
14-42 days (depending on type)
Corporate Law
Corporations Information Act
Within 60 days of event (i.e. incorporation,
amalgamation or continuance)
Within 60 days of carrying on business in Ontario
Within 15 days of the change
Within 6 months of fiscal year-end
MEETINGS
Within 18 months after incorporation
Within 15 months after last annual meeting
277L
281L
429R-430L
429R-430L
430R
262R
262R
262R
262R-263L
191L
191L
Note: special meetings can be called at any time. If shareholder is
exercising right to requisition a meeting the directors have 21 days to do so
following receipt, after which the shareholder can call the meeting in the
usual way (see. 4.3.6 on pg. 182)
10 or more days prior to date of meeting (if not
specified in by-laws)
Offering corporation: at least 21 days before annual
meeting of shareholders
Non-Offering corporation: at least 10 days before
annual meeting
Offering corporation: at least 21 days before annual
meeting of shareholders
Non-Offering corporation: at least 10 days before
annual meeting
187L
189R
189R
-28-
Shareholder Proposal
If matter is to be raised at annual meeting: at least 60
days before anniversary date of last annual meeting.
If matter is to be raised at special meeting: 60 days
before that meeting
Must be advertised at least 7 days before record date.
Notice of Record Date
190R
191R
Note: If no fixed date, the date for determining which shareholders are
entitled to notice is deemed to be either the close of business on the day
preceding the day on which notice is given or, if notice not given, the day of
the meeting.
Adjourned Meeting
NO NOTICE is required if adjournment is for less
than 30 days and the date of an adjourned meeting is
announced at the original meeting. If meeting is adjourned for
191R
an aggregate of 30 days or more by 1+ adjournments, notice is the same as
for an original meeting.
SHAREHOLDER REMEDIES
At least 14 days to directors
Notice of Derivative Action
Export Authorization (i.e. approval to
leave OBCA)
Instrument of Continuance (from
importing jurisdiction, i.e. Articles of
Continuance)
Management Information Circular
CONTINUANCE
Expires 6 months after the endorsement (unless within those
GOING PRIVATE TRANSACTION
Send to the holders of the affected securities not less
than 40 days prior to date of meeting called to consider
the transaction
Notice of Resolution (which
authorized winding-up)
Liquidator files prescribed from with
the Director
222L
6 months the corporation is continued under the laws of the importing
jurisdiction)
File with Director within 60 days of issuance
Articles of Dissolution (& consent
letter and filing fee)
193R
DISSOLUTION
Filed within 60 days of date of consent letter
222L
229L
230L
Note: the corporation is dissolved upon the date of the certificate of
dissolution
WINDING UP
Filed with Director within 10 days after the resolution
is passed and published in the Ontario Gazette within
20 days after the resolution is passed
Within 10 days of the meeting and publishes a notice
in the Gazette
230R
230R
(meeting is re: after liquidator has completed disposing of assets and
settling liabilities, a final meeting of shareholders is called where liquidator
accounts the winding up to the shareholders)
Corporation Terminates (is dissolved)
Employed less than 3 months
Employed less than 1 year
Employed 1-3 years
Employed for more than 3 years
3 months after date that notice is filed with Director
Employment Law
ESA: Notice of Termination (pg. 320)
None
At least 1 week notice
At least 2 weeks notice
2 weeks + 1 week for every year (max 8 weeks)
231L
334R
-29-
ESA: 50+ Employees Terminated in 4 week period
50-199 employees
8 weeks notice
200-499 employees
12 weeks notice
500+ employees
16 weeks notice
Employee must have completed 12 months of
CLC Unjust Dismissal Complaint
(CLC = Canada Labour Code)
continuous employment in order to make complaint,
and complaint must be made within 90 days of
dismissal
Application for certification
Application for certification - when
union is applying to represent an
already represented group of
employees
UNION (i.e. Labour Law)
Can be made at ANY TIME
 Where failed to make an agreement, within 1 year
of the union becoming certified
 During the last 3 months of the term of the
existing collective agreement
 If the term of the existing agreement is greater than
3 years, the last 3 months of the initial 3-year term
and the last three months of each year thereafter
334R
337L
339R
339R-340L
(same timelines apply for terminating a union’s bargaining rights - see pg.
330 section 14)
Application, Response, Vote
Strikes/Lockouts (when permitted)
Business Visitors (work-permit
exemption)
Franchise Disclosure Document
Franchisee Right of Rescission
Franchisor Compensates/Refunds etc.
Franchisee upon rescission
Notice of Intention to Make a Proposal
(NOI)
Projected Cash Flow Statement
Proposal
Extension of Time to File Proposal
Disclaimer of (commercial) Lease
Upon receipt of an application for certification,
employer has two business days to file response. If
OLRB orders a representation vote, it will take place
five business days after the app for cert. was filed.
12:01am on 17th calendar day following no-board
report
BUSINESS IMMIGRATION
If exemption applies, they can only be in Canada for a
period of less than 6 months
Franchise
Delivered at least 14 clear days in advance of such
party making any payment or entering into the
agreement
Within 2 years of entering the agreement
Within 60 days of rescission
Insolvency
Proposal under the BIA
Must send a copy to every known creditor within 5
days after NOI is filed
After NOI, debtor has 10 days to prepare and file
projected cash flow statement
Debtor has 30 days to file proposal with official
receiver after notice of intention
No individual extension can be made for more than 45
days at a time. Aggregate of all extension cannot
exceed 5 months for a total of 6 months (including the
initial 30 day)
Debtor can exercise right by giving landlord 30 days’
notice of disclaimer. Landlord must make application
for review within 15 days of notice if wishing to
challenge.
340R-341L
343R
346L
369R
369R
370L
386R
386R
387R
387R
390R
-30-
First Creditors’ Meeting
Court Approval Hearing
Trustee’s Report
Notice of Initial Order
Initial Stay
Within 21 days of filing proposal. Trustee must send
required materials to all known creditors and the
official receiver at least 10 days before the meeting.
Within 5 days after creditors accept proposal the
trustee must arrange an appointment with the court for
a hearing to approve the proposal. Notice to creditors
of hearing must be provided at least 15 days before
hearing.
Delivered to official receiver at least 10 days before
hearing and filed with court 2 days before hearing.
Proposal under the CCAA
Monitor posts to website and sends to every known
creditor within 5 days if the initial order
Not exceeding 30 days (discretionary)
390L
390R-391L
391L
396L
396R
Investment Canada Act
*Applies to the establishment of a new business in Canada or the acquisition of an existing business in Canada by NON-CANADIANS
Notification
Filed no later than 30 days after implementation of
investment.
429L
See also pg. 429L re: review directed by an Order-in-Council (21 days)
Partnership Declaration
Capital property
Non-capital property
From treaty protected country
PMSI Registration
BIA Notice
Interim Receiver Appointment
Foreclosure
Notice of Sale (Disposition of
Collateral)
Notice of Intention to Remove Fixture
OR Accession
Partnerships
Expires every 5 years, but may be renewed before
expiry date
Purchase and Sale of Business
Reserves
Maximum deferral for 5 years including the year of
sale (see also 10 years for QSBC shares or qualified
farming or fishing property is sold to a child)
Maximum deferral for 3 years including the year of
sale
Non-Resident Vendors
Notify MNR within 30 days of acquiring the property
Secured Transactions
Inventory: before possession
Equipment, Consumer Goods, Intangibles: within 15
days of possession
Receivership
Must give 10 days notice to debtor of its intention to
enforce its security (30 days for forest products)
(Usually) may only be appointed for up to 30 days
15 days notice of proposed foreclosure to all those
persons who would otherwise be entitled to receive
notice under notice of sale
Not less than 15 days prior to disposition. If the notice
is sent by registered mail, the recipient is deemed to
have received the notice 10 days following the
mailing, resulting in a 25-day notice period.
At least 10 days prior
127R
417R
421R
297LR
297L
322L
312L
313R
315L
315R
BIA Receivership Duties
-31-
Report Appointment of Receiver
Initial Report
Interim Report
Application for Review
Notice of Sale
Civil Action Limitation Period
Filing of private issuer or accredited
investor exemption
Re-Sale Restrictions (Hold Periods)
Non-Capital Loss Carrying
Capital Loss Carrying
Allowable Business Investment Loss
(ABIL)
Not-For-Profit - Information Return
Registered Charity - Information
Return + Public Information Return
Corporate Tax Return
Individual Tax Return
Trust Tax Return
Not later than 10 days after the appointment (to
Superintendent of Bankruptcy)
Immediately after taking possession
At least once every 6 months
Within 6 months after a copy of the statement of
accounts is provided to the Superintendent
Bank Act
At least 10 days prior to disposition
At least 30 days in the case of forest products
Securities
Offering Memorandum
Rescission: 180 days following the trade
Damages: the earlier of 180 days following discovery
of the misrep, 3 years following the trade
Within 10 days after trade
Resale Rules
Generally will not exceed 4 months from the later of
the date the purchaser acquired the securities pursuant
to a prospectus exemption and the date the issuer
became a reporting issuer.
Tax
Carrying
Forward: 20 years (for losses arising 2005 + after)
Back: 3 years
Forward: Indefinitely
Back: 3 years
Forward: 10 years (after which it is a capital loss)
Tax Returns
File within 6 months after fiscal year-end
File within 6 months of the end of its tax year.”
Within 6 months of their year-end
 By April 30 each year in respect of the preceding
taxation year (calendar year).
 Individual with business income (includes spouse
or CL partner) has until June 15 of the following
year to file.
Filed within 90 days after fiscal year-end
316R
316R
317L
317L
322R
242R
242R
243L
243R
160R
157L
154R
119L
119L
166L
166LR
166R
The yea-end of an inter vivos trust is Dec 31, the taxation year of a
testamentary trust cannot exceed 12 months
Estate Tax Return
Year of Death Tax Return
Normal Reassessment Period
Filed within 90 days after fiscal year-end
Died after October and before May: must file not later
than 6 months after date of death
Otherwise: April 30
Administration
3 years (4 years in certain cases)
166R
166R
166L
167L
[the MNR is precluded from reassessing after the above time from the day
of mailing of the original notice of assessment…the MNR may also
reassess at any time where a taxpayer has provided a waiver to the MNR
within the normal reassessment period and not more than 6 months have
passed since the waiver was revoked].
Notice of Objection
90 days after notice of assessment mailed
167R
-32-
[any other case than below ]
For individual or testamentary
trust (GRE), must be filed the
later of
Notice of Appeal (to TCC)
Apply within one year for
order extending time to file to
TCC
Notice of Appeal (FCA)
MNR Reply
Hearing
Decision
Seizure

