Risk management – process of identifying, evaluating, and responding to the possibility of harmful effects.
• Identification – identify the risk
• Evaluation – look at all of the alternatives you can use to
• Response – choose which of the alternatives is the best
Strategies for risk management
• Risk avoidance
• Risk reduction
• Risk shifting – shift onto another party. (i.e. independent contractor to use crane instead of own person.
Company can get sued, but independent contractor will get the suit. Also Insurance and exclusion
• Rick acceptance
• Insurance – contract where one person agrees to pay money for another party suffering a loss.
• Exclusion and limitation clauses – contractual term that changes the usual rules of liability. May attempt
to exclude all risk of liability or it may exclude liability for certain types of acts or certain types of losses,
or it may limit the amount of compensation that is available.
• Incorporation – limited liability in a corporation; you only need to pay how many stakes you buy into the
Nature of law
• Law – rule that can be enforced by courts
o Civil law – trace history to ancient rome
o Jurisdiction – geographical area that uses same set of laws
o Common law – trace back to England
• Public law
o Concerned with governments and the ways in which they deal with citizens
Constitutional law – provides basic rules of political and legal systems
Administrative law – creation and operation of administrative agencies, boards,
commissions and tribunals
Criminal law – deals with offences against the state
• White collar crimes – crimes committed by people in suits
• Corporate crime – crime done by corporations Tax law – concerned with rules used to collect money for public spending
• Private law – concerned with rules that apply in private matters
o Tort – private wrong, an offence against a particular person
Business tort – deceit and conspiracy
Intentional tort – assault and false imprisonment
Negligence – other situations where one hurts another
o Contract – concerned with creation and enforcement of agreements
Sale of goods
Use of negotiable instruments – i.e. cheques
Real estate transactions
Operation of corporations
o Law of property – concerned with acquisition, use and disposition of property
Real property – everything attached to land
Personal property – involves things that can be moved from one place to another
Intellectual property – ideas
NOTE – different sections can overlap
i.e. – single event can trigger more than one type of rule. Also some situations involve various types of laws.
Also, some situations may involve various types of laws
Sources of law
• Constitution – document that creates basic rule for Canadian society, including its political and legal
o Divisions of power – constitution separated between federal and provincial
Provincial – provinces, section 92
Federal – whole country, section 91
o Residual power: gives the federal government authority that is not specifically mentioned
Government that tries to create a law outside of its own area it acts ultra vires, which
means beyond the power. Such laws have no force or effect. o Doctrine of federal paramountcy determines which law is pre-eminent based on the
Constitution’s division of powers. Federal law wins.
o Charter of Rights and Freedoms – written into constitution in 1982. Look at charter handout for
Restrictions (pg 16)
• Property rights – rights to own and enjoy assets
• Economic rights – rights to carry on business activities
• Government actions – helps govern relations between individual and states
• Corporations – generally does not apply against private corporations. Does not
apply in favour of them either
• Reasonable limits – states that its right s and freedoms are subject to “such
reasonable limits prescribed by law as can be demonstrably justified in a free and
• Notwithstanding clause – “in spite of”, “despite”
o Chapter remedies – fixing the chapter. Different ways
Declaration – court can declare that charter is violated. Legislation must find a solution
Injunction – requires government to address problem in a certain way. The choice lies
with the judge.
Striking down – just eliminate a statue that violates the charter. Decision can take effect
immediately or it may be temporarily suspended. Temporary suspension appropriate
where immediate elimination of a statute would create substantial problems
Severance, reading down, reading in – court can save statute by rewriting part of it. Part
of statute offensive = severed or cut. Statute written broadly, may be read down, so it
applies only where justified. If written too narrowly, mourt may read in a broader
Damages – plaintiff usually receives damages for injuries or losses suffered if they win
o Parliamentary supremacy – while judges required to interpret constitutional and statutory
documents, they must also obey them
o Law created by parliament or legislature
Bill is introduced
first reading, not very hard to pass second reading, subject of debate way of MPs
third reading, final voting of MPs
• pass, then it is in, not pass then it is not
signature then it is real
o Subordinate legislation – term given to regulations that are created with the authority of
Parliament or the legislature
municipality – town or city
by-law – subordinate legislation that is created by municipality
• Court – where a judge interprets and applies the word that appears in the Constitution and in the
legislation. Courts can also create laws
o common law
Systems – legal system operating throughout most of Canada, similar to the civil law
system that Quebec borrowed from France
Sources – rules that are created by judges rather than by legislators or the drafters of
Courts – England used to have court of law and court of equity. Lawyers use common
law when referring to court of law, and use equity to talk about court of equity
• Law and equity
o Old England only had court of law. Very rigid and harsh.
