bc take five february 2013

604-879-4280 | [email protected]

6

t

BRITISH COLUMBIA EDITION EDITION

INSIDE THIS ISSUE:

Negligence; Duty of Care; Food Inspections

Administrative Law; Professional Discipline; Standard of Review

Municipal Law; Elected Officials; Conflict of Interest; Societies - With 2 Counsel Comments

Class Actions; Real Estate Development; Condominiums - With Counsel Comments

Bailment; Insurance; Subrogation - With Counsel Comments

16

op

Prepare to Win.

ON PO I N TLEGAL RESEARCH

3

20

8

February 2013

Tweet yourself well - p.2

6

Featured Cases:

mailto:[email protected]

604-879-4280 | [email protected]

2

Still trying to find time to tweet, blog, comment, and get linked in?

OnPoint Legal Research has designed four packages to make it easy for you to discover the benefits of social media marketing. We provide articles on recent and relevant case law to

enable you to keep in contact with your existing clients and to acquire new ones.

We do the legal writing, you do the posting.

A. Basic Case SummaryB. Case Summary of Choice

C. Case Summary with Counsel Comments

D. Create Your Own Article

Select one of the cases we have featured in Take Five and we will create a case summary of that decision appropriate for an audience of non-lawyers.

Price breaks for purchases of 3,6, and 12 future articles.

Select a recent decision relevant to your practice area and we summarize it in an article written for an audience of non-lawyers.


Select a recent decision relevant to your practice area and we summarize it in an article written for an audience of non-lawyers. We also interview counsel involved in the decision to obtain their comments for inclusion in the article.


Nobody knows better than you do what would be of interest to your clients and potential clients. We can research and prepare an article on any ground-breaking legal issue.


February 2013

604.879.4280 | [email protected]

3

3

The Appellants were The Los Angeles Salad

Company Inc. and Los Angeles Salad International Inc. The Respondents were Canadian Food Inspection Agency (“CFIA”) and Her Majesty the Queen in Right of Canada as represented by the Attorney General of Canada. The Appellants exported carrots from the United States for sale in Canada, which were subject to inspection by CFIA. There were reports of illness by consumers

who had eaten the Appellants’ carrots, subsequent to which CFIA, the Public Health Agency of Canada and Health Canada inspected the carrots. Based on the results of this inspection, CFIA issued a public advisement that the carrots should not be consumed as they might be bacterially contaminated. The carrots were recalled from sale and destroyed. It was later discovered that the carrots were not contaminated and were not the source of any illness. The Appellants sued on the basis that the inspection was done negligently. The Respondents applied to have the action struck on the basis that they owed no duty of care to the Appellants. In chambers, the judge found that it was plain and obvious that the Appellants’ statement of claim did not disclose a cause of action. CFIA’s duty was owed to the public rather than to food importers, and furthermore there was not sufficient proximity between the Appellants and CFIA to support a duty of care in this case.

The Los Angeles Salad Company Inc. v. Canadian Food Inspection Agency, 2013 BCCA 34Areas of Law: Negligence; Duty of Care; Food Inspections

Description: Food inspection agencies owed no duty of care to food suppliers to act reasonably when inspecting or when publishing inspection results.

BACKGROUNDCLICK HERE TO ACCESS

THE JUDGMENT


http://www.courts.gov.bc.ca/jdb-txt/CA/13/00/2013BCCA0034.htm


http://www.tvsbarristers.com

OnPoint Legal Research | Take Five


4

4

The appeal was dismissed and the action was struck. The

Court confirmed the chambers judge’s approach that the matter should be struck only if it was plain and obvious that it did not disclose a cause of action: Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959. In considering whether CFIA owed a duty of care to the Appellants to properly inspect the goods, the Court proceeded from the basis of Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.) (“Anns”), and Cooper v. Hobart, 2001 SCC 79, (“Cooper”). If the type of duty of care alleged had been previously recognised by the courts, its existence between the parties could be presumed on a prima facie basis. But if the

APPELLATE DECISION

alleged duty of care had not yet been recognised, the court was to consider the elements necessary to establish a duty of care: whether the harm was reasonably foreseeable, and whether the parties were sufficiently closely related to make it just and fair to impose a duty of care. Courts were also to consider whether policy considerations affected the imposition of a duty. In this case, the alleged duty of care was not analogous that found in other cases involving negligent inspections by government entities, such as Ingles v. Tutkaluk Construction Ltd., 2000 SCC 12 (“Ingles”), Adams v. Borrel, 2008 NBCA 62 (“Adams”), Just v. British Columbia, [1989] 2 S.C.R. 1228 (“Just”), and Northern Goose Processors Ltd. v. Canadian Food Inspection Agency, 2006 MBQB 198 (“Northern Goose”). In Ingles, Adams, and Just, the inspections were carried out pursuant to a legislative scheme intended to protect those who were actually injured by the negligent inspections. In this case, food inspections were intended to protect the public, not the appellant food suppliers. The relationship

The Los Angeles Salad Company, (cont.)

