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BEFORE THE COURT OF PUBLIC OPINION
The case against
Keith A. MacLaren,
The law firm of Perley Robertson Hill & McDougall,
and
Arbitrator William L. Neville
Posted by Colin Alexander
Introduction
It needs to be said at the outset that allegations do not connote conviction. That said, the right of free speech and criticism is still a foundational principle of a free and democratic society. Everything stated here is based on fact, and is believed to be true in its entirety. It comprises fair comment on the facts and publication is in the public interest.
This web page states the case against Keith A. MacLaren, his law firm Perley Robertson Hill & McDougall, and arbitrator William L. Neville, on the following charge:
Fraudulent misrepresentation under Section 380 of the Criminal Code:
(1) Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, defrauds the public or any person … of any … money … is guilty of an indictable offence …
Background
I was one of two unrepresented Ottawa homeowners in a four-block who contested a claim for some three thousand dollars. We were objecting to the bill for replacing our common water and sewer pipe to the City mains said to have been charged by fifty percent above the price quoted by contractors Bradley Kelly. Neighbour Michael Dagg took it upon himself to pay the bill in full without authorization. Then he wanted a prorated share of all he’d paid out. The next year he needed work for his personal benefit, and the same contractors discounted the price by an amount approximately equalling that overcharge!
Instead of going to Small Claims Court with its filing fee of just $75, Dagg hired MacLaren to set arbitration in motion on the basis of an ostensible Agreement to Arbitrate signed by the previous property owners half a century earlier, in 1960. In order to secure his own evidently usurped appointment, arbitrator Neville repeated this assertion, which violated the applicable textbooks and case law. By extension, therefore, this Information states the case that it was criminally fraudulent to say that arbitration was obligatory.
Having been induced to believe the falsehood that we had no other option, we signed the contract for Neville’s services. He then demanded advance payment of $5,000 for his own fees. He said he would charge least ten grand to deliver a decision. In due course the make-work-and-gouging operation led to total costs of one hundred thousand dollars in legal fees.
Readers may find it helpful to consider what MacLaren and Neville did in the context of a civil case for fraud. In Small Claims Court, Deputy Judge Ivan Whitehall found fraud by a car dealer.[1] (Whitehall was also a case manager for the civil action against Neville for fraud. With his own flair for disingenuousness—lawyer-speak for dishonesty—he supported the proposition that Neville’s appointment was valid!) Without telling the buyer of prior damage, the dealer had sold a car as new that turned out to have needed serious repairs to make it look new: Whitehall said in his decision:
Silence and half-truths can amount to fraudulent misrepresentation. Mrs. Lefrançois was misled by the defendants’ failure to divulge the previous accident. The duty may be breached not only by positive misstatements but also by omissions, for they may be just as misleading.
Some readers may need a reminder that fraud, by definition, requires a sale induced by deceit to go ahead. Put another way, there’s no fraud if the prospective customer doesn’t get sucked in by a dishonest presentation.
The civil case in Small Claims Court against Neville for fraud died by attrition after it became evident that judges, even at the highest levels, were circling wagons around their fellow court officers, See the applicable pages on this website for their irrelevant and irrational handling of the facts and the law.
What MacLaren and Neville wrote
MacLaren’s initiating letter said this:
According to the terms of the Co-Tenancy Agreement dated February 1st, 1960, which is registered on title and is therefore binding on the neighbours … The Co-Tenancy Agreement requires you to respond to this Notice Requiring Arbitration within ten (10) days. If you do not respond, our arbitrator may hear the arbitration and make an award under S. 50 of the Arbitration Act, which can be enforced as if it was a judgment of a court.
Although not relevant for the core issue, it’s simply not true to say that registration on title, of itself, means anything at all. Supporting the assertion that arbitration was obligatory, Neville wrote this:
Those who purchased the units of the Original Parties are assignees of the Original Parties and “stand in the shoes” of the Original Parties: they are bound, in other words, by the election [of the 1960 Agreement] that Clause 8 created.
The foundational assertion here, then, is that the representations asserting that arbitration was obligatory are false, and that they meet the criteria for prosecution under Section 380 of the Criminal Code.
The prerequisites for arbitration
Now follow that reasons why the ostensible 1960 was invalid in law and, by extension, that MacLaren and Neville were lying in order to induce a contract for Neville’s services. The precontractual exchanges included many more falsehoods that are extraneous to these foundational ones on which the entire operation depended at the outset.
The textbook Arbitration Law of Canada, by J. Brian Casey, states the following points:
1. The essence of arbitration is that it is consensual.
2. Ordinary contract law applies to determine whether or not there is an arbitration agreement. There must be an offer and an acceptance in circumstances in which the parties are ad idem (all on the same page).
3. [T]he arbitration agreement is a contract between the parties and is governed by the ordinary principles of contract law.
4. An arbitral tribunal has no jurisdiction to do anything unless it is fully and properly constituted.
Casey’s textbook contradicts, very specifically, what MacLaren and Neville wrote;
It must be remembered that the arbitral tribunal takes its power solely from the agreement between the parties. If it is shown that there is no agreement by reason [that] the agreement has ceased to exist, then there is no consensual basis for the arbitration. … For consensus ad idem the arbitration agreement must be signed by the present parties. … A tribunal has no jurisdiction to do anything until it is duly and properly constituted.