The day that is 1 yr after the balance-due day of
the taxpayer year
 The day that is 90 days after the day of mailing the
notice of assessment
MNR Extension: 1 year after the objection period has
ended
TCC Extension: either 90 days after service of
application to MNR or MNR mails refusal
Within 90 days after:
 Notice of confirmation issued by MNR
following taxpayer’s notice of objection or
 Mailing of notice of reassessment
1 year of notice of reassessment or notification of
confirmation issued by the MNR
167R
Within 30 days of judgment
Informal Procedure
45 days after notice of appeal served
Not later than 90 days after MNR reply period ends
Within 60 days after hearing
30 days notice to taxpayer
170R
168L
168R
168R
168R
170R
171R
Note: no formal collection proceedings may be instituted during the 90-day
waiting period
85(1) Rollover Joint Election
85(1) Rollover Late Filing
Rollovers
Earliest Filing Deadline of either party
3 years after the original filing deadline and subject to
late-filing penalty
219L
149L
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ESTATE PLANNING: ESTATES CHARTS
ESTATE PLANNING – CH. 35
Lawyer’s
Duties
P. 433
1.
2.
3.
4.
5.
The will is drafted in language sufficiently clear and unambiguous.
There are no practical barriers in the way of the estate trustee’s administration of the estate.
Post-signing practice-to alert the client to future events that may require a review of the will.
The testator has mental capacity.
If the client is elderly-the lawyer must make a professional judgment as to whether he is prepared to take initial instructions from another family member and then
confirm capacity in a meeting with the testator to sign the will.
1. Attending to the funeral and burial arrangements.
Estate
Trustee
 The testator cannot bind the estate trustee by means of instructions in the will.
Duties
 ET has: i) control over the body; ii) authority to determine the place and manner in which funeral and burial will take place.
P. 441R
2. Proving the will (if necessary).
3. Collecting and protecting estate assets.
4. Paying creditors and satisfying liabilities (including taxes owing)
5. Distributing specific bequests and conveying devises of real property.
6. Distributing the residue of the estate.
7. Trustee will-establish and administer trust until final distribution.
Signing the A Formal Will
o MUST be signed at its physical end by the
Will
449 - 451
i. Testator AND
ii. At least 2 witnesses-each need sign only in the presence of the testator.
 Shouldn’t be spouse or beneficiary (raises issues of undue influence and can void the gift)
 An affidavit of execution is required by one of the witnesses.
o Another person-can sign in the testator’s presence and direction.
Holograph Wills
o A valid will in one’s handwriting.
o Does not require witnesses OR formalities of execution.
Distribution Ademption Rules (substituted property) – Ch. 35 P. 444LR and Ch. 42 P. 530R
Lapse Rules (people die in wrong order) - Ch. 35 P. 446LR and Ch. 42 P. 530L
Dependent o Intends to ensure that certain persons who were financially dependent upon the deceased during his lifetime are not put into dire straits by virtue of inadequate
provision – Part V - Criteria
Support
1. The claimant must stand in the right relationship to the deceased
Claim
 A legal or common law spouses; parent; grandparent, child, grandchild or sibling.
Ch. 35 2. Immediately prior to death-the deceased must have been i) actually providing support to the claimant; OR ii) under a legal obligation to do so.
P.436
3. The deceased did not make “adequate provision” for the claimant.
&
 Reflection of the claimant’s budgetary needs.
Ch. 43 – P.
 Moral considerations.
548LR Legal or common law spouse-equitable sharing of the family wealth.
549L
o Application must be commenced 6 months from date on which the certificate of appointment of estate trustee was issued
-34-
POWER OF ATTORNEY (Chapter 36 p. 453)
Scope
o
o
For Property (453, s.3)
A grantor may authorize the attorney to do anything in respect of
property that grantor can do EXCEPT make a will for the grantor.
o No jurisprudence to decide whether other testamentary
decisions (ex: beneficiary designations for RRSPs,
TFSAs, other ‘plans’) are governed by this
Limitations-the grantor can specify scope, duration, conditions.
Capacity
S. 4 of the SDA/Statute for Grantor
o Must be at least 18 years old when the document is signed-applies to
decisions to be made pursuant to the power of attorney.
o Under age of 18-grantor may be at the time the document is signed.
S. 5 of the SDA/Statute for Attorney
o Has the capacity to act with respect to property if he is at least 18 yrs
S. 8 of the SDA
 Sets out conditions for grantor to be capable of giving a continuing
power of attorney.
s. 9(1) of the SDA
o A person may be incapable of managing his own property AND yet
be capable of giving a continuing power of attorney.
Form &
Execution
Form
o Need not to be in any particular form.
Execution
o Two witnesses and both must sign. (s. 10(1) SDA)
o Excluded witnesses: spouse, partner, child, attorney or
attorney’s spouse or partner, person whose property is
under guardianship, under 18
o Before October 3, 1995-valid even if only has one witness as long as
it meets other requisites of the legislation.
Continuing POA terminated on occurrence of any of the following:
1. The attorney dies, or becomes
i. Incapable-the notice must be given to the grantor’s spouse, or
relatives that live in Ontario.
ii. Resigns - must give a copy of the resignation to the grantor.
2. A court appoints a guardian of the grantor’s property
Termination
For Personal Care (457, s.4)
To make decisions respecting the grantor’s “personal care” - health care, nutrition,
shelter, clothing, hygiene and safety.
When
o When HCCA applies, OR
o Attorney has reasonable grounds to believe the grantor is incapable
o Test for capacity-if not outlined in document-an assessment by an assessor
Health
o Places the attorney ahead of all the grantor’s relatives for purposes of giving or
withholding consent to a treatment.
If there is dispute between Co-Attorneys:
o Decision will be made by the Public Guardian & Trustee. (s. 21(1) HCCA)
s. 43 of the SDA
o Grantor must be at least 16 years old when the document is signed-applies only to
the decisions made.
o Under age of 16- grantor may be at the time the document is signed.
o Now, attorney MUST be at least 16 yrs old – s. 44 SDA
S. 47(2) of the SDA/Statute for Attorney
o A person may be incapable of personal care and yet be capable of giving a power of
attorney.
If a person provides health care for Compensation (s. 46(3) SDA)
o May not be an attorney UNLESS the person is
i. Spouse –includes common law of 1 year and shorter if there is a child.
ii. Partner-lived with grantor for at least 1 year in a close personal relationship.
iii. Relative-relations by blood, marriage or adoption.
Form
o Need not to be in any particular form.
Execution
o Two witnesses and both must sign.
o Excluded witnesses: spouse, partner, child, attorney or attorney’s spouse or
partner, person whose property is under guardianship, under 18
o Before October 3, 1995-valid even if only has one witness as long as it meets other
requisites of the legislation.
o
1.
2.
3.
4.
The attorney dies, becomes incapable or resigns UNLESS the document has
appointed a co-attorney.
A court appoints a guardian of the grantor’s person.
A new power of attorney is signed UNLESS there may be multiple POA.
The grantor revokes.
-35-
3.
Revocation
Authorized
expenditures,
gifts, and
loans
Standard of
Care
A new continuing power of attorney is signed (unless it states that
there may be multiple continuing POAs)
4. The grantor dies.
5. The grantor revokes the continuing POA - must be in writing.
Once attorney commences, resignation will not be effective until copy
given to grantor or any other attorney.
 Appointment can be revoked at any time if the grantor retains
capacity
 Must be in writing, formalities the same as making power of
attorney. S. 12(2) SDA
 Must act solely in the grantor’s interest
 May spend grantor’s funds for the support, education and care of
dependants or to satisfy grantor’s other legal obligations
 Property cannot be unduly depleted
 Charitable gifts permitted if specifically authorized in the document
An Attorney who receives Compensation
o Has the higher standard of a person in the business of managing the
property of others.
An Attorney who does not receive Compensation
o Exercise degree of care, diligence and skill that a person of ordinary
prudence would exercise in conduct of own affairs.
 Appointment can be revoked at any time if the grantor retains capacity
 Must be in writing, formalities same as making power of attorney. S. 12(2) SDA
 Requires an assessment by an assessor confirming capacity no more than 30 days
before the revocation is signed. (s. 50(4) SDA)
o
Required to act diligently and in good faith and to explain to the incapable
person the attorney’s powers and duties.
o In best interest of the grantor.
Compensation
 If document silent, attorney may claim compensation as prescribed by
legislation. – none exists currently
Minor Children (Chapter 38 p. 463)
Custody
The
Children’s
Law Reform
Act
P. 475-476L
Guardian of
Property
(P. 476L –
477L)
Guardian: Person who has guardianship of the property of the minor
Custodian: Not defined in the Act, but is the person appointed by the parent in his or her will. Appointed in will to have custody.
o The father and the mother are equally entitled to custody of the child.
o Permits the parent with custody of a minor child to “pass-on” the statutory right to custody.
o A parent’s appointment is at all times subordinate to the court’s supervisory role.
o Two parents having custody-the testamentary appointment will fall to the later of the two parents to die.
o If the parents die simultaneously-the only effective appointment will be one common to both wills.
o Best interest of the child prevails.
o Expires 90 days after the appointment effective; Apply to court within 90 days to make “more permanent” order of custody (pg. 475)
o Any person, anytime is entitled to apply for custody
o Testamentary capacity is subordinate to the outcome of a s. 21 CLRA application for custody.
o No inherent right to possess or control property of minor, not even parents. Apply to court for appointment as guardian.
o S. 47 CLRA – anyone may apply to court for guardianship
o One cannot make a testamentary appointment of a guardian of a minor child’s property-UNLESS one is a guardian of that child’s property.
o Testamentary appointment is temporary – 90 days
o The estate trustee- is generally required to pay into court the estate funds to which the child is entitled.