o Decisions of law were made by the king/queen
o People who were unhappy could ask king for relief
King was too busy to deal with all petitions, so he asked chancellor to act on his behalf
Chancellor soon began to be swamped, so he also asked people to help him.
o This became the court of equity
Less concerned with rules and more concerned with justice
• Therefore, decisions were based on equity
Two specific changes from what it was before
• Nature of equity: concept of equity no longer allows judges to decide cases on
the basis of fairness. There is a consistent set of rules. • One set of courts: before it was two separate courts. Now it is mostly both the
o Trust – Exists anytime that one person owns property for the benefit of another
• Settler (one person) transfers property to trustee (another person) to hold on
behalf of the beneficiary
• Trustee legally owns property, and beneficiary is the equitable owner.
Litigation – Who has access and can be sued in an Ontario Court
• All adults, regardless of citizenship
• Corporations, even if they are incorporated outside of Ontario
o Law treats corporations as legal persons for some purposes
• Trade unions
• Special Cases
o Children: can sue and can be sued against. Must be represented by a parent or litigation
o Adults suffering from mental incapacity (e.g. dementia, Alzheimer’s ). Can sue and be sued, but
must be represented by a litigation guardian
• NOTE: Unincorporated organizations (clubs, amateur teams, community groups, etc) not recognized as
“persons”. They can be sued as organizations; if you want to sue, you have to sue individual members.
If club members want to sue another party, they must sue as an individual member of the club. Club
may reimburse individuals. Trade unions are important exception.
• NOTE 2: legislation has now made it possible to sue government under some circumstances.
• Person who initiates law suit is the plaintiff. Person being sued is the defendant. The law suit as a
whole is the action.
Class action – Allows a single person or a small group of people to bring a legal claim on behalf of a larger
group of people. Class Proceedings Act governs class actions. (Print Class Proceedings Act). First, you need
to have class certified. Judge will certify a class if:
• There is a cause of action – (legitimate claim recognized by the law). Representative plaintiff does not
have to prove his case during the certification phase, but he must show there is some basis in law and
in fact for the claim being made.
• Members must have common issues. Claims of class members must involve similar (but not
necessarily identical) questions of fact or law. Examples o Class members are all suing the same defendant in relation to the same product line or service
in relation to the defendant’s employment practices
o Class members all suffered the same sort of injury
o Class members suffered different injuries but the injuries arose from the same incident
Class members may have different types of injuries but claims still have a lot in common with each
other. In this case, class must be certified with sub-classes that divide the class members into different
sub-groups, based on the different types of injuries suffered. Each sub class needs its own
• Must be a representative plaintiff. The facts of the representative plaintiff’s case must be typical of all
the members of the class.
Representative plaintiff has a few responsibilities: responsibility to have a workable plan for fairly
representing all members of the class. Someone who has a potential conflict of interest with other
members, could not satisfy this requirement.
• Representative plaintiff must demonstrate that he/she has a workable plan to notify all potential
members of the proposed class. People are not required to be part of a class action they can sue the
defendant on their own. But, in Ontario class actions are “opt out” meaning people are deemed to be
included in a class action, unless they say they are not. Only fair to require the representative plaintiff to
give notice to everyone who could be a member of the proposed class so that people can opt out of the
class if they want to sue the defendant.
• Class action must be the preferable procedure for addressing the various claims.
Litigation process – Legal representation
• Three options for legal representation
o Represent yourself
o Hire a paralegal
o Hire a lawyer
• Lawyers and Paralegals are both regulated by the Law Society of Upper Canada. You need certain
credentials and meet certain requirements in order to be licensed to practice as lawyer or paralegal.
This ensures lawyers and paralegals are competent.