WE SERVE...INSURANCELEGALCORPORATE

www.csrinvestigations.com

WE OFFER...SURVEILLANCEINVESTIGATIONSLEGAL PHOTOGRAPHY

WE ARE...EXPERIENCEDPROFESSIONALOBJECTIVE

Box 44026 RPO Kensington Square • Burnaby, BC • V5B 4Y2T (604) 444-5182 • F (604) 444-0746 • [email protected]

CSR Investigations Inc. [BC Take Five].indd 1 1/23/2013 8:50:19 PM


http://www.csrinvestigations.com

February 2013


5

5

was sufficiently different that the duty of care alleged by the Appellants could not be said to have been recognised in the cited cases. Northern Goose found a duty of care for a food inspection agency related to negligent misrepresentation of facts and results related to food processing, but the Court declined to follow this case as it failed to adequately set out the analysis which supported its finding. The Court held that the purpose of the food inspection regime was to protect the health of the public, and that imposing a duty of care on CFIA in favour of food sellers would conflict with that purpose and “have a chilling effect on

the proper performance of [inspectors’] duties”. The statutory scheme was therefore incompatible with a prima facie duty of care: R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, at para. 47. Such a duty of care would also impose indeterminate liability on the regulator as the range of the duty of care could not be naturally limited: Fullowka v. Pinkerton’s of Canada Ltd., 2010 SCC 5. For these reasons, the Appellants’ claim could not found liability in negligence and the action was struck. The Court also considered the appropriate remedy for claims related to statutory inspections. The unreasonable exercise of statutory powers by a regulator was properly addressed by judicial review, not by an action in negligence: Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817. Authorities responsible to enforce statutory regimes did not thereby undertake a duty to act reasonably or prudently towards the regulated parties.

The Los Angeles Salad Company, (cont.)

We are a boutique business litigation law firm in Vancouver, BC. We welcome referrals in the following areas:

• Corporate & Shareholder disputes • Contract Disputes• Employment Law Issues• Franchising & Distribution issues• Commercial tenancy & real estate disputes• Injunctions and Anton Pillar Orders

Suite 906 Cathedral Place925 West Georgia Street

Vancouver, B.C. V6C 3L2

JOSEPHSON ASSOCIATES

Tel: 604.684.9887Fax: 604.684.3221

[email protected]


http://www.jabarristers.ca



6

6

The Appellant was Vivian Chiang. The Respondent

was the Law Society of British Columbia. The Appellant sought judicial review of a decision of a Bencher Review Panel, which reversed a majority decision of a Bencher Hearing Panel that had dismissed proceedings for a citation for professional misconduct. The review was undertaken pursuant to section 47 of the Legal Profession Act, S.B.C.

1998, c. 9, which stated that parties to a decision of a Hearing Panel could “apply in writing to the Benchers for a review on the record”. The Review Panel could “(a) confirm the decision of the panel, or (b) substitute a decision the panel could have made under this Act.” The Review Panel agreed with the dissent, and substituted a finding of professional misconduct in respect of one allegation, but confirmed the Hearing Panel’s dismissal of all other allegations. The Appellant argued that the Review Panel had failed to properly defer to the findings of the Hearing Panel, but rather had substituted its own decision and misapprehended the evidence as found by the Hearing Panel.

BACKGROUND

Law Society of British Columbia v. Chiang, 2013 BCCA 8Areas of Law: Administrative Law; Professional Discipline; Standard of ReviewDescription: Benchers Review Panels were to review Benchers Hearing Panel decisions on the basis of correctness; on appeal, Review Panel decisions were held to a standard of reasonableness.

CLICK HERE TO ACCESSTHE JUDGMENT

• EstateLitigation• MedicalMalpractice

• DebtRecovery• ShareholderDisputes

604-669-6609hobbsgiroday.com908-938HoweStreet,Vancouver,V6Z1N9




http://www.hobbsgiroday.com

February 2013


7

7

Law Society of British Columbia v. Chiang, (cont.)

The Court dismissed the appeal and confirmed the

decision of the Bencher Review Panel. The Court held that the wording of the Legal Profession Act was clear, and that the Review Panel was entitled to consider the decision made by the Hearing Panel on a standard of correctness. Section 48 of the Legal Profession Act provided a right of appeal of the Review Panel decision to the Court. The Court held that on such appeals, it was required to treat the decision of the Review Panel with deference and the review should be made on a standard of

APPELLATE DECISIONreasonableness. So long as the Benchers’ process and decision were justified, transparent and intelligible, and not “based on a material misapprehension of the evidence or… otherwise clearly wrong”, the Court should refrain from substituting its own decision for that of the panel: Christie v. The Law Society of British Columbia, 2010 BCCA 195, Canada (Citizenship and Immigration) v. Khosa, 2009 SCC 12. In this case, the Review Panel was specifically entitled to substitute its decision for that the Hearing Panel. The Review Panel considered the majority and dissenting reasons of the Hearing Panel, and determined that the dissenting reasons were correct. The decision was well-supported by the analysis in the dissenting reasons, and by the decision of the Review Panel, and was based in the evidence as found by the Hearing Panel. It could not be said to be other than justified, transparent and intelligible, and it was not grounded in a misapprehension of the facts.

Discovery needs willing partners.When your client remembers the BC Cancer Foundation in their will, they’ll be supporting world-renowned research in BC that is shaping the future of cancer care.

Please be sure to use the full legal name of our organization: BC Cancer FoundationRegistration Number: 11881 8434 RR0001

For more information, please contact Isabela Zabava, LL.B at 604.877.6040or [email protected]

Help create a better future for everyone touched by cancer.


http://www.bccancerfoundation.com



8

8

BACKGROUND

Schlenker v. Torgrimson, 2013 BCCA 9Areas of Law: Municipal Law; Elected Officials; Conflict of Interest; SocietiesDescription: Local government officials were in a conflict of interest when dealing with non-profit societies of which they were directors.