o Absent court appointment of guardian, minor’s property paid into court to credit of minor and held during child’s minority or until subsequent guardian apptmnt.
o Where no guardian of a child’s property has been appointed-the estate trustee may pay to a custodian for the benefit of the minor child up to an all inclusive
maximum value of $10,000
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Chapter 37- Procedure for the Court Appointment of Guardians for Mentally Incapable People
SEE PAGES 471-474 for Flow Charts
Guardian of Property
Assessments
Standard Procedure (463L-465L)
*not required, but to get finding of incapacity the
court wants a capacity assessment by a duly
qualified assessor (as the court needs clear medical
evidence of incapacity).
Can also use affidavits from at least two physicians
(See s.1.1.4 ‘Medical Affidavits’ on p. 464L)
Summary Procedure (465L-466R)
Requires two assessments, at least one by an official assessor (need to
state that person is incapable with respect to property, basis of that
opinion, in written statement)
Use two assessors OR one assessor and one person who has seen
alleged incapable person within one year prior to issuance of notice of
application
 Depends on availability of non-assessor and cost of assessor
Contact Capacity Assessment Office to arrange the assessment
 Assessor must be member of college listed in the
Capacity Assessment OReg 460/05
Assessment must be made during 6 months BEFORE the notice of
application to appoint a guardian was issued.
Note that there is a form for assessment where opinion of assessor or
other person laid out. If assessor says no person has to be appointed,
and other person disagrees, court might refuse order.
Hearing
Hearing is required
Initial Documentation to be Prepared
Proceeding commenced with notice of application
(must seek finding that person is incapable of
managing property)
See pp.465L – 466R
No hearing required- over the counter, application read by judge in
chambers
Notice of Application and affidavit of applicant (including exhibits) is
the core of the application record. Same as standard procedure BUT
need additional capacity assessments. Also, consent of each proposed
guardian.
Personal service of notice of application on the
respondents (incapable person, attorney under
continuing POA, guardian, attorney for personal
care, Public Guardian and Turstee, proposed
guardian of property if not applicant).
Relatives served by ordinary mail, not
-37-
Who can Start Application
Who can be Appointed
Evidence
Service of Application Record
Response to Service of Application
Record
Court hearing and judgment
automatically respondents (spouse, partners,
children at least 18, parents, brothers and sisters at
least 18)
Need not be proposed guardian of property, but
usually is (463L)
See ss 24(1)-(2) for prohibited people
-Affidavit- but such evidence is not to be on
“information and belief” except for facts that are
not contentious.
 See page 463R for what it should include
 Necessary if no viva voce evid
-Viva voce evidence.
-Management plans- key element of application,
reviewed by court in light of best interests of
incapable person
-Medical affidavits- not required, but need a finding
of incapacity to be appointed, and so generally this
is required in form of capacity assessment by dulyqualified assessor.
-Affidavits from at least two physicians
Personal service on respondents (or alt to pers
service)
Ordinary mail on specified relatives
SEE 464
Respondent- deliver notice of appearance
Specified Relatives- can become parties at any
stage.
Need finding that person is incapable, and
necessary for decisions to be made on person’s
behalf.
Judgment should include specific statement
appointing guarding.
Can have joint guardians.
Appointment can be for limited time or with
conditions.
Don’t HAVE to incorporate management plan, but
guardian has to act in accordance with plan, so best
to have it in judgment/as schedule.
Guardian can apply to court for directions.
See above re assessments
Notice of application issued after assessment.
Procedure same as standard.
Procedure same as standard.
Instead of hearing, applicant relies on statements from at least 2
medical assessors, or one assessor and one other person. One must
contain opinion that necessary to appoint guardian.
DUE to extra steps, rarely used.
Judges reluctant to declare incapacity w/out hearing.
After time for delivery expired, applicant can require that the registrar
submit the documents directly to a judge, and the judge makes a
judgment without a hearing or anyone appearing. The registrar is
REQUIRED to do this IF no notice of appearance has been delivered,
-38-
NOTE judgment often includes provisions re
passing accounts within specified period.
Should address costs.
appropriate documents, at least one statement says incapacity and
need someone to make decisions.
 Should include affidavit of service for notice of application.
 Does not need draft judgment, but can help.
 Need to set out costs in draft judgment if seeking them.
NOTE that notice of appearance must be filed “forthwith”, so hard to
know that no notice will/has been filed.
Three possible dispositions: judgment, additional evidence or hearing,
or order a trial.
Guardian of the Person
General
Standard Procedure (466R-468L)
Summary Procedure (468LR)
All the same steps as standard route plus two assessments by
assessors from the Capacity Assessment Office. They must meet and
assess 6 months before notice issued, and provide statements in
proscribed form, one of which has to state that person incapable and
needs someone to make decisions.
MUST be two ASSESSORS
Regarding how assessments are conducted, notice from assessorssame as summary with respect to guardianship.
Same material required EXCEPT not clear whether medical affidavits
are unnecessary due to fact that assessments will be obtained from
two assessors.
Initiating Documents.
Notice of application, affidavit of applicant, and
arguably a capacity assessment (no statutory
requirement, but courts often require anyway),
proposed guardian’s consent to act and statement.
Preparing application record is the same as standard procedure for
 Guardian’s consent usually attached as
guardianship of person.
exhibit to affidavit, or in affidavit.
In notice of application, should request a finding that
the person is incapable with respect to some/all
personal care functions & need decisions to be made
on his/her behalf.
Affidavit- prepared with an eye to the categories of
decision making (full or partial guardianship).
Consent of guardian and guardianship plan
necessary.
If relatives consent, helpful to include those
-39-
consents as exhibits (but not required)
Service
Response
Court hearing and judgment
Can be optional third-party statements- person who
knows the alleged incapable and has been in
personal contact with him or her in the 12 months
before the notice was issued can make statements in
prescribed form. Better to have info sworn in
affidavit.
Same as for guardianship
Same as for guardianship
Considers criteria in ss 55(2)(a)-(b) and 57(3)(a)-(c)
Need finding that person is incapable wrt some or all
of the functions (see s 45) and therefore needs
decisions to be made on their behalf by someone
authorized to do so.
Need specification of whether full or partial (full
only if person incapable of all functions).
Joint guardians can be appointed.
Can be for a limited period, or impose other
conditions. Can give guardian authority to
apprehend person w/police
Can grant power to change existing arrangements
with regards to custody and access of a child, or
consent for adoption.
Guardian must act in accordance with guardianship
plan, good to have this stated in judgment.
Same as for guardianship of person.
Same as guardianship of person
Same as summary disposition procedure for guardianship of property.
Three options- same as summary disposition procedure for
guardianship of property.
HCCA and Giving Consent on Behalf of Incapable Person (pp. 468R-469R)
 Consent can be given or refused on behalf of incapable person BY: guardian of the person (if authority), attorney for personal care (if authority), representative
appointed by the Consent Capacity Board, spouse or partner, child or parent or agent of children’s aid society (not parent w/only right of access), parent w/right
to access, brother or sister, any other relative.
 Person can only consent or refuse to consent IF: capable, at least 16, not prohibited by court order or separation agreement from having acess or
consent/refusing consent, available and willing to assume responsibility.
 If there is no one, the Public Guardian and Trustee decides.
 With respect to admission to a hospital or psychiatric facility, if the incapable person is 16+ and objects, then consent can only be given by guardian (need
authority to consent) or attorney for personal care (POA needs provis authorizing attorney to use force)
-40-
TAX ISSUES
Estate Admin Tax
Ch. 35 – P. 439L
Ch. 42 – P. 519522
Income Tax
Ch. 35 – P. 440R441L
Ch. 39 – P.479R483R
AMOUNT: In order to obtain an initial certificate of appointment from SCJ of estate trustee (with or without a will), an estate trustee must pay an
estate administration tax at the rate of $5 per $1,000 (or part thereof) for the first $50,000 of estate value and $15 per $1,000 (or part thereof) for the
estate value in excess of $50,000.
Value of the property which is excluded from the calculation of estate administration tax:
1. Real property situated outside Ontario.
2. Property owned by the deceased jointly with one or more other persons-where there is a right of survivorship.
3. The proceeds of life insurance payable on the death of the deceased to a designated beneficiary.
4. Any benefits payable under a “plan” to a designated beneficiary.
 The value of all other property governed by the will is included in the calculation of estate administration tax.
Debts and liabilities of the deceased
o Do not reduce the value of the estate for the purpose of calculating estate administration tax.
o Exception-the value of an encumbrance registered against real property included in the property of the deceased person.
REASSESSMENT BY MINISTER OF REVENUE
 Minister may assess or reassess an estate for additional estate administration tax is four years from the date on which the certificate of
appointment of estate trustee was issued. The period of time is open-ended—being whatever the Minister considers to be reasonable—where
the applicant fails to provide the required additional information within the time prescribed, or where any person has “made a misrepresentation
that is attributable to neglect, carelessness or wilful default, or has committed any fraud in supplying any information regarding an estate or in
omitting to disclose any information regarding the estate.”