It follows that the 1960 Agreement expired when the signatories sold their respective properties, and the current owners did not stand in the shoes of those signatories.
Requirements for a valid contract
Proceeding from Casey’s Point 3, in the textbook used by the Supreme Court of Canada, The Law of Contract,[2] G.H. Treitel says this about the requirements for a valid contract:
The doctrine of privity means that a contract, as a general rule, cannot confer rights or impose obligations arising under it on any person except the parties to it. The rule that no one except a party to a contract can be made liable under it is generally regarded as just and sensible.
Here’s an example of this point in practice. Under contract law and the principle of privity of contract, your neighbour can’t bind his son to paint your house without his son agreeing to do the job on terms he personally agrees to. Casey says several times, with variations in wording, that to be enforceable an arbitration agreement must be signed by the present parties.
Covenants and easements law
Covenants (agreements) registered on the land title come in two flavours—affirmative (positive) and negative. A negative covenant could forbid the next owners to block a view or to disturb a power line, and it carries forward to the next owners. An affirmative covenant binds only these who signed it. It can require, of those signatories only, some kind of expenditure, like maintaining a fence or, as in this case, submitting to arbitration. Every first-year law student leans about privity in Contract Law 101. A recent case before Ontario’s Court of Appeal, Amberwood,[3] addressed this issue. The future Supreme Court Justice Louise Charron carried forward this long-established principle of Law:
In Parkinson,[4] Cartwright J [in the Supreme Court of Canada] quoted Gale on Easements, 12th ed. at p. 77:
The [1848] rule in Tulk v. Moxhay does not extend to affirmative covenants requiring the expenditure of money or the doing of some act. Such covenants do not run with the land either at law or in equity.
In Sport Maska,[5] the Supreme Court’s Justice L’Heureux Dubé J had earlier confirmed the law stated by Casey and Justice Charron:
Two stages are therefore required: first, the parties promise to resort to arbitration if a dispute arises, and second, when the dispute does arise, they conclude a submission in the proper form.
Justice L’Heureux Dubé explained that you can’t have a valid second step without having the first one already in place.
As a final clincher on this point, the Arbitration Act of Ontario says in its introduction: “This Act applies to an arbitration conducted under an arbitration agreement.” It follows that nothing falls within the purview of the Act without a prerequisite arbitration agreement in good standing.
A salesman’s duty to prospective customers
In addition to the duty of honesty for salesmen set out in Ontario’s Consumer Protection Act, with its provisions for criminal prosecution of fraud, a Canadian template is Fletcher v. Manitoba Public Insurance Co.[6] That case was about the company failing to provide information necessary for the customer to make an informed decision as to what level of insurance to buy. The court ruled that reasonable reliance on information provided by someone selling goods or services can ground a duty of care in tort that binds the provider of the information. The Court said:
In many cases where a misrepresentation has been made to another person, particularly by a professional man acting in the course of his profession, the assumption of responsibility may be readily inferred.
The case against MacLaren and Neville resembles a criminal case in the Supreme Court of Canada, R. v. Théroux.[7] The company entered into agreements with a number of individuals for the purchase of residences. The contracts were made and the deposits taken on the basis of a false representation by the company that the deposits were insured. The
deposits were not insured, as agreed in the contracts, and the company went bankrupt so that the depositors lost their money. Justices La Forest, Gonthier, Cory and McLachlin said this:
The actus reus of fraud [the fact of there having been deception] is established by proof of a prohibited act, be it an act of deceit, falsehood or other fraudulent means, and by proof of deprivation caused by the prohibited act (which may consist in actual loss or the placing of the victim's pecuniary interests at risk). Just as what constitutes a falsehood or a deceitful act for the purpose of the actus reus is judged on the objective facts, the actus reus of fraud by "other fraudulent means" is determined objectively, by reference to what a reasonable person would consider to be a dishonest act.
Conclusion
Reduced to basics, here’s the case for the prosecution.
1. MacLaren and Neville said that arbitration was obligatory.
2. The textbook references and case law show that what they said was false, and it follows that their representations meet the criteria for fraudulent misrepresentation under Section 380 of the Criminal Code.
How then do you find MacLaren, his law firm and Neville on the charge of fraudulent misrepresentation under Section 380 of the Criminal Code?
Appendix I
How the Perley-Robertsons law firm operates
During exchanges between the parties, MacLaren presented an offer to end the ordeal by process that he and arbitrator Neville had induced.
The French-speaking widow Carole Labarthe put numbers to the apparent intentions of MacLaren’s incompetently worded email. She then replied agreeing to pay the amount she had calculated, and MacLaren accepted it. Then she found out that she had miscalculated. When she asked to pay, instead, the correct amount of a thousand dollars less, MacLaren held her to the erroneously calculated higher amount. Cowed by MacLaren’s threat of ever-escalating costs, Carole paid up.