The Appellants were Norbert Fred Schlenker, Ted Bartrim,

Alison Mary Cunningham, Harold Derek Hill, Malcolm George Legg, Dietrich Luth, Victoria Linda Mihalyi and Mark Lyster Toole. The Respondents were Christine Torgrimson and George Ehring. The Respondents had been elected trustees of the Local Trust Committee for Salt Spring Island (“Salt Spring Island”), a statutory corporation pursuant to the Islands Trust Act, R.S.B.C. 1996, c. 239, which held certain local government powers. In 2011, the Respondents were involved in the incorporation of the Salt Spring Island Water Council Society and the Salt Spring Island Climate Action Council Society (collectively, the “Societies”) and sat as directors as one or both of the Societies at the same time as they were trustees for Salt Spring Island. The Respondents, in their role as trustees for Salt Spring Island, approved grants to the Societies. The Appellants were electors in Salt Spring Island, and alleged that the actions of the Respondents breached s.100 of the Community Charter, S.B.C. 2003, c. 26, which provided that:

100(2) If a council member attending a meeting considers that he or she is not entitled to


A DIVISION OF CANACCORD GENUITY CORP., MEMBER – CANADIAN INVESTOR PROTECTION FUND

Randal van Eijnsbergen, CIM Senior Investment Advisor Portfolio Manager

T: 604.643.7021

[email protected]

www.randalvan.com

66% of the TSX pays dividends higher than the10-year government bond yield.

Markets change. You change. Isn’t it time youmade sure your portfolio keeps up?

Contact us for our current piece on How to TellGood Dividends from Bad with a list of our topdividend-paying equities for 2013.

vanE_Take5_J18fin_Layout 1 13-01-18 12:13 PM Page 1




http://www.randalvan.com

February 2013


9

9

Schlenker v. Torgrimson, (cont.)

participate in the discussion of a matter, or to vote on a question in respect of a matter, because the member has

(a) a direct or indirect pecuniary interest in the matter, ...the member must declare this and state in general terms the reason why the member considers this to be the case.

(3) After making a declaration under subsection (2), the council member must not do

anything referred to in section 101 (2).

101(2) The council member must not

(a) remain or attend at any part of a meeting referred to in section 100(1) during which the matter is under consideration,

(b) participate in any discussion of the matter at such a meeting,

(c) vote on a question in respect of the matter at such a meeting, or

(d) attempt in any way, whether before, during or after such a meeting, to influence the voting on any question in respect of the matter.


http://www.onpointlaw.com



10

10


(3) A person who contravenes this section is disqualified from holding an office described in, and for the period established by, section 110 (2), unless the contravention was done inadvertently or because of an error in judgment made in good faith.

In Supreme Court, the judge held that the Respondents’ positions as directors of non-profit

societies did not constitute a “personal pecuniary interest” prohibited under s.100(2)(a) of the Community Charter. The chambers judge found that the trustees did not receive (nor was it alleged that they received) any financial gain. The judge relied on Fairbrass v. Hansma, 2010 BCCA 319, in finding that the Respondents’ roles as directors of the Societies did not create a pecuniary interest in the dedication of funds to the Societies. The Court also found that the reasonable person would not perceive a non-pecuniary conflict of interest on the part of the elected officials because the societies were so closely related to the purposes and goals of local government.

Speed

ScenePHOTOGRAPHS & DIAGRAMS

Unbiased pictorial and diagrammatic views for MVA and personal injury scenes

Photography day or night, rain or shine | Scale diagrams

Courtroom-ready packages | Witness experience | Video

Serving British Columbia Since 1986

Phone/Fax: Toll-Free from Vancouver604.856.3888

Email:[email protected]

Website:www.speedscene.ca

Address:35155 High Drive,Abbotsford, BCV2S 2X7


http://www.speedscene.ca

February 2013


11

11

The Court allowed the appeal and declared the Respondents

had voted on questions contrary to s.101 of the Community Charter. The Court first dealt with issues of standing and mootness. The Community Charter required that at least ten electors bring this type of petition, but several had dropped out after the action and only eight were left at appeal. The Court held that although ten electors were required to file a petition, there was no restriction in the Community Charter as to a number required to pursue the appeal, and any subset of the parties to the petition could pursue an appeal. Regarding mootness, although the Respondents were no longer in office, a declaratory remedy could be granted even without corresponding consequential relief: Supreme Court Civil Rules, Rule 20-4. Furthermore, hearing the appeal served a public interest in settling the law regarding the conduct of public officials. The Court considered the relationship between the Respondents and the Societies and found that it satisfied the definition of “a direct or indirect pecuniary interest” as used in s.100(2)(a) of the Community Charter. This type of provision should

APPELLATE DECISIONbe given a broad construction consistent with the purpose of preventing divided loyalties in financial matters: Re Moll and Fisher (1979), 96 D.L.R. (3d) 506 at 509. The Court referred to the decision of the Supreme Court of Canada in Old St. Boniface Residents Assn. Inc. v. Winnipeg (City), [1990] 3 S.C.R. 1170, which set out the common law rule that “a member of Council is disqualified if the interest is so related to the exercise of public duty that a reasonably well-informed person would conclude that the interest might influence the exercise of that duty.” Pecuniary interests were not limited to personal financial gain, but could include, as in this case, an “indirect interest, pecuniary in nature, in the fulfillment of the respondents’ fiduciary duty as directors.” The Respondents were directors of the Societies, and therefore bore a fiduciary duty to put the Society’s interests first. The Court held that as a result of their positions, the Respondents automatically had an indirect interest in awards made to the Societies. When voting on the matter as trustees of Salt Spring Island, their duties to Salt Spring Island were in direct conflict with their duties to the Societies. As a result, “the public did not have the undivided loyalty of their elected officials.” It was this type of conflict that s.100(2)(a) of the Community Charter was intended to prevent.





