Our Take on Things

This past week the President of the BC Law Society created a big stir when people reported comments she made to a Cloud Computing Seminar. Apparently she said that BC Lawyers could only use cloud computing if the cloud was located in BC. The President has since backed away from that statement, but does insist that lawyers must comply with the new BC rules and as always, with Canadian Privacy Rules.

We’re an Ontario law firm, so the BC Rules do not directly impact us. However, we’ve always been cautious when dealing with servers and insist that they be Canadian based if we’re using them for client data. We avoid the Cloud for client related matters as currently, we are unaware of any Cloud based storage servers located solely in Canada.

The biggest concern we have is that any USA based server is subject to the ever watching eyes of the USA government due to the Patriot Act.

Imagine, if you’re a tax lawyer in Toronto, consulted by a Canadian  individual who has both USA and Canadian Tax issues and you store all your client notes, including financial data, on Dropbox. Dropbox servers are located in the USA. Do you really think that the USA government cyber sleuthing might not pick up on your notes?

Have you just breached lawyer/client confidentiality by storing to a non-Canadian cloud? I’m going to suggest you have.

Our firm considers these issues in all of our technology decisions. We ensure our servers and our backup servers are located in Canada. We do our best to protect our client’s confidentiality and uphold our obligations as lawyers.

Cloud computing is great: it is convenient and yes, however, as lawyers convenience must take a back seat to our obligation for lawyer/client privilege.

Inga B. Andriessen JD

Last week Thursday the Canadian Supreme Court released its decision on a case called Bhasin v. Hrynew.   This decision is an important decision in Canadian contract law: if your business uses contracts, this applies to you.

The Court found that there is a new duty of honesty in Canadian contract law.  The intention is to bring our contract law into line with the American laws as well as the Quebec Civil Code.

This new duty of honesty is a requirement that the parties do not lie or mislead each other about their contractual performance.   Each party is still allowed to negotiate and act in their own self-interest, however, if you lie about what you’re doing, you’re breaching your duty of honesty.

This duty of honesty is not a fiduciary duty, but it is getting close to it.

This decision can have huge consequences: businesses should sit down over the next few weeks with their lawyer to discuss any contracts they currently have concerns about.  Better to assess the risk head on instead of wait for a law suit.

Inga B. Andriessen JD

We do not need a government taskforce to investigate sexual harassment in the workplace.

We have excellent legislation that protects people from harassment: the Human Rights Code and the Occupational Health and Safety Act spring to mind.

Employees have no difficulties accessing the Human Rights Tribunal, either on their own or with counsel.

Employees have no difficulties contacting the Ministry of Labour to investigate Workplace Violence issues under the Occupational Health and Safety Act.

Employees have no difficulties contacting lawyers who “don’t get paid until you do” to sue employers.

The CBC will no doubt soon find itself on the receiving end of complaints and law suits dealing with the harassment allegations.  This is how the CBC will learn to improve its’ HR practices to come into line with the private sector.

The government doesn’t need to investigate: if they do, they’ll find that there are processes available and the processes are being used.   Let the processes take there course: we don’t need new ones.

As a lawyer who represents Employers, the discussions this week about sexual harassment in the workplace have been frustrating to listen to.  The reason is that I have not heard anyone discuss the difficult legal position Employers find themselves in when one employee harasses another.

If you are not an Employer who has not been exposed to Wrongful Dismissal litigation lately, you’re likely unaware that it is almost impossible to terminate employees for “cause”.  “Cause” is a fancy legal term that loosely translates into “bad behavior”.

If an Employer investigates sexual harassment allegations and terminates the harasser on the spot.  That Employer will likely be on the wrong end of a law suit for damages for wrongful dismissal.

Canadian case law requires employers to warn employees before termination.  Harassers must be given an opportunity  to respond to the allegations against them, be offered help to overcome any issues they have and then be given an appropriate amount of time to change their behavior.

Obviously, this makes the work place uncomfortable for the victim of the harassment and that victim is a person the Ontario Occupational Health & Safety Act requires the Employer protect.

This legal “rock and a hard place” is a challenge to navigate and one of the topics that needs to be discussed: is this the Canada we want?  Shouldn’t Employers be able to terminate harassers for cause if an independent investigation confirms they are harassers?