 Estate trustee is entitled to challenge assessment
 If Minister confirms the assessment, the estate trustee is entitled to appeal to SCJ
 No provision to apply for clearance certificate
1. Immediately before death- individual is deemed to have disposed of capital property and land inventory at its then fair market value – P. 440R
o The capital gain is included in the tax return for the deceased’s year of death; only 50% is taxable (440R)
o capital loss cannot be triggered as a result of the disposition or deemed disposition of personal use property (i.e., property owned by the
taxpayer that is used primarily for the personal use or enjoyment of the taxpayer and family, such as an automobile or furniture) (479R-480L)
2. ROLLOVER Where capital property (depreciable and not) is transferred as a consequence of death to
i. A surviving spouse or common law partner OR
ii. A testamentary trust for the exclusive lifetime benefit of the spouse or common law partner (all income must go to spouse, only spouse may
encroach on capital)
iii. inter-generational farm property
iv. RRSP spouse is direct recipient as beneficiary designation or if estate is beneficiary and jointly elect amount deemed received by spouse
The property will transfer at its tax cost to the deceased – p. 481R-483R
3. Capital gains from a deemed disposition of i) qualifying small business corporation shares; ii) qualified farm property; OR iii) qualified fishing
property may be sheltered under an individual’s lifetime capital gains deduction-max to $800,000 (440R)
4. Charitable gifts made by will give rise to a tax credit for taxable income in the year of death and year preceding year of death (440R)
5. The value of RRSPs and RRIFs-as at the date of death of the deceased annuitant is included as income of the annuitant for the year of his death
(441L)
-41-
Two Taxpayers
Ch. 39 – P. 479
Ch. 39 – P. 484
Ch. 40 – P. 489493
6. If creates a trust, fiction of deemed disposition every 21 years (441L)
When a person dies
o “Terminal Return” -income earned or deemed to be earned between January 1st and his death-is included in his T1 Tax Return due in respect of
the year of death. CHANGES TO ACCRUAL BASIS
o Due date for terminal return
o Death prior to November: terminal return due by next following April 30 (or June 15th, if the deceased had business income).
o Death in November or December: terminal return due six months from death
o Due date for return preceding year of death
o Death prior to May: prior year’s return due six months after death.
o Death in May or after: prior year’s return was due on April 30 in year of death and no extension is given
The day after the taxpayer’s death
o The estate of the deceased becomes a new taxpayer and the day after death is the first fiscal period (479L)
o Files a special tax return T3 trust return (taxed like a trust) (479L)
o Don’t have to file return where the total taxable income of the estate does not exceed $500, no beneficiary’s share in that taxable income exceeds
$100, all of the income is taxable in the hands of the beneficiaries, and there are no non-resident beneficiaries (484L)
o T3 return is due within 90 days from end of trust’s taxation year (489R). Both inter vivos trusts and testamentary trusts or estates use calendar
year as taxation year (489R).
o Trust deducts all amounts flowed through to beneficiaries – P. 493R
o Taxation of beneficiaries – P. 494LR
Clearance Certificate – P. 480L-481L
-42-
THE IMPACT OF THE FAMILY LAW ACT (ch 41, p 497)
When
What
The Family Law Equalization Payment (p. 498)
Deaths ON or AFTER March 1, 1986 will give rise to a right in the surviving spouse to
make an equalization claim (FLA, s 70(1)(b).
When a spouse dies, if the NFP of the deceased spouse exceeds the NFP of the surviving
spouse, the latter is entitled to 1/2 the difference between them.
A court has the authority to award an amount up to 100% of the value of the NFP of the
spouse who has the higher NFP to the spouse with the lower NFP (Von Czieslik v Ayuso).
Under the Will/On Intestacy
Election is between, on one hand:
1. an equalization claim
AND on the other hand:
1.
2.
3.
where there is a will, the entitlement under the will;
where there is no will, the entitlement according to
Ontario’s SLRA;
on a partial intestacy, entitlement under the will and
the provincial intestacy rules;
but NOT BOTH.
Election
How, when, and where is the election filed?
Must be filed within 6 months of the death of the deceased spouse UNLESS an application is granted for an order to extend the time to file (FLA, s
2(8)).
Must be filed with the Estate Registrar for Ontario in Toronto (FLA, s 6(10)).
If the surviving spouse fails to file the election within the 6 month period, they are deemed to have elected to take under the WILL or under the SLRA
or BOTH, UNLESS the court orders otherwise on application (FLA, s 6(11)).
Who can make the election?
1.
2.
3.
4.
named attorney according to validly executed power of attorney on behalf of surviving spouse
the Public Guardian & Trustee who acts as statutory guardian of the property of a surviving spouse pursuant to a Mental Health Act certificate
guardian of property (statutory, court-appointed, or for mentally incompetent surviving spouse)
NOT a personal representative if surviving spouse dies within 6 month period without electing (Rondberg Estate v Rondberg Estate)
Can the election be revoked?
Effect of Election
Generally—no. Conflicting decisions. Iasenza v Iasenza Estate: court has a residual discretion to authorize revocation in restrictive circumstances:
1. where the interests of justice so require; AND
2. where it is warranted by a balancing of interest of the affected parties.
If the surviving chooses to take under the FLA (subject to deceased’s express intent),
The surviving spouse’s entitlement arising on the death of
-43-
p 500
Priority
p 503
Restrictions on
Distribution
p 503
Personal Rep Duty
to Surviving Spouse
p 508
results include:
the deceased spouse will be unaffected (FLA, s 6(4)).
1. the forfeiture of all entitlement under the will;
2. interpretation of the will as if the surviving spouse had predeceased the testator
In addition, the surviving spouse will receive:
(FLA, s 6(8));
3. inability of the surviving spouse to act as executor, unless the will provides that the
1. all insurance proceeds from policies on the
surviving spouse is to receive her entitlements under the will in addition to the
deceased’s life naming the surviving spouse as
entitlement under the FLA (Reid Martin v Reid, FLA, s 5(2));
beneficiary;
4. on a partial Intestacy, even if the will states that the spouse can enjoy both benefits, 2. death or survivorship benefits under pension plans;
still forfeiture;
and
5. set-off obligation against equalization claim:
3. the right of survivorship associated with any property
a. benefits entitled to as named beneficiary under insurance policy;
jointly owned by the spouses will be operative in the
b. lump sum payments entitled to under pension plan;
normal manner.
c. value of any property to which spouse becomes entitled by right of
survivorship;
d. property that was established by a third person that the deceased
spouse was never entitled to
The surviving spouse still gets:
1. on a full intestacy, the SLRA does not govern a surviving spouse’s entitlement to
assets outside of Ontario, so the surviving spouse who elects for equalization may
nonetheless be able to claim certain assets outside Ontario therefore can claim both
(this unfairness has been removed by the FSLAA)
2. dependant’s relief if deceased spouse, whether dying testate or intestate, has not
made adequate provision for the dependent on date of hearing
The equalization claim has priority over:
1. gifts made under the will UNLESS made for valuable consideration;
2. a person’s right to a share of the estate under Part II of the SLRA; and
3. orders made against the estate, except those in favour of a child of deceased
BUT NOT over:
1. secured creditors;
2. those that are preferred by law; and
3. gifts under a will which have been made in accordance with a contract entered into by the deceased spouse i) in good faith AND ii) for valuable
consideration EXCEPT to the extent that the value exceeds the consideration.
NO distributions can be made out of the estate during the 6 month period immediately following the deceased spouse’s death without:
1. the surviving spouse’s written consent OR
2. court authorization.
Reasonable advances to dependants are permitted.
To the surviving spouse:
1. Advice that she may have rights under the FLA.
2. Suggest that independent counsel be retained to explain those rights.
3. Stress the importance of doing as in a timely manner in order to preserve those rights.
-44-
CLAIMS BY COMMON LAW SPOUSES (CHAPTER 44 P. 555)
Married
Entitlement to
Property
Will Revocation
p. 556 Ch. 44
Dependant
Support
Application
p. 555
Estate Trustee
p. 555
Children
Family Law Act
o A surviving “spouse” for purposes of an
equalization claim is – a married spouse.
Succession Law Reform Act (p. 555)
o A “spouse” for purposes of inheritance on
intestacy is – a married spouse.
Entitled to
o The first preferential share as $200,000 of
the deceased estate.
o A will declared to have been made in
contemplation of marriage remains valid
even if the marriage does not take place.
o A client living in a i) common law marriage
OR ii) engaged to be married-should be
warned that a marriage subsequent to the
signing of the will-would revoke the will
UNLESS it contains a declaration that it is
being made in contemplation of that
marriage.
Section 29 Estate Act
Married spouse AND
Persons with whom the deceased was living in
a conjugal relationship outside of marriage
share priority to become personal reps of
estate.
Common Law (p. 555 Chapter 44)
o No Statutory Entitlement to Property.
Common law remedies are available to claim property rights or monetary compensation:
1. Unjust enrichment
2. Constructive trusts
3. Quantum meruit.
o
Entering into a common law relationship would not revoke their respective wills
Section 57 SLRA – p. 555
1. 2 people who are NOT married to each other AND have cohabited continuously for a period of not
less than 3 years OR
2. In relationship of some permanence AND are the parents of a child.
Section 29 Estate Act
Common-law spouse including a person of the same sex who was living with the deceased in a conjugal
relationship.
Common-law spouse has information priority, if intestate, to become estate trustee.
o
If the client has an adult child who is living in a common law relationship-the lawyer should
question the client whether any children born in that relationship are to be included in the scheme
of distribution.
-45-
MISCELLANEOUS WILLS & ESTATES LAW CONCEPTS
Will Formal Requirements (Signing the Will)—CH. 35, p. 449