12

12

“There is no doubt that the Schlenker v. Torgrimson

decision is already impacting on the choices that those elected to local government must make regarding which master they will serve. This is an intrinsically divisive issue. For some, the crux of

the matter is the need to promote expediency and efficient delivery of public services by local government. For others, the question that arises is proper transparency in the process of local government.

The conflict of interest provisions in Part 4 of the Community Charter apply to most, if not all Local Government elected officials, including Municipal Councillors, Regional District Directors, and Islands Trust Trustees at least. I will refer to them here as “Council Members”. There is no doubt the decision will bring about changes for Council Members in the future.

For example, it has become a regular practice amongst some Regional Districts to appoint Council Members to fill leadership roles on the boards of not-for-profit societies that are funded to facilitate the delivery of public services or other desirable social objectives that these societies espouse. Details of the expenditure of public money “granted” to these societies for their programs are thereafter not subject to disclosure as of right to the public, and their role as directors require the Council Members to make decisions only in the best interests of the society. Citizens must be members, or otherwise interested in the societies in question in order to effectively raise any issue regarding the actual allocation of these tax payer dollars. Should Council Members be governing in a way where there is such a divided loyalty and lack of transparency? Do they even want to? This decision makes it clear the answer lies not in how a Council Member may address the divided loyalty, but what the public is entitled to. Justice Donald for the Court said: “the public is disadvantaged by the conflict, whether the respondents derived any personal gain or not, because the public did not have the undivided loyalty of their elected officials”.

COUNSEL COMMENTS Schlenker v. Torgrimson

Comments provided by L. John Alexander and Aurora Faulkner-Killam, Counsel for the Appellants

Aurora Faulkner-KillamL. John Alexander


February 2013


13

13

The chambers judge in assessing the situation was persuaded to follow two paths. First that the beneficial objective sought to be achieved by the societies negated the existence of a conflict of interest in the first instance. In so doing he elided the critical search for an interest with the planning objectives to be achieved. However, it is clear that the common law, as stated by the Court of Appeal and the governing statutes of other jurisdictions agree that the ends do not justify the means. Second, the chambers judge examined whether or not actual personal financial gain was shown. The Appeal decision now firmly establishes that it is not necessary to “follow the money”.It is interesting to note that the record contained evidence that one of the societies had represented it had a broad membership including numerous individuals, stakeholders and organizations but, when faced by a demand under the Society Act to view the society’s records that was made by a “notional” member, the society swore its membership role was in fact limited to the original five applicants for incorporation, including of course the two respondent Trustees. Although the question before the court was not about how societies control their membership, it is of significant practical consequence. If public money passes to a society, even a society with a public purpose, only those people who the society decides are eligible for membership may scrutinize its expenditures. As a consequence of the decision, many Council Members are now forced to make an election between continuing to sit in their leadership roles with the various societies, which will require them to absent themselves from the council table when any matter to be considered touches upon the interests of those societies, or resign from the societies and continue to enjoy the full roll of elected office. Some local governments are already calling for clarification of, or amendments to, the Community Charter conflict provisions. Clarification of the law on point may not be unwelcome. However, an exception for Council Members who seek to conduct some of their duties through private societies would not be in line with the common law, or with legislation in other Canadian jurisdictions. In particular, the Ontario Municipal Conflict of Interest Act, R.S.O. 1990, c. M50 clarifies the point: it is express that filing the role of director in a corporation or society constitutes an interest for the purposes of determining conflict. One only has to imagine the difficulty that could result in the event that a society directed by a Council Member was accused of some financial impropriety. Would the Council Member be in a position to vote on any measure taken by the local government in response, notwithstanding the director’s legal responsibility for the situation in the first instance? To legally exempt in situations of this kind flies in the face of the long established legal principles that assure public office accountability.”

COUNSEL COMMENTS




14

14

“The problem of local elected officials wearing more than one hat in their community is not new. Many local government elected officials are elected

precisely because of their involvement with their community. Others are appointed by their local government to sit as directors of society boards which receive funding from the local government for the purpose of providing some accountability to those boards by elected representatives of the community. In many cases, such as police boards, or library boards, this “wearing of two hats” is mandated by statute.

The use of non-profit societies to coordinate between various local governments (and indeed representatives of provincial and federal governments) is fairly pervasive in British Columbia. These non-profit societies generally require representation by elected officials from each participating government to sit on the board, and further also require joint funding arrangements by the participating local governments to pay for meeting and staff resources. The tool of the non-profit society allows for equal participation in the organization where more than one local government has a stake in the outcome.