Let’s talk about it.

Inga B. Andriessen JD

Just when Canadian businesses thought governments might be done with legislating them to oblivion, word comes of even more oversight that may be coming soon to your business: http://www.canadianlawyermag.com/5334/Data-breach-disclosure-law-could-bring-fines.html?utm_source=responsys&utm_medium=email&utm_campaign=CLNewswire_20141027

In the US, Bill S-4 would amend that country’s Personal Information and Electronic Data Act. The intent is to impose on businesses a requirement to notify individuals of breaches in the security of personal information where there is the potential for significant harm. The individuals affected need to be notified, as does the privacy commissioner. Failure to notify carries a fine up to $100,000.00.

As is discussed in the article, businesses in Canada already voluntarily disclose to individuals and the authorities when a breach is significant and is a threat to the customer’s data.

Is legislation seriously going to change the assessment made by a business as to the need to disclose? Can businesses not be given some credit (pun intended) that they have other interests beside not being fined to ensure that breaches do not occur and that customers are notified if it does happen – such as customer retention, avoiding negative publicity, insurance costs and the bottom line?

Given the usual “how can it hurt” attitude of the electorate and the desire of government to be seen as creating jobs (through increased governance), we should expect to see such legislation here in Canada soon enough.

Paul H. Voorn
Andriessen & Associates, Professional Corp.

Many accounting packages allow businesses to input a rate of interest that is put on every invoice sent out.  Often the rate is expressed as a monthly amount, for e.g. 2% per month.

Unless the interest is expressed as an annual amount, for e.g. 24% per year,  this is a violation of the Canadian Interest Act and a Court will not enforce the rate.  Instead, in Ontario, you’ll be awarded the Courts of Justice Act Rate.  At the time of writing this Blog, that rate is 1.3% per year for pre-judgment interest and 3% per year for post- judgment interest.

Even when the rate is expressed as an annual amount on the invoice, unless you have a signed contract by the debtor to pay that rate, many Judges exercise discretion to reduce the rate to the dreaded Courts of Justice Act Rate.

Yes, it feels like a “technicality” but it is the law.  It is worth taking the time to review your invoices and business contracts with your Business Lawyer to be sure the rate you’re charging is something that can be enforced, should you need to sue on it.

Inga B. Andriessen JD

The Greater Toronto Area, within the past year or so, has been “blessed” with a new a.m. radio station that plays all comedy all the time. As a result, my memories of Jeff Foxworthy and his comedy routine have been re-kindled and in a weird way, inspired this Blog.

The independent contractor/employee issue has been an issue I’ve litigated through most of my 22 years as a lawyer. As with many areas of law,  it makes a cyclical appearance every five years or so.  Lately, the issue has come up a lot during conversations with business owners during October’s Small Business month.

Many “employers” are clearly confused if a person is an employee or independent contractor, so in order to help:

You might be an independent contractor if your “employer” provides the tools of the trade for you.

You might be an independent contractor if your “employer” sets the hours of work for you.

You might be an independent contractor if you are limited in what you can earn and take on no financial risk in your contract.

“Employers” need to pay attention to this issue. If the CRA investigates and finds that a person is truly and employee, the “employer” will be liable for failing to make income tax deductions at source, failing to make Employer contributions to CPP, EI and EHT (if applicable) as well as penalties and interest.

Nobody wants that.

Inga B. Andriessen JD

Business owners who pay legal fees to obtain a Judgment are often worried that they will be defeated by debtors who will somehow manage to avoid paying the Judgment.   This type of concern is definitely something that needs to be factored in, when evaluating: do we sue or do we write this off ?

This type of evaluation should not be done without consulting a Business Lawyer who is experienced in the variety of strategies available to pursue debtors that many General Litigators are not familiar with.   I am that type of experienced Business Lawyer.

In earlier Blogs I’ve discussed using the Oppression Remedy in either the Ontario Business Corporations Act or the Canadian Business Corporations Act on behalf of a creditor to successfully enforce a Judgment against the officers and directors of a corporation as well as new corporations that take over the business of the corporation a creditor has a Judgment against.

