Litigation

Landlord Liability for Tenant Damages

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A recent Court of Appeal case affirming an earlier Supreme Court decision, provides some interesting, and possibly surpirsing, commentary on the allocation of risk in commercial leases.

 

In 1044589 Ontario Inc. carrying on business as Nantucket Business Centre v AB Autorama Ltd. the Ontario Court of Appeal ruled on the liability for damages that resulted from a fire that occurred due to the tenant’s negligent use of a leased unit.   The parties had negotiated an Offer to Lease, which required the tenant to maintain commercial liability insurance (including fire, premises and liability) in the amount of two million dollars.

 

There was a fire and there were damages.  Presumably the amount of damages exceeded the two million dollar cap, or whatever amount the tenant’s insurance paid out in any event, and the landlord attempted to sue for the excess damages.  The landlord was acting under the general rule that a tenant is responsible for damage caused by its own negligence.

 

However, the court held that under the circumstances, the obligation to carry the insurance transferred the risk of loss to the landlord.  The court held that any other result would deprive the tenant of the benefit of paying the insurance premiums.  The landlord was precluded from carrying on its claim against the tenant.

 

If you are a landlord and your standard form leases contain an insurance requirement, you should be aware that they may shifting liability for excess damages on to you.  Whether the Nantucket v Autorama case will apply to your leases will depend on the context of the full lease, the percentage of the building rented, and any other covenants contained in the lease.

 

There are two pieces of advice that we can offer to avoid liability for any damages not covered by insurance. 

 

□        The first is a requirement of tenants to carry insurance well in excess of what might reasonably be required in order to pay for damages.  If insurance fully covers all of the losses associated with the negligent act, then it never becomes an issue.  We recognize of course that insurance is expensive and that this option may not be commercially viable for most tenants.

 

□        The second is to ensure that the lease is drafted so as to give clear and unambiguous consideration to the question of liability for damages that result from negligence.  Such drafting must give regard to the entirety of the lease (including the offer to lease), and factors such as the tenant’s liability for the whole building.

If you have any questions about this, we can review any lease you have in place or any offer to lease that you are negotiating.  We can advise you of your exposure and we can suggest practical solutions.  Don’t hesitate to contact us.

 

Scott R. Young

The Expectation of Privacy in the Workplace

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We are often asked to act for clients who have issues that stem from a conflict of privacy expectations in the workplace.  The expectation never seems to come to a head until there is point issue such as a termination or a workplace incident.  At that point we’re asked to go back and determine whose expectation was more reasonable.

              

The analysis is never easy.  Workers have a right to privacy, but that right is not unlimited.  Employers have a right to monitor the workplace, but that right, too, is not limited.

 

We need to look at a host of factors that will help determine where the appropriate expectation should fall.  The nature of the work done is important – in a law firm, the information dealt with is incredibly sensitive and employees might reasonably expect that there management of that information might be monitored;  in a distribution facility, the goods handled by employees are the only source of revenues and employees might reasonably expect that their interaction with those goods will be monitored.

 

We also look at the various ways that privacy is challenged.  Are employees monitored by surreptitious means, or in accordance with a clear company policy?  Is information collected that serves no purpose?  Is the challenge to privacy as non-invasive as possible?

 

Ultimately, both parties are best served by a clearly thought out policy that considers that collection use and storage of all potentially private information, and the communication of that policy to all employees who might be subject to it.

 

We have experience in both helping employers to draw that line before it becomes an issue, and in dealing with the consequences of breaches of the expectation.  If you are an employer and you are concerned about a workplace privacy issue, please contact us before you make your next step.

 

Scott R. Young

Changes to a Contract

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This week NBC announced that its failed experiment with late night television in prime time was coming to end – sending Jay Leno back to 11:35 p.m. and bumping Conan O’Brien back after midnight.