Formal Will
o Signed at its physical end by testator and at least 2 witnesses
o Someone can sign on testator’s behalf, in testator’s presence and at testator’s direction.
o Both witnesses have to see testator sign, but witnesses only need to sign in the presence of the testator.
o Best practice- all three sign in the presence of one another.
o Witness should not be a beneficiary or spouse of beneficiary bc gift becomes void unless court satisfied there was no improper or undue influence.
o Affidavit of execution, from witnesses, should be procured.
International Will
o Convention Providing a Uniform Law on the Form of an International Will
o Ontario has adopted the Convention.
o Useful if client has assets in one or more foreign jurisdictions (who are signatories)
o See Unidroit website to find signatories
Holograph Will
o Valid will entirely in own handwriting, with signature at the physical end of the will
o No need for witnesses or other formalities.
o Useful in emergency situations
Distribution on intestacy—CH 42, p. 527
Governed by Part II of the SLRA and the potential takers are (a) surviving spouse and partner (in Ontario you must be married- or in a void/voidable marriage in good faith- to share in
your partners intestacy); (b) issue, (c) lineal ascendants and collaterals).
1. If there are no surviving issue, then section 44 of the SLRA states that the spouse is entitled to the entire state absolutely.
2. If issue survive, then the spouse is entitled to a preferential share, in the amount of $200,000. The preferential share is calculated according to the following rules:
a. If the deceased died partially intestate, the benefits received by the spouse under the terms of the will are taken into account in computing the preferential share
(SLRA, s. 45(3)(a)).
b. If the net value of the estate is less than the preferential share, the entire estate passes to the spouse, whether or not there was surviving issue (SLRA, s. 45(1)).
c. If the net value of the estate is greater than the preferential share, the preferential share passes to the spouse (SLRA, s. 45(2)).
3. In addition to the preferential share, the spouse is entitled to a distributive share, which varies with the number of issue surviving, under section 46 of the SLRA. This amount
is not reduced by any amount the spouse received under partial intestacy.
a. If the person dies intestate and leaves a spouse and one child, then the spouse is entitled to ½ the residue (SLRA, s. 46(1)).
b. If the person dies intestate and leaves a spouse and more than one child, then the spouse is entitled to 1/3 (SLRA, s. 46(2)).
c. Section 47(1), (2) SLRA- each child gets an equal share of what is left after the spouse gets their share. If one child predeceases the intestate, but that child has issue,
then the child’s share is distributed among their issue to the nearest degree. Children of half-blood and adopted share equally. Other than that, all about blood reltn.
4. If the intestate dies without a spouse or issue, then section 47 of the SLRA dictates who will recover:
a. Surviving parents take all equally, or if only one then he or she takes all.
b. If no surviving parents, then the siblings share the estate equally with representation being permitted among brothers’ and sisters’ children (per stirpes).
-46-
c.
d.
If no brothers and sisters survive, then nieces and nephews take per capita.
If no next of kin survive the property becomes the property of the Crown.
Incorporation by Reference—CH. 35, p. 445
Requirements:
1. The memorandum must have come into existence prior to the signing of the will
2. The court must have no doubt that the document is the one referred to in the will
Abatement—CH. 42, p. 530R
1.
2.
3.
General rule is that all general legacies abate rateable
Priority is not established just because the will contains that the legacy is to be paid first
Priority is established if there is an indication that the testator contemplated the possibility that assets might be deficient and thus provided an order or priority payments
Ademption—CH. 42, p. 530R
If the testator makes a specific gift, and the gift no longer exists at the time of the testator’s death, in the absence of a statutory provision to the contrary, the specific gift adeems and
the testator receives nothing. But, case law says that bequest of specific property may still take effect if it has merely changed form.
 Substitute Decisions Act- the guardian and an attorney of property shall not, subject to some exceptions, dispose of the property that is subject to a specific testamentary
gift…ademption will not apply if the guardian or attorney disposes of it. Rather, the beneficiary is entitled to receive the corresponding right to proceeds.
Attribution—see CH. 39, p.485 and CH. 40, p. 492L-493R for majority of rules
Lapse/anti-lapse—CH. 35, p. 446
SLRA