In this case, the elected Trustees of Salt Spring Island, as well as the elected director of the Capital Regional District, were involved in two organizations created for the purpose of coordinating the efforts of various levels of governments and community organizations on Salt Spring Island: the Salt Spring Water Council and the Salt Spring Climate Action Council. The Water Council, for example, brought together elected representatives from the two local governments with jurisdiction over Salt Spring Island, the Islands Trust and the Capital Regional District, together with representatives of water improvement districts, and other organizations active on Salt Spring in monitoring and managing water use on the Island. The Water Council was incorporated into a society in 2011 for the express purpose of obtaining access to grant funding from the Capital Regional District, with the elected officials from both the Islands Trust and the CRD appointed as directors, and the expectation that the organization would be funded, at least in part, by the participating governments.

COUNSEL COMMENTS

Comments provided by Francesca Marzari, Counsel for the Respondents

Francesca Marzari

Schlenker v. Torgrimson


February 2013


15

15

However, as the Court of Appeal decision makes clear, the use of a non-profit society for these purposes can be highly problematic. Doing so requires the elected official to wear “two hats,” and to have independent duties and obligations to both the local government and to the non-profit society. As a director of the non-profit society, the elected official will frequently have at least a non-pecuniary conflict in relation to implementing or considering the representations of that society to the local government. With respect to funding matters, it is now apparent from the Schlenker decision that the elected officials will also be considered to have a disqualifying pecuniary interest in those matters, that prevents them from participating in the very decisions that the local government likely appointed them to be involved in.

It is likely that local government elected officials appointed to boards and commissions created by statute will continue to be permitted to act in their dual capacity as directors and elected officials.

In Save St. Ann’s Academy Coalition v. Victoria (1991), 5 MPLR (2d) 331, our Court of Appeal considered the appointment of two City of Victoria councillors to the Provincial Capital Commission, a Crown corporation, and found that the councillors could not be required to disqualify themselves from voting on Council resolutions in relation to matters pertaining to the Commission’s property, as this would defeat the statutory scheme of having them appointed to the Commission. Therefore, statutorily authorized conflicts of this nature should not give rise to the assignation of a personal pecuniary conflict that was found in Schlenker, or at least, it will be treated as an exception to the rule.

However, the Schlenker decision is likely to have a profound effect on the participation of local governments in community initiatives that are currently organized or run through a private non-profit society model. Elected representatives put themselves at risk of disqualification from office if they accept a position as director on the society with the goal of acting as a sort of intermediary with that society. Rather, elected officials will be required to keep their two roles entirely separate if they do participate in non-profit society work, and local governments will have to rely on new and different models to coordinate and cooperate across jurisdictional lines.”

COUNSEL COMMENTS




16

16

BACKGROUND

Bosworth v. Jurock, 2013 BCCA 4Areas of Law: Class Actions; Real Estate Development; Condominiums

Description: Class actions by individual strata lot owners were permitted under the Class Proceedings Act, despite representative action provisions of the Strata Property Act.

The Appellants were Oswald Jurock, David

Barnes, Ralph Case, Standard Apartments Ltd., Proper Tee Investments Ltd., and Greenwich Holdings Ltd. The Respondent was Gregory Bosworth. The Appellants were joint venture participants and principals of a developer corporation that marketed strata lots in the Roosevelt Apartments, a converted rental building in Prince Rupert. The Respondent purchased a unit in the Roosevelt Apartments, and subsequently the strata council of the building confirmed deficiencies to the common property exterior cladding, which required repairs estimated at $35,109 per strata lot. The developer had provided a disclosure statement under the Real Estate Development and Marketing Act, S.B.C. 2004, c. 41 (“REDMA”), which included a statement that an engineer’s report had confirmed that the building was ‘free from material defect’. The Respondent argued that

the disclosure statement was inadequate as it failed to disclose a number of deficiencies and problems with the buildings. The Respondent brought an action for misrepresentation, and sought to have it certified as a class action on behalf of all purchasers of strata lots in the Roosevelt Apartments. In chambers, the judge certified the class action.

OnPoint is proud to announce that we have joined the impressive crew of contributors

for SLAW, a far-reaching and highly respected Canadian Law blog. On one Sunday a

month we will be featuring a case summary, commentary, and counsel comments in a

column called Summaries Sunday: OnPoint Legal Research.

Bosworth v. Jurock was the first case to be discussed in this new SLAW feature in

February.

If you don’t already follow SLAW, it is well worth your time: www.slaw.ca



http://canlii.ca/en/bc/bcca/doc/2013/2013bcca4/2013bcca4.html



February 2013


17

17

The Court dismissed the appeal and upheld

the certification order. The pleadings met the requirements of section 4(1) of the Class Proceedings Act, R.S.B.C. 1996, c. 50, setting out a cause of action, an identifiable class of two or more persons, common issues to be determined in the claims of the class members, and a representative plaintiff who fairly and adequately represented the proposed class. The only question arose out of section 41(a) of the Class Proceedings Act, which provided that it did not apply to proceedings “that may be

APPELLATE DECISIONbrought in a representative capacity under another Act”. Sections 171 and 172 of the Strata Property Act, S.B.C. 1998, c. 43, permitted a strata corporation to bring an action on behalf of and as a representative of owners. The Court held that section 41 of the Class Proceedings Act barred certification only if another Act authorised the plaintiff, and not another party, to bring the action in a representative capacity: Knight v. Imperial Tobacco Canada Ltd., 2006 BCCA 235, and Seidel v. TELUS Communications Inc., 2011 SCC 15. In this case, the Strata Property Act permitted only the strata corporation to bring a representative action. The Respondent, as an individual owner, could not bring such an action and was therefore not barred under section 41(a) of the Class Proceedings Act. The Court also noted that it was unclear whether the strata corporation could bring a representative action for misrepresentation in a disclosure statement. In Strata Plan LMS 1564 v. Lark Odyssey Project Ltd., 2008 BCCA 509, this question had been described as “arguable”. However, given the decision regarding the class proceeding, the Court found no need to settle the issue.