Another strategy I have used for many years, dating all the way back to my second year as a lawyer, is attacking transfers of assets by debtors as “Fraudulent Conveyances”.  In one of the matters I acted on (Warsh v. Fink, [1998] O.J. No. 3908) the debtor consented a judgment in favour of a family member.  I convinced the Judge that the judgment was only consented to in order to prevent my client’s claim from being enforced.   This case used a combination of my “Nancy Drew” skills following a document trail as well as using an established legal principle in a new way.

As debtors come up with new and creative ways to try to defeat judgments, it’s important that your lawyer come up with new and creative arguments to shut down those attempts. We’re good at meeting the challenge of difficult debtors and we’re happy to discuss you Business Litigation matter with you if your current lawyer is not meeting that challenge.

Inga B. Andriessen JD

The word trademark sounds important to many. It sounds big.  It sounds expensive.  As a result, many small businesses believe that registering a trademark for their name and/or log is not important.

While cost is always a consideration in any business decision, registering a trademark will actually save legal fees, in the event you are challenged by someone who did register a trademark and takes you to court for infringing.

This is not to say, failure to register a trademark means you will lose the court challenge: however, obtaining your own registration ensures you are far less likely to find yourself defending your brand from attack.

Urban Distilleries Inc. learned the above lesson the expensive way.   The company started marketing its’ vodka and gin as “Spirit Bear Gin” and “Spirit Bear Vodka”.  The company did apply for a trademark on the names and the City of Terrace and Kitasso Band Council opposed the registration.  Rather than following through the legal process to conclusion and defending their registration, the distillery abandoned the process, believing it could continue to use the unregistered trademark.

The City & Council brought a Court proceeding in Federal Court claiming their rights over the trademark and sued the distillery for infringement.   Happily the distillery won the law suit, however, it had a very large legal bill.

The legal bill could have been avoided had the distillery completed the trademark registration process.

When you are starting a business and building your brand, take time to protect that brand. If you use a trademark agent (such as our firm) to register the trademark before you invest a lot of money and time into it, you’ll ensure you’re not throwing away hard work on something someone else is already using.

Our firm charges a flat fee of $ 2 000.00 plus disbursements and taxes to register a trademark. This includes all meetings, correspondence, phone calls and registration documentation to protect your brand.

If you’re a new business, $ 2 000.00 is a lot of money. However, litigation to protect your brand will easily cost you $ 20 000.00 or more.

Some things are worth protecting and your brand is one of them.

Inga B. Andriessen JD

If you are a commercial landlord, then you may have some knowledge of executing a distraint to collect rent owed to you.

If you are owed rent monies, then you have the right (unless it’s been removed in the lease) to take the chattels of your tenant and sell them, with the net proceeds of the sale applied to the rents that you are owed.

Some leases even dictate that certain non-monetary breaches of the lease will trigger a right to collect accelerated rent, thus bringing the right to distrain into play.

Often, a landlord uses a distraint to scare or embarrass the tenant into payment, as the presence of a bailiff in the premises taking an inventory of all of the furniture, computers and artwork on the walls (and taking pictures of it all) does not convey a positive image to employees and clients of the tenant.  Many times, payment flows after to the bailiff for the full amount of the rents owing along with the bailiff’s costs of the distraint.

Distraints can, however, be fraught with danger if used unwisely or if done improperly.  Illegal or irregular distraints can give a tenant a cause of action against the landlord for damages.  Those damages can be very significant if the landlord improperly seizes and sells the chattels of the tenant, which could cause the entire business operations of the tenant to collapse. A common example is an excessive distraint – that is, where more chattels were seized than was necessary to satisfy the arrears.

A distraint cannot be used after a landlord has terminated the lease and locked out a tenant.  However, landlords without an understanding of commercial tenancy law often attempt to do so regardless, realizing too late that the chattels had value or attempting illegally to coerce payment from the tenant by refusing to allow the chattels to be removed.

There is also recent caselaw from the BC Court of Appeal that suggests using a distraint to collect accelerated rent will require the landlord to wait out the accelerated rent months before it can abandon the distraint and instead proceed with a termination of the lease.  That could cost a landlord tens or hundreds of thousands of dollars in lost rent while waiting for those accelerated rent months to pass.

Our office utilizes a bailiff who has decades of experience, which compliments well with our similar years of experience in this area of law.  An experienced counsel and bailiff are essential to properly and effectively exercising a distraint remedy.

Paul H. Voorn LLB