• Clients can sue lawyers and paralegals for carelessness and intentional wrongdoing. Lawyer and
paralegals may not have enough to compensate client. There are mechanisms to protect clients;
lawyers and paralegals in Ontario are required to hold professional liability insurance. This provides
compensation to clients who have suffered losses as a result of a lawyer’s or paralegal’s carelessness.
Law society maintains Assurance Fund to compensate people who have suffered losses as a result of
lawyer’s or paralegal’s dishonest conduct.
Steps in Legal Action
• Cause of action occurs – action must be commenced within applicable limitation period • Pleadings - parties exchange various filings that outline issues that they will raise at trial and the facts
upon which they will rely
• Pre-trial activity
o Parties have opportunity to discover each other’s cases through exchange of documents and
pretrial examination of witnesses which occur under oath. Discovery gives parties the
opportunity to evaluate the relative strength of the other’s party ‘s case and to gauge how much
the claim is really worth.
o Parties have a pretrial conference which they meet with a judge. Judge may give the parties a
frank assessment of which side is likely to win if the case goes to trial. Gives the potential party
more incentive tosettle
o Some cases, there is a court mandated mediation
• Determination of Claim
o Parties either settle or case goes to trial. Majority of cases settle before trial.
o If case goes to trial, plaintiff must prove its case on a balance of probabilities. in other words,
every important part of the plaintiff’s claim must be shown to be more likely true than not. (claim
must be probably true)
o At trial, defendant is found either liable (and therefore responsible) or not liable. If the defendant
is held liable, the plaintiff will be awarded a remedy. Most common remedy is compensatory
• Enforcing the judgement – if plaintiff wins an award of damages, the defendant becomes a judgement
debtor. Plaintiff now has the difficult task of getting its money from the defendant.
• Appeals – Party may appeal all or part of a judgement. Means that the party (called an appealant) asks
a higher court to review case and to decide if judge made the correct legal decision. Appeals are very
different from trials.
Rules of civil litigation
• Limitation periods: period of time which an action must be started. Legal claims must be made within a
certain period of time or the court will not allow the claim to proceed. The time periods are governed by
statute, and ranges from six days (sue a city in tort) to 2 years (assert certain property rights). In
Ontario involving torts or breach of contract, most common limitation period is two years from the date
on which the plaintiff should have become aware that he/she has a claim against the defendant.
If plaintiff misses limitation period; he/she still has a claim but they cannot enforce claim through courts
unless there are very special circumstances. Means plaintiff likely will not be able to get a remedy.
Special exception applies to debts; if debtor acknowledges a debt after the limitation period expires,
creditor may bring an action to recover the outstanding monies even though the limitation period has
passed. Look at Ethical Perspective 11.1 on page 246.
• Pleadings: limits placed on the time each party has to respond to the other’s pleadings. Failure to file
your pleadings in response to other party’s pleadings can have terrible repercussions. Ex: if a
defendant does not file a Statement of Defence on time, plaintiff can move for a default judgement in favour of the plaintiff. Failure to file the Statement of Defense means that defendant accepts all of the
plaintiff’s allegations in the Statement of Claim, including the allegation that the defendant is liable.
Litigation process – Remedies and Enforcing Judgement
Remedy Description Example
Compensatory damages Pay the plaintiff money to Provide an injured plaintiff
compensate for the plaintiff’s with the amount he lost as a
loss result of not being able to
work and the amount spent on
Punitive damages Pay the plaintiff money as a Punish an insurance company
means of punishing the that made up allegations of
defendant for acting very arson in order to avoid paying
badly a benefit under an insurance
Nominal damages Pay the plaintiff a very small Recognize the right of a store
amount of money (e.g., $1) to that sued for trespass even
recognize symbolically that though the unwanted
the defendant acted customer did not do any harm
wrongfully even though the
plaintiff did not suffer any loss
Specific performance Order the defendant to fulfill a Force a defendant who
contractual promise promised to sell a piece of
land to the plaintiff to go
***equitable remedy through with the sale
Injunction Require the defendant to act Force the defendant to stop
in a certain way (e.g., to do cutting through the plaintiff’s
something or to stop doing backyard or force a
something) construction company to
remove its equipment from a
***equitable remedy neighbour’s property
Rescission Terminate a contract Eliminate a contract that was
created by a con artist who
tricked an elderly couple into
Table adapted from McInnes et al., Managing the Law: The Legal Aspects of Doing Business,
3rd edition (Toronto: Pearson Canada, 2011) at 38.
