A Whole New World during and post COVID? Virtual Examination Discovery in B.C.

Virtual Series – Discoveries

In British Columbia, the examination for discovery is an essential pre-trial step for all litigation which allows for the examining party to orally question an opposing party on all issues in dispute in the litigation. Usually conducted in-person in the boardroom of a firm providing court reporting services, the social distancing rules and guidelines which have emerged in response to the Covid-19 pandemic have caused the examination for discovery procedure to move online.

The move online presents new challenges but also provides new opportunities to streamline the procedure and save costs.

Background

Prior to the pandemic, virtual discoveries were the exception to in-person discoveries. It usually involved the witness calling in from a separate location to save costs and time. All other participants would still be physically present. However, in light of the need for physical distancing, all parties in the discovery process now need to call in from their respective off-site locations. A client and their counsel may call in from the same room if physical distancing measures can be maintained. To facilitate the online discovery, reporting firms have embraced using Zoom, Starleaf or other similar videoconference platforms.

Conducting the Virtual Discovery

Before conducting a virtual discovery, there are certain factors to consider to determine the appropriateness of proceeding virtually. This consideration should be undertaken as far out from the discovery as practical and not left until the day before. The most important factor is the sophistication of the witness being examined and his or her comfort with video conferencing applications. These factors can often be determined by using the documents produced so far in the trial process, by conducting a Google search of the witness, or through a discussion with opposing counsel.

The other major considerations in respect of proceeding virtually relate to the litigation itself. Counsel should consider whether credibility is an issue in the litigation or whether the litigation is document-intensive and, as well, assess whether urgency warrants proceeding virtually or whether the discovery should be delayed until an in-person discovery is practical.

To make the process easier and more efficient, counsel should be well prepared and plan their discovery in advance. The documents should be reviewed and prepared as they would be for an in-person examination for discovery. An amended list of documents should be requested beforehand for consistency in references. It may be useful to segregate the key documents from other documents. Counsel should also prepare an outline containing all the questions they want to ask or topics they wish to raise during the examination, and all key documents must be available for counsel’s use. There are several options for preparing the documents for a virtual discovery. A single PDF can be created with the outline and key documents all together, or an outline with citations can be created alongside a separate folder containing the key documents.

The virtual discovery session can be conducted so as to closely emulate the in-person experience. The examining party’s counsel(s), the witness, the opposing counsel(s), and a court reporter will all be present in a virtual room on the selected videoconference platform. A technical expert may also be present in the room to offer technical support. Most reporting firms have opted to use Zoom for virtual discoveries.

The witness is sworn in with specific confirmations added to reflect the virtual nature of the discovery process. The witness will be asked to confirm that they are proceeding virtually using the selected videoconference application. The witness must also confirm that they have no physical documents in front of them nor any documents or applications open on their computer. Finally, they must confirm that there is no one else present in the physical room they are in, and that they will not contemporaneously communicating, by text or email for example, on another device.

Counsel can use the screen share feature of the videoconference application to share documents. Exhibits can be emailed to the court reporter for virtual stamping.

Commentary

Conducting discoveries virtually presents challenges as well as benefits. On the whole, proceeding virtually has proven to be a very adequate substitute for in-person discoveries. That said, some challenges warrant bearing in mind:

Assessing Credibility. It is harder to gauge a witness’ credibility over a video screen. There are physical indicators that often arise during cross-examination that can reveal much of the witness’ credibility that are not as evident in a virtual discovery. Where credibility is a central issue to the litigation, careful consideration should be given as to whether to proceed virtually.
Lowered solemnity. Virtual discoveries can bring forth a loosening of protocol and a reduction in the adversarial atmosphere, particularly as the witness may be examined from the comfort of his or her home. The witness may not appreciate the solemnity of the process and may divulge more evidence than anticipated. This, of course, may be a benefit for an examining party but is a potential pitfall for the party being examined.
Dishonesty. At an in-person discovery, there is no room for sleight-of-hand or assistance for the witness. However, in a virtual setting where all that is visible to counsel is witness’ face, there is the possibility that other aids—such as documents or chat applications with counsel or others—may be present in the room to assist the witness. As noted, this concern may be partially alleviated by confirming on the record with the witness that he or she is not employing any of these.

Despite these drawbacks, there is a lot to be gained from conducting discoveries virtually. During the pandemic, the procedure has allowed litigation to proceed when it might not have otherwise. Additionally, there is the potential for significant savings of cost and time where parties and their counsel are located in geographically disparate locations. The cost of flying parties in can be eliminated and the coordination of schedules can be more easily done when the need for travel is eliminated.

For more information about conducting discoveries virtually, please reach out to: Steve M. Vorbrodt, Ronald Josephson, Harpreet Dosanjh or Daniel Barber.

* Cen Yang, summer articled student, assisted with the preparation of this article.

Virtual Series – Virtual Oral Advocacy in British Columbia

The COVID-19 pandemic has significantly hastened a move towards video hearings for trials, appeals, and arbitrations in British Columbia. Whether the significant uptick in video use for hearings will persist once pandemic restrictions relax is uncertain; however, the likelihood of social distancing measures remaining in place for the foreseeable future means that the use of video technology for hearings will remain for the time being.

Most critically, the use of video technology in oral advocacy poses challenges for litigators because the art of advocacy changes from in-person to video submissions, much as acting changes from the stage to the screen.