 

I’m not privy to the details of either Leno’s or O’Brien’s contracts, but generally speaking, this sort of unilateral modification of the terms of employment give rise to one or two legal problems…

 

The principal is simple – one party cannot unilaterally change the terms of what two parties bargained for.  In the case of employment law, an employer cannot fundamentally alter the terms of the employment contract (whether it is written or unwritten) without the consent of the employee.

         

Demotions, decreasing salary, changing titles to something less prestigious, sticking you in the early morning time slot, anything that could be viewed as degrading or embarrassing in terms of working conditions or lowers your actual income, can all be considered such alterations.

 

And once altered, the aggrieved party, the employee, may successfully argue that the terms of the contract of employment have been frustrated and they have been constructively dismissed.  If you are an employer, be very careful about making these sorts of changes.  Speak with your lawyer about the effect and the possibility that your actions are giving rise to significant damages.

 

It’s simple – contracts, whether they are between employers and employees or between billion dollar corporations and million dollar TV personalities, are bargains – promises to do something in the future in exchange for something else.  They are bargains made between two parties.  Any changes to those bargains must also be made between the two parties.

 

If you are an employer looking to make any changes to the terms of employment of your workforce, call us first.  If you are NBC, we don’t envy you the payout that this is going to cost you.

 

–Scott R. Young

New Year, New Rules

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2010 – it’s a whole new world out there for civil litigation – is your law firm up on all the changes? 

(If we’re your law firm, the answer is yes, by the way.)

Here is a quick highlight of two important changes:

Small Claims Court now goes up to $ 25 000.00 – don’t do this yourself, however, retain a law firm – ours handles these matters on a flat fee basis so you don’t get any surprises in costs at the end of the day.

Simplified Procedure is now mandatory for $ 100 000.00, but there is a twist (is it just me, or do I sound like a Reality TV Show host?) the twist being that this procedure, which came in years ago in an effort to reduce legal fees by eliminating discoveries is now bringing back discoveries, but capping them to two hours maximum.

There are also many changes regarding how far in advance documents must be served, so if we are suddenly hounding you to swear materials far earlier than you are used to, please do not shoot the messenger (well, don’t shoot anyone, ever. That is just good legal advice).

As I said at the top, if we’re your law firm, we are on top of the new Rules.  If we are not, ensure your current firm doesn’t charge you for their education, you do not have to pay to educate your law firm!

Happy New Rules (and of course, New Year!)

Season’s Greetings

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It is the time of year when we prepare to celebrate various religious, cultural and seasonal holidays and festivals.  As business lawyers, we are increasingly called on to advise clients as to the best way to enjoy these celebrations with a minimum of offence and a maximum of fun.  Well, okay, no one ever asks us how to make anything more fun, but if they ever did, we would sure have some great ideas …

                               

Most of the trouble at this time of year comes from office parties, alcohol consumption and the celebration of specific religious holidays.  Inga’s blog from a few weeks ago covered a lot of the issues surrounding drinking and office parties.  In terms of the subject of the celebrations, common sense rules the day.

 

Each province has its own human rights legislation and each one of them speaks to discrimination in the workplace.  Celebrations that favour any particular religious tradition are discriminatory and are to be avoided.  Case law is littered with examples of employees seeking restitution for offenses committed by thoughtless employers.

 

Celebrations should be all-encompassing and non-specific.  While it is true that the greater religious significance that a ritual has, the more likely it is to be offensive to those adherents of other belief systems, even seemingly innocuous celebrations can create an uncomfortable atmosphere in the workplace.  Nativity scenes and menorahs are obvious stay-away items, but even the humble poinsettia has been the subject of at least one wrongful dismissal claim.

 

Remember that perception is more important than intention.  Even the noblest intention of sharing one particular celebration with others may cause discomfort and exclusion.  Before engaging in any holiday celebration, it is important to consider the range of perceptions that any activity or undertaking is going to bring about.  Think about it once and then think about it again – and if you’re still in doubt, call us.  We can probably suggest a sensible way to celebrate the joy of the season without stepping on anyone’s toes.  And if you want some ideas for how to make things more fun, we’ve got that covered too.