But with Perley-Robertsons having unreasonably refused requests by the parties to address the issues on the basis of the facts and the law, or to file in Small Claims Court, any demand for costs was unconscionable. Including his firm’s claimed make-work and docket-padded costs, MacLaren gouged out of the hapless widow four times as much as the amount of money at issue.
The landmark case for correcting this kind of mistake is Webster v Cecil, dating from 1861. In a more recent case hinging on an essentially identical issue of mistake, Hartog v. Colin & Shields,[8] Singleton J voided the deal and excoriated the dishonest plaintiff. The judge accepted the defendants’ argument, quoted here in the Decision:
There really was no contract, because you knew that the document which went forward to you, in the form of an offer, contained a material mistake. You realised that, and you sought to take advantage of it.
When Labarthe asked Neville to review the obvious injustice, he responded that he did not get involved in negotiations between the parties. Of course, this was not a negotiation. He was hired to settle contested issues.
The foregoing information, when supplied to Tom McDougall and the lawyers at Perley-Robertsons, elicited no response let alone the remediation that one might expect of honest people.
Appendix II
Deep Trouble in Deep River: How Neville operates
On the internet there’s documentation for another case arbitrated by William L. Neville, AWS Engineers and Planners Corp. v The Town of Deep River. It appears to demonstrate Neville’s continuing modus operandi.
Construction of a $5.1 million sewage treatment plant for Deep River was delayed. As a result, there were competing claims for extras and deficiencies that led to litigation.
Instead of engaging a neutral quantity surveyor for fact-finding on location and then ruling on the findings, Neville laboured over the meaning of 138 words in the contract and held 39 days of hearings to gather “evidence”.
Neville attributed the length of the hearings to the lawyers’ miscalculations and said there were endless arguments over the admissibility of evidence.
Each day of hearings cost the parties $5,000 to $10,000. These costs compare with the estimate, in the contract for the work, of $900 per day for liquidating the Town’s damages for delayed completion.
At the end of the four-year process, Neville commented inanely in his judgment:
Much like the Seven Years' War, the parts of this lengthy arbitral proceeding comprised a panorama of skirmishes and full-pitched battles.…Nor was [the AWS Engineers] victory a Pyrrhic one. It established [their] right to more than a paltry sum of money. From my viewpoint of the case, I would say that [AWS Engineers] enjoyed not meager success but modest success.
AWS Engineers had a very different view of the process. Senior manager Jeff McIntyre says, “The arbitration was extremely unsatisfactory both as to the result and, especially, the process.”
The mayor at the time, Ann Aikens, says the process cost the Town hundreds of thousand dollars in legal fees. Eventually the Town just threw in the towel to end the process. According to Helmut Brodmann, the lawyer for AWS Engineers, the Town was ordered to pay for some of the company’s legal costs but only on a “partial indemnity” basis.
As an apparent manifestation of a well-justified inferiority complex, Neville wrote this to the parties in the Water Pipe case:
These were large commercial parties who had deep pockets with very
significant money on the line. It is perhaps understandable that, in their circumstances, the lawyers felt it was necessary to conduct a very formal arbitration.
Translation: From Neville’s perspective, deep pockets, including the bottomless ones of municipal taxpayers, could afford to waste hundreds of thousands of dollars and four years on his arbitration process.
The evidence, including court documents, suggests that Neville’s arbitration for Deep River may have cost the parties twice as much as the eventual award.
Even if this were an appropriate way to proceed, the problem in the Water Pipe case was that he took bidding only from the evidently co-conspiratorial MacLaren.
Neville has lectured to law students on the Rules of Civil Procedure. He also claims to use them. But he does not seem to see it as his job to follow them. Contrary to what Neville says, when an arbitrator stands in for the court, it is the responsibility of the arbitrator, not that of the lawyers, to follow this paramount guideline for the Rules:
These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
In applying these rules, the court shall make orders and give directions [emphasis added] that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.
The evidence suggests that although Neville knows the rules, he doesn’t follow them. As noted above, he said of the lawyers in the Deep River case that they “felt it necessary to conduct a very formal arbitration”. It’s astonishing that Neville would acknowledge publicly in writing that he turned his own administrative responsibilities over to the lawyers appearing before him.
Neville’s modus operandi in the case at hand clearly mirrored what he did in the Deep River case. There are anecdotal reports that he’s been bamboozling customers for years and that in one instance he was fired by a major American retailer.
It’s a terrible indictment of the legal community in Ottawa that Neville was able to stay in business.
[1] Ottawa Citizen, Dec. 19, 2016
[2] The Law of Contract, 9th. Ed, 1995
[3] Durham Condominium Corporation No. 123 v. Amberwood Investments Limited, 2002 CanLII 44913 (ON CA)
[4] Parkinson et al. v. Reid [1966] SCR 162
[5] Sport Maska Inc. v. Zittrer [1988] 1 S.C.R.
[6] Fletcher v. Manitoba Public Insurance Co. [1990] 3 SCR 191
[7] R. v. Théroux [1993] 2 SCR 5.
[8] Hartog v. Colin & Shields [1939] 3 All ER 566