Bosworth v. Jurock , (cont.)


http://onpointlaw.com/



18

18

“The Court of Appeal decision in Bosworth clarifies

the operation of the statutory bar found in section 41(a) of the Class Proceedings Act (“CPA”). It also helps to establish another procedural route for claims brought in relation to strata units.

Bosworth endorsed and applied the existing law that for the section 41(a) bar to apply, the plaintiff for both proceedings must be the same person – it is not sufficient if the same action can be brought on a representative basis by someone other than the proposed class plaintiff. Prior jurisprudence focussed almost exclusively on the Business Practices and Consumer Protection Act and the predecessor Trade Practices Act.1 As such, the main question in Bosworth was whether the same judicial interpretation would apply to a different statutory context, in this case, the Strata Property Act (“SPA”). In affirming that interpretation, the Court of Appeal has, in our view, established that section 41(a) of the CPA will be interpreted similarly in future cases, including in connection with different statutes.

The case also raised the question whether a strata corporation has standing to pursue a misrepresentation claim under REDMA or the common law on behalf of affected owners. Although the court did not need to answer the question, the fact that it remains unresolved leaves a shadow on the right of a strata corporation to bring such a claim. In that regard, last year the Supreme Court (in obiter) expressed that it had a “great deal of difficulty in accepting” that such claims could properly be brought by the strata corporation (See Stachniak v. Jurock, 2012 BCSC 601 at para. 61). To address the standing concern, owners have been added as plaintiffs to existing strata corporation

1 ThemainexceptionisthedecisionofourCourtofAppealinJellema v. American Bullion Minerals Ltd.,2010BCCA495.However,Jellema consideredwhetheranoppressionproceedingwasa“representative”proceedingwithinthemeaningofsection41(a)oftheCPA.ItdidnotraisethesamequestionasinBosworthandtheothercasesundertheTPA andtheBCPCAastowhetherthesameindi-vidualmustbecapableofbeingtheplaintiffinbothproceedings.

COUNSEL COMMENTS

Comments provided by Jon Goheen and Roy Millen, Counsel for the Respondent

Roy MillenJon Goheen

Bosworth v. Jurock


February 2013


19

19

actions (See Strata Plan LMS 1564 v. Lark Odyssey Project Ltd., 2008 BCSC 316, appeal dismissed, 2008 BCCA 509; 2009 BCSC 1024).

The Court of Appeal’s decision confirms that strata owners can pursue strata-related claims as a class action. There are a number of benefits to proceeding in that fashion. There is no question as to standing (see Hamilton v. Ball, 2006 BCCA 243). Neither is the ¾ vote authorization process under either section 171 or 172 of the SPA necessary. In some circumstances, that authorization could pose a problem. Affected owners might vote against the resolution because they would be obliged to contribute to the action. Even if only a smaller group of owners is affected, the supermajority vote is still required. While non-affected owners are not required to contribute to the cost of the litigation, it is reasonable to expect that litigation-averse individuals would vote against the resolution regardless, so as to minimize the litigation pursed by the strata.

Those issues aside, a significant factor in pursuing a class proceeding, as opposed to a multi-plaintiff or strata corporation action, is to minimize discovery costs. Past strata cases have held that all members of a strata are potentially subject to both document and oral discovery (see Strata Plan No. VR 368 v. Marathon Realty Co., [1982] B.C.J. No. 30, 41 B.C.L.R. 155 (C.A.)). Depending on the number of units, discovery could become disproportionately cumbersome and expensive. By pursuing a class action in which only one individual is subject to documentary and oral discovery, costs can be substantially reduced.

Similarly, another difference that could lead to lower litigation costs is the characterization of the damages claim. The damages suffered by strata owners may include consequential damages, i.e., the amounts assessed on individual unit owners by the strata corporation to fund the cost to repair, restore or remediate the deficiencies to the common property. This is not the same as a damages claim by the strata for the actual expenses incurred, which would also include an analysis of the reasonableness of those expense. In most cases, the class action will serve to reduce discovery on the damages aspect of the claim.

We do not see Bosworth as changing the existing law. However, the decision does provide guidance as to the operation of section 41(a) of the CPA for other cases, and its endorsement of the class proceeding process for strata-related claims could well lead to more such actions being filed in the future.”

COUNSEL COMMENTS




20

20

The Appellant was Kruger Products Limited / Produits Kruger Limitee.