s. 23 – disposition of a void devise – if the bequest or devise to a beneficiary fails because of the beneficiary’s predeceasing the testator, it falls into residue unless there is a
contrary intention.
s. 31 – substation of gifts – if there is a gift to a child, grandchild, or sibling of the testator, who dies before the testator, either before or after the testator makes his or her
will, and leaves spouse or issue surviving the testator, the devise or bequest does not lapse but passes as if on an intestacy of the deceased beneficiary (BUT NOTE—without
any preferential share for the surviving spouse, if any)
Survivorship
SLRA

s. 55 – when two spouses die simultaneously – the property of each spouse shall be disposed of as if he or she survived the other. Any property they held jointly will be
treated as if they were tenants in common and split 50/50 (515L); [neither spouse’s estate will have a claim (under FLA) against the estate of the other (498L)]
-47-
REAL ESTATE: REAL ESTATE CHART
The Land Titles System






Purpose: Confirms who the owner of a particular property is
Piece of Land = Parcel
o Each parcel has a number and is registered in a book or electronically
o Book = register = parcel register  shows title and encumbrances.
Previous Transfers: Ruled off when a new instrument disposing of an interest is registered.
Instruments: If presented for registration, and it creates, transfers or terminates an interest in land 
deemed to be an application to amend the registered title.
Registration: No instrument is registered unless certified.
LRRA Terminology:
o Transfer (Deed) = all conveyances
o Charge (Mortgage)
o Document (instrument)
Title Searches
Registry 40 Year Search (p. 598)
 Only have to look 40 years back  show that he has good title for 40 years
 Commencement Date = date 40 years prior to agreement date i.e. June 20, 1977 for agreement dated
June 20, 2017
 First Conveyance: Look for the first conveyance after the commencement date  root of title.
o If no conveyance is found  must go back and look for the first conveyance before the
commencement date.
 Adjoining Owners Search
o Ensure no encroachment or violation of the Planning Act
Land Titles Search (p. 600)
 Key Point: Purchaser is entitled to rely on the fact that the person who appears as owner on the
register has good title.
o No 40 year search or chain of title required.
 Search Via: parcel and section numbers
 Everything no longer affecting the land will be crossed off
o Should get copies of instruments that still affect the land.
 Exceptions to Guaranteed Title
o Check corps who held title  if they dissolved  land escheated back to the Crown
o Check adjoining land back to 1967 in accordance with the Planning Act
 Subsearch
o Prior to registration of the transfer  subsearch to make sure there have been no intervening
registrations since the original search
 RESULT OF THE SEARCH = POLARIS Printout
o Shows active instruments
o Registered owner
-48-
o Outstanding encumbrances
o Other documents that affect title of the property.
Letter Enquiry Searches (p. 603)


