Solicitor Sample Practice Questions
Business Law
John serves as a director of a private corporation but decides to resign due to internal financial issues within the company. After submitting his resignation letter, he discovers that the corporation owes unremitted source deductions and HST to the CRA from before his resignation.
What are John’s obligations regarding these tax liabilities?
A) John may remain personally liable for amounts the corporation was required to remit while he was a director.
B) John is only liable if the CRA establishes that his resignation was not made in good faith.
C) John cannot be held liable for unpaid taxes unless he was directly involved in the corporation’s financial decisions.
D) John is automatically shielded from liability for prior tax debts once his resignation takes legal effect.
Estate Planning
Emma, a single mother, names her brother, Jack, as the guardian of her minor daughter, Lily, in her will. Emma's will also specifies that Jack should manage Lily's inheritance until she reaches the age of 21, but does not create a trust or appoint Jack as trustee of the inheritance. After Emma's unexpected death, Jack steps in as Lily's guardian.
Under the Children’s Law Reform Act (CLRA), what must Jack do to legally manage Lily’s inheritance?
A) Jack becomes the guardian of Lily’s property by virtue of being named in the will and taking on custody.
B) Jack must seek court authorization to act as property guardian, even though the will states that he should manage Lily’s inheritance.
C) Jack is entitled to administer the property under the will without court involvement, unless contested.
D) Jack must notify the Office of the Children’s Lawyer and follow their recommendations before managing assets.
Real Estate
Mark is purchasing a residential property, and during the title search, his lawyer discovers a restrictive covenant registered against the property, prohibiting any construction that exceeds two stories. Mark plans to build a three-story home on the property.
What should Mark’s lawyer advise him to do?
A) Proceed with the transaction and apply to the court post-closing for a declaration that the covenant is unenforceable.
B) Negotiate with the vendor for a price reduction to offset the risk posed by the covenant.
C) Explain that the covenant may be enforceable and may prevent construction unless it is lawfully removed or varied.
D) Rely on municipal approval processes, which override private land use restrictions like covenants.
Professional Responsibility
Emily, a real estate lawyer, is meeting with her client, Michael, to discuss the sale of a commercial property. Michael brings his business partner and his real estate agent to the meeting, asking them to stay and assist in decision-making.
How should Emily handle this situation?
A) Advise Michael that including third parties may affect solicitor-client privilege and proceed only with informed consent.
B) Proceed with the meeting, relying on Michael’s implicit waiver of confidentiality by inviting them.
C) Permit the business partner’s presence as a stakeholder, but exclude the agent to preserve privilege.
D) Decline to continue the meeting unless all non-clients are excluded to protect against future liability.
ANSWERS
Business Law
John serves as a director of a private corporation but decides to resign due to internal financial issues within the company. After submitting his resignation letter, he discovers that the corporation owes unremitted source deductions and HST to the CRA from before his resignation.
What are John’s obligations regarding these tax liabilities?
A) John may remain personally liable for amounts the corporation was required to remit while he was a director.
B) John is only liable if the CRA establishes that his resignation was not made in good faith.
C) John cannot be held liable for unpaid taxes unless he was directly involved in the corporation’s financial decisions.
D) John is automatically shielded from liability for prior tax debts once his resignation takes legal effect.
Correct Answer: A
Explanation: Under s. 227.1 of the Income Tax Act and s. 323 of the Excise Tax Act, directors may be held personally liable for certain amounts that a corporation was required to withhold or remit, including source deductions and HST, where the statutory requirements for director liability are met. Resignation does not eliminate liability arising from failures that occurred while the individual was a director. Generally, the CRA must assess a former director within two years after the person last ceased to be a director. A director may also have a due diligence defence in appropriate circumstances.
Estate Planning
Emma, a single mother, names her brother, Jack, as the guardian of her minor daughter, Lily, in her will. Emma's will also specifies that Jack should manage Lily's inheritance until she reaches the age of 21, but does not create a trust or appoint Jack as trustee of the inheritance. After Emma's unexpected death, Jack steps in as Lily's guardian.
Under the Children’s Law Reform Act (CLRA), what must Jack do to legally manage Lily’s inheritance?
A) Jack becomes the guardian of Lily’s property by virtue of being named in the will and taking on custody.
B) Jack must seek court authorization to act as property guardian, even though the will states that he should manage Lily’s inheritance.
C) Jack is entitled to administer the property under the will without court involvement, unless contested.
D) Jack must notify the Office of the Children’s Lawyer and follow their recommendations before managing assets.
Correct Answer: B
Explanation: Under s. 47 of the Children’s Law Reform Act, a person may apply to the court to be appointed guardian of a child’s property. Being appointed to care for the child does not, by itself, give that person authority to manage the child’s property. Because the will does not create a trust or appoint Jack as trustee of Lily’s inheritance, Jack must obtain the appropriate court appointment before acting as guardian of her property.
Real Estate
Mark is purchasing a residential property, and during the title search, his lawyer discovers a restrictive covenant registered against the property, prohibiting any construction that exceeds two stories. Mark plans to build a three-story home on the property.
What should Mark’s lawyer advise him to do?
A) Proceed with the transaction and apply to the court post-closing for a declaration that the covenant is unenforceable.
B) Negotiate with the vendor for a price reduction to offset the risk posed by the covenant.
C) Explain that the covenant may be enforceable and may prevent construction unless it is lawfully removed or varied.
D) Rely on municipal approval processes, which override private land use restrictions like covenants.
Correct Answer: C
Explanation: A registered restrictive covenant may impose an enforceable private land-use restriction even where municipal zoning would otherwise permit the proposed construction. The lawyer should advise Mark of the covenant and the risk that it may prevent the proposed three-story home unless it is lawfully removed, discharged or varied. Under s. 61 of the Conveyancing and Law of Property Act, the Superior Court of Justice may modify or discharge a restrictive covenant in appropriate circumstances.
Professional Responsibility
Emily, a real estate lawyer, is meeting with her client, Michael, to discuss the sale of a commercial property. Michael brings his business partner and his real estate agent to the meeting, asking them to stay and assist in decision-making.
How should Emily handle this situation?
A) Advise Michael that including third parties may affect solicitor-client privilege and proceed only with informed consent.
B) Proceed with the meeting, relying on Michael’s implicit waiver of confidentiality by inviting them.
C) Permit the business partner’s presence as a stakeholder, but exclude the agent to preserve privilege.
D) Decline to continue the meeting unless all non-clients are excluded to protect against future liability.
Correct Answer: A
Explanation: Emily must protect the confidentiality of information concerning Michael’s affairs and should advise him that the presence of third parties may affect solicitor-client privilege. If Michael understands that risk and nevertheless wishes the third parties to participate, Emily may proceed with his informed consent. Whether privilege is ultimately preserved will depend on the circumstances, including whether the communications remained confidential.