The Respondents were First Choice Logistics Inc. (“FCL”) and Terrance Bodnar, an employee of FCL. This was a subrogated action, brought by the Appellant’s insurer. The Appellant stored paper products in a warehouse operated by FCL. A fire broke out when paper debris became overheated in a forklift engine, and destroyed the building and all its contents. The Appellant alleged that FCL’s negligence had contributed to the

fire, and that FCL had breached its warehouse management agreement (the “Agreement”) with the Appellant to operate the warehouse “so as to minimize the risk of damage to the Plaintiff’s inventory, including the risk of damage by fire.” The trial judge found that the fire had been caused by the negligence of the Respondents. The case turned on whether the Appellant’s insurer was barred from pursuing a subrogated action. The trial judge held that barring the action was undesirable on policy grounds as it would be contrary to the purpose of the Warehouse Receipt Act, R.S.B.C. 1996, c. 481, which imposed

BACKGROUND

Kruger Products Limited v. First Choice Logistics Inc., 2013 BCCA 3Areas of Law: Bailment; Insurance; Subrogation

Description: Subrogated claims were barred against warehousers where the bailment agreement included covenants to insure on the part of the bailor


Suite 1100 1177 West Hastings Street Vancouver, BC, V6E 4T5 Telephone: 604.687.4544 Facsimile: 604.687.4577 www.bmmvaluations.com

Blair Mackay Mynett Valuations Inc.

is the leading independent business

valuation and litigation support practice

in British Columbia. Our practice focus

is on business valuations, mergers

and acquisitions, economic loss claims,

forensic accounting and other litigation

accounting matters. We can provide

your clients with the knowledge and

experience they require.

Left to Right: Vern Blai r, Cheryl Shearer, Robert D. Mackay,

Kiu Ghanavizchian, Chad Rutquist, Gary M. W. Mynett, Chris Halsey-Brandt,

Andy Shaw, Jeff P. Matthews, Farida Sukhia




http://www.bmmvaluations.com

February 2013


21

21

Kruger Products Limited, (cont.)

The appeal was allowed, and the Court held that the subrogated

claim was barred. The Court referred to North Newton Warehouses Ltd. v. Alliance Woodcraft Manufacturing Inc., 2005 BCCA 309, which held that where a landlord had covenanted to insure against fire, its insurer was barred from pursuing a subrogated claim against a tenant that had caused the fire. The Court confirmed that this principle also applied to bailment situations as in this case: Commonwealth Construction Co. Ltd. v. Imperial Oil Ltd., [1978] 1 S.C.R. 317. The Court held that there was no conflict between covenants to indemnify and insurance provisions which would bar subrogated claims:

Indeed one may see insurance covenants as a means of strengthening

APPELLATE DECISION

indemnification obligations, which alone are only as strong as the indemnifier’s particular financial circumstances… It would make no commercial sense to permit an indemnity provision to overwhelm or supersede an insurance provision.

The Court also held that there was no conflict between insurance requirements and the duty of care required by the Warehouse Receipt Act. The Court referred to Evans Products v. Crest Warehousing, [1980] 1 S.C.R. 83, which stated that “a contractual limitation of liability does not impair the obligations to take care declared in s. 14 of the Act. That obligation is statutory and not subject to modification by private contract.” The Court held that a covenant to insure on the part of a bailor or landlord was intended to benefit the bailee or tenant. For this reason, subrogated claims were barred in such cases unless the lease or bailment agreement contains clear language that the obligation (to repair etc.) exist “notwithstanding” the covenant to insure.

a particular duty of care on FCL. The trial judge also held that barring the subrogated claim would render meaningless the indemnities contained in the Agreement, where the Appellant

and FCL had agreed to hold the other harmless from all claims for property damage related to the negligence of the other. Accordingly, the claim was allowed.

Records and DocumentationIf you are carrying on a business, you are required to keep adequate records that provide sufficient details and support to determine how much tax you owe. Estimates and incomplete information are not acceptable to CRA. In this regard, I refer you to CRA’s Guide RC4409 Keeping Records, which can be found on CRA’s Website.

A CompanyAnother way to do business is through a company. A company is a separate legal entity that can undertake to do business and own property in its own name. A company has its own requirements to file tax returns, pay taxes, and meet other obligations. A company pays tax at different rates than does an individual proprietor.

There may be circumstances where it is tax-efficient to do business through a company or where liability issues make incorporation a prudent choice.

There are costs associated with incorporation, however. Before making a decision, you should carefully consider the costs of incorporating and carrying on an incorporated business and compare them to the benefits that would be gained by doing so.

Professional advice is recommended to assist you in making this assessment.

CautionThis article is not intended to provide a complete summary of issues and requirements relating to individuals in business; it highlights a few preliminary considerations. The comments provided herein are based on information available at the time of writing and are general in nature. We recommend that individuals consult their own tax advisors before acting on information contained in this article, to ensure that their own specific circumstances and current tax legislation are taken into account. s

Kathryn G. Edwards, CA, is a Partner with Pagnanini Edwards Lam Chartered Accountants.

[email protected]

Estate Litigation

I can help.

• PastPresident,TLABC

• PastChairWills&TrustsSection,CBA

• Over36yearsoflitigationexperience

TrevorToddWills

EstatesEstate Litigation

ReferralsWelcome.

P | 604 264-8470 www.disinherited.comE | [email protected]

Better care for a better life

Home care designed especially for you

• Nursing• Personal Care• Home Support• Companionship

• Funding Investigations• Free Assessments• Nurse Supervised Staff • 24 Hour/7 Day Service

Vancouver office

604.873.25451.866.227.3106 www.bayshore.ca

52 The Society of Notaries Public of British Columbia Volume 19 Number 2 Summer 2010


http://www.disinherited.com



22

22

“Bernard & Partners lawyers W. Gary Wharton, Neo J.