Form: By way of letter
Purpose: Determine whether there are liens, orders affecting property OR if the property complies
with municipal by laws and other statutory standards.
Realty Taxes (p. 604)
 Get a tax certificate


Water Account (p. 604)
Local Improvements (p. 604)



Hydro Arrears (p. 604)
Gas Arrears (p. 604)
Zoning Compliance (p. 605)



Legal Non-Conforming Use (p. 605)
Work Orders (p. 605)
Building Code
Electrical Safety
Fire Protection


TARION (p.607)


Unregistered Hydro Easement (p.607)
Waste Disposal Search (p.607)


Heritage Designation (p.607)

Corporate Status (p.608)

Airport Zoning Regulations (p.608)

Underground Fuel Oil Tank (p.609)



Farm Property Serviced by a Well
(p.610)
Tile Drainage Act (p.610)
Farm Property Tax Program (p.611)


Are there any taxes owing?
Taxes due on land are a special lien in priority to
everything except for the Crown.
Are there any outstanding water/sewage charges?
Inquire to tax department or local municipality
Whether, if in addition to tax, there are any levies for
additional services
Do not form a lien on land  NOT necessary
Do not form a lien on land  NOT necessary
Obtain info as to whether the property is in
compliance
Work order may have been issued specifying what
needs to be done to rectify the deficiency.
Every builder must register
Inquire to TARION of the enrolment number of the
builder and home.
Most are registered… but some may not be.
Cant use land where there has been waste disposal
within 25 years
If designated, there may be restrictions on alteration
or improvement
Make sure corps who held title were in existence at
time of title  otherwise land escheats to the Crown.
May be height restrictions etc… check if property is in
compliance
All tanks must be registered with TSSA
Contact TSSA to see if its registered
Check quality, capacity etc.
Lien on a property where tiles must be installed to
permit run-off water.
Taxed at 25%
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


Highway Entrance (p.611)
Weed Control (p.612)
Make sure the property is assessed as Farm Property
Class in order to be eligible.
Make sure it is a legal entrance
Make sure there are no weed control
orders
Electronic Registration of Land Titles Documents