— Scott Young

Now in the spirit of the season, we offer our own wishes for a joyous season to you.

 

 

 

SEASON’S GREETINGS

 

This seasonal greeting is hereby submitted on the 11th day of December, 2009 (CE) and shall be open for acceptance until 5:00 p.m. Eastern Standard Time on the 24th day of December 2009 (CE).

 

B E T W E E N:

 

ANDRIESSEN & ASSOCIATES, a professional corporation comprised of Barristers and Solicitors, incorporated pursuant to the laws of the Province of Ontario (hereinafter the “Greetors”)

 

and

 

YOU, an individual ordinarily resident in the Province of Ontario and not a non-resident, as that term is defined in the Income Tax Act (Canada) (hereinafter the “Greetee”)

 

WHEREAS pursuant to the belief systems underlying various theistic ideologies, non-theistic ideologies, cultural, astronomical and agricultural observances, many different festivals and events of significance are observed in and around the current period;

 

AND WHEREAS despite popular conceptions to the contrary, those practicing in the legal profession in general, and the Greetors in particular, are, in concert with the various groups engaging in the aforesaid rituals and celebrations, desirous of extending sentiments laden with joy and cheer (hereinafter the “Greeting”) to other humans in general and to the Greetee in particular;

 

NOW THEREFORE in consideration of the covenants and agreements herein and one dollar ($1.00) now paid by each party to each of the other (the receipt and sufficiency whereof are hereby acknowledged) the parties as follows:

 

1          GENERAL PROVISIONS

 

1.1        Deity Non-Specific.  Any reference by the Greetor to any monotheistic, duotheistic, multitheistic deity or to the existence of a deity at all, or the absence of any deity shall be interpreted so as to give effect to the appropriate theistic or non-theistic belief system as preferred by the Greetee.

 

1.2        No Warranty.  The Greetor offers no express or implied warranty as to the soundness or merchantability of the Greeting.  In the event that the Greeting is constructed by a court of competent authority to include a warranty, under no circumstances shall such warranty survive the expression of the Greeting.

 

1.3        Governing Law.  This Greeting will be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. Each party attorns to the jurisdiction of the courts of the Province of Ontario in the event that the Greeting requires adjudication.

 

2          GREETING

 

2.1        The Greetor shall and does hereby extend to the Greetee wishes for the happy (as that term is generally defined) and safe (including, but not limited to the exclusion of all legal, physical or moral perils, as allowed by applicable law) enjoyment of the upcoming, ongoing, or recently passed holiday (or holiday season as the case may be).

 

2.2        The Greetor shall and does further hereby extend to the Greetee wishes that during the aforesaid holiday (or holiday season as the case may be), they be surrounded by those family and friends for whom the Greetee has an affinity or predilection and with whom the Greetee would be and is desirous of being surrounded by.

 

2.3        The Greetor shall and does further hereby extend to the Greetee wishes for a happy (as that term is generally defined) New Year, unless and except in the case where the Greetee is not in observance of, or bound by, the Gregorian civil calendar.

 

2.4        The aforesaid section 2.3 shall not be interpreted as any endorsement for the supremacy of the Gregorian calendar, Pope Gregory XIII or the Roman Catholic Church, nor shall it be construed as any challenge to the supremacy of the Gregorian calendar, Pope Gregory XIII or the Roman Catholic Church.

 

 

IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the day and year first above written.

 

ANDRIESSEN & ASSOCIATES, Professional Corporation

 

Per:______________________________________

I have authority to bind the corporation

 

 

I hereby accept this Greeting and agree to abide by the terms contained herein on this __ day of December, 2009.

 

 YOU

 _________________________________________       

The Most Reliable Law Firm Ever

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Have you been following this ridiculous Rogers/Bell/Telus wars regarding ” the most reliable ” title ?