Tuytel and Paul D. Mooney have successfully appealed a judgment for loss of inventory, estimated at more than $16,000,000.00, when a warehouse in New Westminster was destroyed by fire.

A primary issue in the case was the lack of a signed agreement. The warehouse operator had, prior to the commencement of operations, provided a first draft of the contract to the plaintiff paper manufacturer. By the day of the fire (July 31, 2001), the plaintiff paper manufacturer had not provided any meaningful response to numerous requests for suggested revisions to or other comments on a draft agreement for operating the warehouse, which the defendant had presented at a meeting in the late Spring of 2000. The draft agreement contained covenants, among other things, by the plaintiff manufacturer to insure its inventory which the defendant would manage. The Supreme Court of Canada, and other Canadian appellate Courts, have since the 1970s held that covenants to insure, in leases or construction contracts, bar claims by covenantors for loss or damage to the subject property by perils to be insured against, due to the negligence of covenantees.

A lawsuit was brought in the plaintiff’s name (whether on its own behalf, or as a subrogated claim by its insurer), to recover the amount of the inventory loss from the warehouse operator. At trial, the plaintiff denied that the draft agreement applied. However, the B.C. Supreme Court accepted the defendant warehouse operator’s evidence – based on detailed forensic and other investigations by its counsel – that the plaintiff – by its conduct – accepted the terms of the agreement. The Court nevertheless distinguished such bailment agreement from a lease or construction contract, did not apply the defence of ‘tort immunity’ pursuant to insurance covenants in that context, and (after reserving for approximately two years) granted judgment against the operator: Kruger Products Limited v. First Choice Logistics Inc., 2010 BCSC 1242.

COUNSEL COMMENTS

Comments provided by W. Gary Wharton and Neo J. Tuytel, Counsel for the Appellant

Neo J. TuytelW. Gary Wharton

Kruger Products Limited, (cont.)


http://canlii.ca/en/bc/bcsc/doc/2010/2010bcsc1242/2010bcsc1242.html

February 2013


23

23

COUNSEL COMMENTS

This January 9th, the B.C. Court of Appeal reversed that decision. In addition to a ‘trilogy’ of S.C.C. decisions, and others (most if not all of which had been cited at the trial), the Court of Appeal unanimously relied upon its own decision in North Newton Warehouses Ltd. v. Alliance Woodcraft Manufacturing Inc., 2005 BCCA 309, a landlord-tenant insurance covenant case in which Mr. Tuytel was counsel for the successful defendant/appellant.

The Kruger Products case represents yet another instance where Courts of Appeal have been required to bring lower Court decisions into line with the body of law emanating from the Supreme Court of Canada which deals with covenants to insure. Such remedial action is generally necessitated by the tendency of lower Courts to treat covenants to insure as if they were exculpatory clauses. Lower Courts, such as a the trial Court in Kruger Products, have sought to find creative ways to circumvent covenants to insure by finding conflict within the contract or by finding that such clauses extinguish rights otherwise created by the contract or compromise the very relationship established by the contract.

However, as the Supreme Court of Canada has pointed out in Agnew-Surpass v. Cummer-Yonge, [1976] 2 SCR 221, and T. Eaton Company v. Smith, 1977 CanLII 39 (SCC), [1978] 2 S.C.R. 749, and other cases, such covenants to insure are not “exculpatory provisions” but are instead “supervening covenants.” As such, these clauses do not extinguish rights but are instead a pre-determination by the parties that such rights of recovery must be exercised as against a third party insurer rather than by the parties, inter se.

It is likely that, until Judges of first instance accept that such clauses are not exculpatory in nature and that the pre-determination of contracting parties to shift risk to a third party underwriter is a mutual benefit resulting in economic efficiency, further excursions of such cases to the appellate level will continue to be necessary.”






24

24

OnPoint is a law firm of on-call

research lawyers, many of whom have completed clerkships and all of whom have litigated with downtown law firms.

Who is OnPoint?

For over 13 years, our firm has completed research and writing projects for lawyers in the private and public sectors, from case summaries to complex memoranda and facta.

Many of our clients consider using our services as equivalent to relying upon work completed by in-house associates, and add a measure of profit accordingly when billing their own clients.“OnPoint has always

performed in a timely, effective and professional manner and has done excellent work at a reasonable price. We do not hesitate to use their services.”

Larry Kahn, QC and Marvin Lithwick, Kahn Zack Ehrlich Lithwick

“OnPoint’s lawyers are knowledgeable, efficient, effective and reliable. Their work is always proficient and timely. It is a pleasure to work with them. They are an invaluable resource to our firm.”

Angiola De Stefanis, Alliance Lex Law Corp.

“All of us at Taylor Veinotte Sullivan use OnPoint’s researchers on our cases. OnPoint’s expertise in a wide range of complicated commercial litigation is invaluable to a firm of our size and is also a real costs savings to our clients” Carey Veinotte, Taylor Veinotte Sullivan

Sarah Picciotto, B.A., LL.B. Founder of OnPoint Legal Research Law Corp.

T.604.879.4280 [email protected]


bc take five february 2013

Documents

appellants carrots

relevant case law

health canada

future articles

recent decision relevant

counsel comments16opprepare

public health agency

counsel commentsd