Search Mechanism = Teraview (software made by Teranet)
Remote Registration of Land Titles Documents = e-reg (also done through the Teraview software)
LRRA Part III  Set the framework for electronic registration of documents
o Documents no longer required to be in writing and signed
o Electronic format prevails over written format
Law Statements: replace the need for the registrant to provide evidence to the registrar.
o Can only be made by a lawyer licensed in ON
Process
Title Search
Letters of
Enquiry
Off Title
Searches
Root of Title Requisitions
 ie. Breach of planning act
Requisitions (by
Purchaser) 
rectification of various
defects of title or any
other problems
discovered.
Conveyancing Requisitions
 ie. No old mortgage
dischagrge
Reply to the Letter of
Requisitions (By
Vendor)
Contract Requisitions
 ie. Work orders outstanding
-50-
REAL ESTATE: CONSTRUCTION LIENS & PRIORITY OVER MORTGAGES
CONSTRUCTION LIENS
Section 14(1) of the CLA (Construction Lien Act): "a person who supplies services or materials to an improvement for an
owner, contractor or subcontractor, has a lien upon the interest of the owner in the premises improved for the price of those
services or materials."
- The lien creates an interest in the land in favour of those who supply materials or services, thereby creating security.
- This prevents the owner from receiving improved land w/o making payment for the improvement.
- This is especially important to subcontractors who have no right to bring an action for payment under a contract.
HOLDBACK STRUCTURE p 846
-
-
Each payer (i.e. owner, general contractor, subcontractor, etc.) on a contract or subcontract is required to retain a
holdback of 10 per cent of the price of the services or materials as they are actually supplied under the contract or
subcontract until all liens that may be claimed against the holdback have expired or have otherwise been satisfied or
discharged.
The purpose of this holdback is to create a fund to which lien claimants may look if they are unable to recover from the
person with whom they have a direct contract.
In general, the owner's exposure to a subcontractor or supplier lien claimant, with whom the owner has no direct
contract, will be limited to the amount of the holdback.
TIME LIMITS FOR ENFORCING A CLAIM FOR LIEN p 847
Specific time limits for a claim for lien. The lien must: (1) Be preserved by registration against the title to the property, and (2)
Be perfected by the commencement of a court action.
Preservation of Lien
Claim
Registration of a claim for lien against title within 45 days after the earliest of:
- Publication of a certificate of substantial performance of the contract
- The date the contract is completed or abandoned (in the case of a contractor),
or
- The last supply or certification of completion (in the case of a subcontractor)
Perfection of Lien
Claim
Commence an action to enforce the lien prior to the next 45-day period (action
commenced within 90 days of the last supply of services or materials).
Set Action Down for
Trial
Within a period of two years from the date of commencement of the action.
Failure to set action down for trial will cause lien to expire and the lien right will be lost.
VACATING THE LIEN p.849
An owner with a lien on his property will have to remove it from title before any prospective purchaser will close a transaction.
In order to clear title, the owner has a few options:
(1) Security can be posted into court for the full amount of the claim plus 25 per cent for costs in order to vacate the lien
from title, or
(2) The owner can negotiate with the lien claimant for the payment of an amount sufficient enough to settle the lien in
exchange for a discharge.
While a discharge of the lien is ideal, if the lien is vacated, it will no longer attach to the land, and any prospective purchaser
can be satisfied that the property is not encumbered.
-51-
PRIORITY OF LIEN CLAIMS OVER MORTGAGES p. 850
Three classes of mortgages under s. 78:
- “Building mortgages” – taken “with the intention to secure the financing of an improvement”
- Non-building prior mortgages –registered prior to the time the first lien arose
- Non-building subsequent mortgages –registered after the time the first lien arose
In determining priority, look to three considerations: 1) when the mortgage was registered, 2) when the mortgagee made
advances to the owner, 3) the amount of the advances
78(2)
Building mortgages are subordinate in priority to lien claims to the extent of any deficiency in the
holdbacks required to be retained by the owner
Lien claims will be satisfied prior to any building mortgagee’s claims, BUT only to the extent of any
deficiency in the holdbacks.
78(3)
Non-building prior mortgages have priority over liens arising from the improvement to the extent of the
lesser of the actual value of the premises at the time the first lien arose and the total of all amounts
advanced prior to that time under the mortgage
In this situation, non-building mortgagees will have priority over subsequent construction liens, BUT
only to the extent of the value of the premises (at the time the lien arose) or the sum of all amounts
advanced, whichever is lower. Hence, lien claimants can still recover for claims that exceed the
mortgagee’s claim value.
78(4)
Advances made under non-building prior mortgages subsequent to the time that the first lien arose
have priority over the lien claims to the extent of the advance, provided that
- At the time when the advance was made no preserved or perfected lien existed against the
premises; or
- Prior to the time when the advance was made, the person making the advance had not
received written notice of a lien
In this situation, a lien arises subsequent to a non-building mortgage. Advances are made under the
non-building mortgage subsequent to the lien arising. The mortgagee will have priority over the lien
claims (in the amount of any advances) as long as the lien claims were not preserved/perfected when
the advances were made OR the mortgagee did not receive notice of the lien.
78(5)
Liens arising from an improvement have priority over mortgages registered after the first lien arose to
the extent of any deficiency in the holdbacks require to be retained by the owner.
If it can be established that a mortgage was registered after the first work was done or first materials
were supplied to the improvement, a lien claimant will have priority over the mortgage.
SPECIFIC PRIORITY DISPUTES: p.850
Workers’ wage
claims
Claims for wages of workers who supplied services to the project (includes claims for
benefits payable to a worker’s trust fund) have priority over all other liens in the same class
(to a max. amount a worker would earn in 40 regular-time working days)
s. 81, CLA
Between lien
claimants
All amounts available to satisfy lien claimants are distributed rateably among members of
each class (i.e. persons who supplied services or materials to the same payor)
-52-
Liens of class members take priority to the payor of that class
Subcontractor claims have priority over the claim of the general contractor, etc.
General liens
General liens rank with the class to which they otherwise belong, divided by the number of
premises to which the person supplied services/materials.
The balance of the general lien ranks next in priority to all other liens against the premises,
whether or not of the same class.
Judgments,
executions, etc.
CLA liens have priority over all judgments, executions, assignments, attachments,
garnishments, and receiving orders, except those executed or recovered upon before the
time when the lien arose.
Insolvency
Upon insolvency of a payor, beneficiaries of the trust hold a priority with respect to trust
funds, so long as liens are proven. The holdback and trust funds are then distributed.
Remaining funds are distributed in accordance with the priorities in place had the liens been
proven.
s. 85, CLA
Lenders to a
trustee under the
CLA
If those who are making advances to trustees (appointed under Part IX of the CLA) are
granted an interest in the premises, those interests will have priority (to the extent of
advances made) over every lien claim existing at the date of the trustee’s appointment.
LEASEHOLD IMPROVEMENTS (S. 19, CLA) p.848
Where a tenant commissions improvements, the freehold interest may become subject to a lien. The proper procedure must
be followed:
Contractor notice
The contractor must provide written notice to the landlord of the improvement to be made.
to landlord
Written response
The landlord must provide a written response declaring that it assumes no responsibility for
from landlord
the improvement to be made within 15 days of receipt of the contractor’s notice.
If landlord responds within 15 days of receipt of notice  If the landlord declines to
assume responsibility, the contractor will only have a right to lien the leasehold interest.
If landlord fails to respond within 15 days of receipt of notice  Absent a landlord
response, the [freehold] interest of the landlord shall be subject to a lien to the same extent
as the interest of the tenant.
Contents of NOTICE TO BE GIVEN TO LANDLORD by contractor:
- Name of the landlord and reference to its capacity as landlord
- Details of the contract entered into between the contractor and the tenant
- Description of the improvement to be made
- Sufficient description of the premises to identify the landlord’s property
- Reference to the contractor and tenant by name and capacity
- Language sufficient to make it clear that the contractor is looking to the landlord’s interest in the land, in
addition to the tenant and its interest in the leasehold, to be responsible for the improvement to be made
- Additional language to make it clear that the landlord must provide written notice back to the contractor
within the time prescribed in s. 19(1), wherein the landlord is to state that it disclaims responsibility for
payment of the improvement to be made
- Additional language sufficient for the landlord to know when the 15-day period commences, within which it
may disclaim liability
-53-
REAL ESTATE: ENFORCEMENT OF MORTGAGE SECURITY(REMEDIES)
PROCESS
COST
NOTICE REQ’D
BEFORE SALE
WHEN IT’S BEST
PROCESS
DEFICIT AFTER
SALE
MORTGAGOR’S
RIGHTS POST
SALE
TAX ON
REMEDY
LIABILITY POST
SALE
ABANDONMENT
SURPLUS
COMBINED
ACTION
FORECLOSURE
JUDICIAL SALE
Technical (677R)
Expensive – court procedure
(677R-678L)
longer threshold under Rules of
Civil Procedure – 60 days to
pay after taking of accounts,
with further extensions possible
(677R)
Technical (677R)
Expensive – court procedure
(677R-678L)
longer threshold under Rules
of Civil Procedure – 60 days
to pay after taking of
accounts, with further
extensions possible (677R)
in a depressed market - where
value of the property is less than
the debt (678LR)
issue Statement of Claim and
serve personally (678L)
where there are legal issues
regarding title and need the
court’s assistance (678L)
issue Statement of Claim and
serve personally (678L)
can’t claim for deficit – take
property in entire satisfaction of
debt (678L)
court has discretion to allow
mortgagor to redeem the
mortgage even after foreclosure
Land Transfer Tax applicable
(678L) b/c considered a legal
transfer to mortgagee; payable
by mortgagee when registering
final order of foreclosure (678L)
court-supervised process, after
final order, mortgagee does not
have to account for any surplus
(678L)
can’t abandon foreclosure
action once commenced without
leave of the court (678L)
not req’d to account to anyone
for any surplus on sale (678L)
can sue for deficiency (678L)
can add a combined claim for
possession and recovery of
mortgage debt (678L)
can add a combined claim for
possession and recovery of
mortgage debt (678L)
purchaser’s title is immune
(677R)
PRIVATE SALE / POWER
OF SALE
Simple (677R)
Cheaper – conducted from
solicitor’s office (677R)
faster:
Mortgage contains power of
sale provision: Default must
continue for 15 days before
notice given; sale only after 35
days of date of notice (s.32)
(679L)
Mortgage does not have power
of sale: 3 month default min.,
45 day notice req’d (s.24)
(679R)
in most situations – this is the
best (679L)
notice of sale – can be served
personally or by registered
mail (678L)
can sue for deficiency (678L)
no Land Transfer Tax when
mortgagee takes control of
property (678L)
purchaser’s title is immune,
mortgagor loses interest (677R;
690R)
no Land Transfer tax when
mortgagee takes control of
property (678L)
court-supervised process –
court must approve sale and
price (678L)
not a court-approved process –
liable for suit alleging less than
FMV (678L)
can’t abandon once
commenced without leave of
the court (678L)
req’d to account for surplus
to mortgagor and subsequent
encumbrancers
entitled to abandon power of
sale at any time (subject on to
s. 42 of Mortgages Act) (678L)
req’d to obtain fair value and
must account to mortgagor and
subsequent encumbrancers for
surplus (678L)
separate action is req’d for
claim of possession or recovery
of mortgage debt (678L)
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-55-