Ethical Investing in Trusts (part I)


Written on June 25, 2015 – 7:56 am | by Paul Fensom

It seems like every month, a Charity or a pension plan is making an announcement about how they have changed their investment mandate to incorporate ‘Socially Responsible Investing’ (“SRI”) standards. There is no question we are witnessing a real growth in these types of investment mandates. In fact, a 2015 report prepared by the Responsible Investment Association (RIA) and Royal Bank of Canada indicated that Canadian assets under management using responsible investing strategies has increased from $600 billion in 2011 to over $1 trillion.

I would like to take the opportunity to use my next couple of blogs to explore SRI investing in the context of estate and trust administration.

The principal SRI strategies that I will refer to include;

 
• Negative screening: In addition to the usual investment goals, a negative screen will eliminate certain types of investments. For example an investor can choose to eliminate investments in tobacco companies, gambling, alcohol or companies with a negative impact on the environment

• Positive screening: A positive screen generally makes use of a scoring system to rank the best of class within any industry. The scoring system focuses on matters such as Board Governance, the companies’ environmental footprint and its social or human relations policies.

• Direct or Impact Investing: active investment of capital in business and funds that generate positive social and/or environmental impacts, as well as financial returns.

A Testator or Settlor can expressly permit or mandate investment choices. However, in my experience this is rarely done and, when it is, the Testator or Settlor will mandate a form of negative screen. The interesting aspect of a negative screen is that it limits the choice of investments and could potentially adversely impact the financial return. I believe this is the principal reason why we don’t see many trusts with negative screens. If the main reason for the trust being established is to generate a financial benefit then why potentially direct a mandate that possibly limits those returns.

In my next Blog I will discuss the growing use of positive screens as an SRI investment strategy and the growing body of evidence that suggests this strategy does not limit financial returns. I will also draw attention to the legal cases that govern how trustees should behave when there is no express language and the Trustees are faced with the question about incorporating an SRI strategy.

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    Carter v Canada informed by lessons from literature


    Written on June 24, 2015 – 6:00 am | by Ken Shulman

    The life and death issue central to the recent SCC decision on physician assisted dying has been portrayed in its most poignant form by the great Canadian writer Miriam Toews in her 2014 novel ‘All My Puny Sorrows’ (AMPS). The SCC has left open the possibility that the change in the law could apply to those who suffer from intractable and unbearable mental illness. In AMPS, Toews conveys the agonizing dilemma facing individuals and families who struggle with chronic refractory depression that can result in a persistent desire for suicide as a relief from unbearable psychic pain. The story also highlights the vicissitudes and capriciousness of receiving appropriate treatment for mental illness in this country. In particular, Toews conveys the vulnerability not just of the individual who is suffering but also the family who suffers along with their loved one and yet is too often ignored and even shut out of the clinical discussions.

    Elfie, the patient in the novel, is a brilliant pianist who reflects the well known association of creative genius with mental illness described  by the psychologist/writer/bipolar sufferer Kay Jamison in her book ‘Touched with Fire’. Elfie’s persistent pursuit of relief by physician assisted death will be at the heart of future decisions faced by the multiple protagonists in the new clinical arena where physician assisted dying becomes a legal option in Canada. One would hope that this will be a very small minority who continue to suffer despite the considerable therapeutic armamentarium that modern Psychiatry has to offer.

    We owe a great debt of gratitude to Miriam Toews who has shared her personal life experiences in this moving story about suicide, our flawed mental health system, deep sisterly love and the way in which the law can be a force for good or evil. The SCC has given us another opportunity for the legal and medical communities to come together to make this world a better place. Let’s make the best of this opportunity.

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      The Sorry State of Civil Trials in Ontario


      Written on June 23, 2015 – 9:42 am | by Justin de Vries

      The length and cost of civil trials is an ongoing and significant problem in Ontario. Chief Justice Strathy of the Court of Appeal has warned: “Our justice system has become so cumbersome and expensive that it is inaccessible to many of our own citizens.” Access to justice is an issue that has preoccupied the bar and bench for the last 20 years (or more).

      The Advocate’s Society, a professional association for trial and appellate lawyers in Ontario, struck a task force to examine best trial practices to address this issue (a dry but nevertheless important topic). It has now produced a report on Best Practices for Civil Trials (despite the name, the report also applies to hearing of applications and alternative models of adjudication).

      Some of the report’s key recommendations can be summarized as follows:

      • As early as possible in the litigation, counsel should confer to determine the likely form and requirements of the final hearing (partial or full summary disposition should be considered), fix a trial date, establish a timetable and attempt to reach a settlement.
      • Parties should consider whether case management could be used to resolve interlocutory disputes without the need for a formal motion (and case management conferences with a judge should be available within 30 days of a party requesting same).
      • The same judge should case manage the entire proceeding and, in some cases, should also conduct the trial/hearing.
      • Serious consideration should be given to having some evidence introduced in writing.
      • The parties should attempt to resolve all procedural issues in advance of the first day of trial, including preparing agreed statements of facts and joint document books, settling issues relating to expert testimony and setting time limits on submissions and examinations. If the parties cannot agree on any matter, they should seek to have it resolved prior to trial at a case management, pre-trial or trial management conference (note that issues relating to admissibility of evidence should be resolved by the trial judge).
      • Counsel should inform themselves about the court’s preferences and technical constraints with respect to documents (e.g. coordinate with the court staff to ensure the judge has the proper software to view electronic documents).
      • Counsel should consider providing written closing submissions on a USB key, with hyperlinks to cases and documents.
      • Counsel should consider having an “electronic trial” which, at its most sophisticated, contemplates all evidence being received and stored electronically.
      • Counsel should retain experts early and serve the report as early as possible.
      • When appropriate, counsel should mark the entirety of the expert report as evidence (if any portions are inadmissible, such portions should be redacted). Note that this is a controversial recommendation that many practitioners will disagree with.

      Hopefully, these recommendations will ensure that civil disputes are resolved more frequently and in a more accessible, proportionate, and cost-effective manner, without compromising fairness. Too many reports have simply been shelved to gather dust.

      Happy Litigating (using best practices of course)!

      Justin

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