Wow. A tonne of legal fees have been spent on this and at the end of the day – how important is this victory?

Most business people I speak to are not swayed by advertising on cell phone plans/networks at all – they are swayed by word of mouth – finding out which plan works best for those whose cell phones appear to have good coverage.

The point of this blog is not to talk about cell phone companies (though I love my Fido) – but to point out that sometimes it’s only the lawyers who win – and aside from us, who really wants the lawyers to win?

When considering litigation that is not due to breach of contract, but more based on ” principle ” you must stop and ask, what tangible benefit is going to be recovered? This doesn’t just have to be money, but you do need to ask how much money you want to spend on a moral victory.

I always describe my job as getting paid to pick a fight – but I also am quick to point out to a client when I’m the only one who is going to win that fight and I think it is that trait that truly makes our firm the Most Reliable Law Firm Ever!

Inga B. Andriessen
Sr. Lawyer

Getting the Name Right

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Of all the arcane legal trivia I have picked up over the years of study and practice, one thing that I have never come across, is the reason for the various legal endings that exist for business corporations; there are nine:

Limited
Limitée
Incorporated
Incorporée
Corporation
Ltd.
Ltée
Inc.
Corp.

Wherever they came from, here they are now. Nine separate terms that denote that your business is registered under the Business Corporations Act. Except for the English and French distinction, there is nothing about any of them that carries any distinguishing feature. When I ask clients what legal ending their new corporation will have, they often respond that they don’t care. When I ask clients what legal ending their current corporation has, they often respond that they can’t remember.

That is the extent to which the legal ending doesn’t matter. In every other instance it is incredibly important.

Once chosen, the legal ending is as important as every other part of the name. Mistake an “Ltd.” for a “Limited” and you might as well be talking about another company (except we’re talking about trade-mark matters, which right now we aren’t). These mistakes can be bothersome, time-consuming and costly.

In recent weeks I’ve seen these errors account for thousands of dollars of unnecessary legal fees and dozens of hours wasted on everything from fixing errors in titles to property to multiple PPSA searches to ensure security registration against the right company.

It is vitally important that you get your name right every time. It is perhaps more important to get the names of the corporations that you do business with right every time as well. Entering into a contract with the wrong name on a document will result in considerable expense if it ever becomes an issue for litigation. Searches must be done, investigations must be undertaken, and ultimately a judge will have to be convinced of what should have happened and between whom.

Getting the name wrong will make it impossible to properly secure any debt that you might be taking for a transaction. It will almost certainly make collections, even on a debt, difficult if not impossible. In short it will create a monstrous headache after the fact that could easily have been avoided with a small bit of due diligence.

Before doing business, make sure that you know that you are entering your corporation’s full legal name in the appropriate places. Remember that using a registered business name alone is not enough – the Business Names Act requires that the Corporate name be used, in addition to any name that business is carried on under, in all contracts, invoices or negotiable instruments.

But also make sure that you know that your customers, your suppliers and any other corporations that you do business with are properly identified as well. If you have any doubts, speak to us and we will provide the searches and profile reports necessary to confirm the valid status and proper name of the parties you do business with.

Getting it right the first time is invaluable.

Scott Young

Termination Pay in the Contract for Employment

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In Ontario, and in most Canadian jurisdictions, the law allows an employer to end a contract of employment, and to thereby terminate an employee, at any time. If the termination is for cause, then you had better be ready to prove it. If the termination is without cause, then the law requires you to provide notice of the dismissal to the employee – and that’s the subject of this blog.

There are two options for notice of dismissal – the first is known as working notice. With working notice you inform the employee that you’re letting them go, then you allow them to continue to work (or to collect a paycheque anyway) for a period of time that can be calculated based on a handful of factors, including, most importantly, the employee’s length of service. This is a great option for the fantasy scenario where you know in advance what your work requirements are and the fantasy employee will continue to earn their paycheque right up until the last day.