When defendant has been found liable and ordered to pay damages, defendant becomes a judgement debtor
(because defendant owes the plaintiff a debt pursuant to a judgement). If a judgement debtor does not pay, the
plaintiff has a few options.
• Plaintiff can garnish the judgement debtor’s income by getting a court order that requires the debtor’s
employer to pay a portion of the debtor’s wages to the plaintiff • Plaintiff can get a court order to seize and sell some of the judgement debtor’s assets like land,
vehicles, computers and other equipment. Judgement debtors may not be stripped bare (left with
nothing to earn a living).
• Business perspective: can defendant pay damages if the action is successful? Litigation is very
expensive, and it may not make sense to sue a defendant if that defendant is unlikely to pay a
judgement. Cost of litigation and defedant’s ability to pay are also reasons to consider using alternative
means of dispute resolutions like mediation.
Litigation process – Costs
• Costs of an action include lawyers’ fees, disbursements, and filing fees
• Canadian jurisdiction have interesting rule with litigation costs: losing party pays the costs of the
winning party, although costs that are awarded are set using specific formulae that do not reflect actual
costs of the litigation. Ontario, typical cost award coveres between 40 – 50 percent of actual costs of
litigation. In unusual cases, award may be 70-80 percent. Costs awards do not cover the internal costs
• Contingency fee agreements can reduce the risk associated with the high costs of litigation. When
client has a contingency fee arrangement with a lawyer, client only has to pay the lawyer’s fees if the
lawsuit is successful. Important to realize that since lawyer is taking such a risk with the arrangement,
client will pay a premium on the legal fees if the lawsuit is successful.
• Trials not necessarily last stage of a lawsuit. Losing party may appeal to a higher court. Higher court
will decide whether a mistake was made in the court below. Party that appeals the lower court’s
decision is called the appellant and the party that seeks to uphold the lower court’s decision is called
the respondent .
• Appellate courts focus on law, not facts: issue before appellate courts is whether the lower court made
a legal error. General rule, appellate courts accept the factual findings established at trial. Related
matter, parties generally cannot introduce new evidence on appeal. Appellate courts hear and read
legal arguments from the parties or their lawyers; no witnesses and no evidence submitted.
• Variety of outcomes possible on appeal. Appellate court may affirm (i.e.e uphold) decision; reverse
decision, vary the decision, or order a retrial.
Court System in Canada
• Hierarchy of Federal Court System • Small Claims Court: deals with claims involving limited amount of money. In Ontario, limit for small
claims case is 25k.
o Small claims court is generally faster, simpler, and less expensive than trials brought in Superior
Court of Justice. Rules of evidence are relaxed and filing fees are less than in other courts.
Essentially designed for people who are self represented and is means of improving efficiency
in the court system and facilitating access to justice.
Types of remedies: does not have equitable jurisdiction and they cannot award equitable
remedies such as injunctions or specific performance
Monetary limits: less than 25k.
Types of claims: deals with cases where the plaintiff is suing for either a limited amount
of money or the return of a piece of property that plaintiff already owns. Small claims
cannot hear cases that fall within federal jurisdiction.
Geographical limits: certain limits apply, including procedural rules about where a small
claims court action must be started.
Court Hierarchy and the Doctrine of Precedent
• Judges bound by doctrine of precedent, meaning court must follow decisions of any court that is above
• Decisions from courts in other jurisdictions are considered persuasive but not binding.
• Decisions of federal courts are only binding within the federal court hierarchy.
• Bodies that exercise power delegated to them by government for specific purposes.
• Administer various statuses; they enforce the statutory and regulatory requirements and resolve
disputes related to the application of the statute. Terms of character, tribunals fall between government
and a court. Examples: Ontario Human Rights Tribunal, Competition Tribunal, Labour Board of Ontario,
National Parole Board.
Alternative dispute resolution
• Process allowing parties to resolve their dispute without going to court. Offers alternatives that can
preserve business relationships and expedite settlement of a dispute, often at a much lower cost than
the litigating the dispute in court.
• Three major types
Parties attempt to resolve differences through discussion and direct bargaining
• Pros o Usually quicker, less complic