In reality however, the reason that most employers dismiss an employee is because they want them out of the workplace immediately. That is where the second form of notice comes in; it is referred to as pay-in-lieu of reasonable notice. In this scenario, an employee is paid, either in lump sum, or in installments, an amount equivalent to their pay for the duration of the above-mentioned notice period. It is not uncommon for an employer to be faced with the obligation of paying a long-standing, though ill-performing, employee for an equivalent of a month or more, for every year of the employee’s service – and if the employee disputes your calculation of their entitlement, add legal fees to the payout…

These are the two unpleasant options that every employer who doesn’t plan for the inevitable has to choose from when faced with the already daunting task of having to dismiss an employee.

A third alternative, and one we recommend to clients wherever practicable, is to draft a contract for employment that includes a fair and reasonable limitation on the notice period that the employee will be entitled to on dismissal. This option provides clarity to both the employee and the employer and it provides an unambiguous dollar value to the dismissal entitlement. This allows the employer to weigh the real cost of dismissal. Perhaps most importantly, if done properly, a notice limitation eliminates the need for litigation.

A properly drafted contract, including an explicit clause outlining an employee’s dismissal entitlement will almost certainly save you the legal fees involved in drafting it – every time you use it. If you are an employer who values certainty, please contact us about drafting the contract that all of your new employees should be signing.

Scott R. Young

The Importance of Knowing your Customer

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Many clients come to our firm seeking help to get paid on outstanding invoices and contracts.

A common question for new clients to ask is: do I have to pay if the defendant turns out not to have assets and our answer is yes – we charge our rates as stated to you up front.

This question, when asked, shows that the business of the client is operating blindly – if you are hoping your lawyers will take a leap of faith on the fact that your customer has assets, but is just refusing to pay you – then you don’t know your customers and you should.

Credit applications are very important tools to ensure that you know who you are dealing with and including on them an authorization to perform periodic credit checks on systems such as Equifax is even more important, particularly if payment slows or cheques start bouncing.

Similarly, know if you’re dealing with a corporation, partnership or sole proprietorship – ask the question and then spend the $ 20.00 to do a corporate search and ensure the information is accurate.

Having the information about your customer before you provide them with products and/or services can save you a lot of money in the long run – after all, you’re in business to get paid, not to chase your money.

Our firm can help you set up a legal (because there are some things you cannot ask) credit application and guide you in what checks you need to take care of to protect your business – it’s less expensive to use our firm on that type of work, than to retain us to sue someone who you don’t really know.

Inga B. Andriessen, Senior Lawyer

The Small Claims Court Limit is Changing

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In only a few short months, your options when litigating a claim are going to dramatically change.

On January 1, 2010, the limit for claims that can be brought in the Small Claims Courts in Ontario will increase to $25,000.00. That is a huge increase from the current limit of $10,000.00.

Of course, you can always bring your action in Small Claims Court if the amount you are owed is over the limit, but you have to cap the claim at the court’s jurisdiction level ($10,000.00 now and soon $25,000.00).

The court rules regarding costs were previously amended, eliminating fixed amounts for costs. Now, the catch-all word used for awarding costs in the Small Claims Court Rules is “reasonable”.  That wording will not likely change. What will change will be the maximum amount of costs that will be awarded to a successful part, which will now be capped at $3,750.00 (15% of the amount of the claim).

Companies and individuals can continue to act on their own behalf in the Small Claims Court without the need for legal representation. However, I do not recommend that you do this.

There are too many aspects of a lawsuit that self-represented parties just do not know. Do you know how to properly plead your case? Do you know the Rules of Evidence? Do you know how to summons a witness to trial? Do you know the difference between examining in chief versus cross-examination? Do you know how to introduce exhibits at trial?

Your lawyer will know how to do these things.  This is where hiring counsel pays off, especially now that there is much more at stake in the Small Claims Court.

Inga B. Andriessen
Senior Lawyer