Background

In British Columbia, the Supreme Court resumed holding in-person trials effective June 8, 2020. However, significant social-distancing changes have been implemented. Plexiglass dividers have been installed. Counsel must distance themselves at counsel table. Significantly, the Court has strongly indicated that witnesses should testify remotely as much as possible.

Arbitrations, being private dispute resolution processes, have always allowed for greater procedural flexibility than traditional trials. The more informal boardroom setting of arbitrations has also traditionally provided an easier way to incorporate video testimony. Now, using separate boardrooms in a virtual chat application provides an easy manner to conduct socially-distanced arbitrations.

For appeals, the Court of Appeal directed that effective May 4, 2020, all appeals would proceed by way of videoconference unless otherwise directed. The first video appeal was Trenchard v. Westsea Construction Ltd. using the Zoom platform and is available for viewing on the Court of Appeal website here.

Commentary

Clearly, the move to using online platforms to lead witness evidence, conduct cross examinations, and present oral argument presents challenges to advocates whose experiences have largely been in live settings. Most prominently, whether in the Courtroom before a judge (or panel of judges) or in the boardroom before an arbitrator, we have been conditioned through years of in-person practice to adjust to social cues in order to advocate convincingly on behalf of clients.

The goal does not change in virtual litigation; however what constitutes effective and convincing advocacy does, and the differences extend beyond just the manner of oral presentation.

Seamless control of electronic documents is critical. In the paper world, effectively directing a judge or arbitrator to a binder of documents is an essential skill of a well-practiced litigator. The time used to introduce documentary evidence allows counsel and the judge to gather their thoughts and prepare to take in the import of the document before them.

In the virtual world, careful preparation of the documents and planning their use is very important. During a hearing care should be taken when directing the judge or arbitrator to a hard copy or hyperlinked document. Selecting a hyperlink should seamlessly display the documentary evidence. Appropriate pausing should be employed to allow for the importance of the document to register. Rushing to get to the document, or technical difficulties, will both throw the witness, opposing counsel or judge off if not done properly. If it hasn’t already been acquired in some way, this skill should be well-practiced beforehand.

Mark C. Stacey, counsel for Westsea Construction Ltd. and a partner at Singleton Reynolds, had the following comments regarding the successful video appeal:

“Successful virtual advocacy requires that counsel anticipate the technological challenges which will allow for the effortless presentation of the evidence, case authorities and legal arguments.”

Co-counsel take on added responsibility virtually. Claire Immega, partner at Singleton Reynolds, and Talya Nemetz-Sinchein, associate at Singleton Reynolds, participated in separate video appeals as co-counsel and offer insight into the advantages that co-counsel can bring to a video hearing. They explain that no longer is co-counsel passing binders of documents and taking notes, but they are an on-demand technical and substantive resource in virtual litigation. There may be a great additional strategic advantage to be leveraged in on-line hearings as the muting of microphones in chat platforms allows for much easier communication between co-counsel during testimony and argument, and other communications platforms can be simultaneously employed.

Counsel should be mindful of the potential for technological errors arising. Fumbling about during the hearing will affect the confidence of the advocate and the focus of the judge, arbitrator or witness. Significant practice beforehand will alleviate the risk of this occurring during the actual hearing. Moreover, significant practice will also allow for review and critique of what is most effective and what is least effective in a video presentation, including technical items such as background and positioning of the camera and what personal idiosyncrasies may be distracting. Even a difference in the extent to which counsel moves on screen can detract from the effectiveness of advocacy in a way that it does not in-person.

That said, moving a hearing to a virtual platform may lead to significant costs savings by eliminating travel costs for witnesses and counsel as well as forcing counsel to streamline procedures. When the pandemic was declared during a break in the middle of a multi-week arbitration, H. David Edinger, partner at Singleton Reynolds, pivoted the arbitration from an in-person to a virtual setting, resulting in reduced time and costs of the hearing.

Tristan Packwood-Greaves assisted with the preparation of this article.

Extensions to Maximum Length for Temporary Layoff: What Federally Regulated and British Columbia Employers Need to Know to Avoid Deemed Terminations

Employment standards legislation across Canada allows employers to temporarily layoff employees for a limited period of time in certain circumstances. This temporary layoff should not be conflated with termination. Temporary layoff does not immediately sever the employment relationship so long as the employer meets the applicable legislative requirements, including recalling the employee before the maximum allowable time period. If the employer does not recall the employee before the maximum time period elapses then the employment relationship is deemed terminated.

In the past four months, following the outbreak of COVID-19, various provincial governments as well as the federal government have amended their employment standards legislation by extending the maximum allowable time period for temporary layoff. On June 23^rd and 24^th , the federal and British Columbia governments, respectively, announced further extensions. The Federal Minister of Labour announced an extension of time for federally regulated employers to recall temporarily laid off employees by up to six months. The British Columbia government quickly followed in the federal government’s footsteps by extending the maximum allowable length for temporary layoffs to 24 weeks.

Federally regulated employers, prior to the amendment on June 23, 2020 and pursuant to the Canada Labour Standards Regulations, were permitted to temporarily layoff their employees for up to 3 months with no notice of a recall date; or, for a period not exceeding 6 months with notice of an expected date or period within which the employee would be recalled. The three month period is now extended by six months for employees laid off prior to March 31, 2020; and up to December 31, 2020 for employees temporarily laid off between March 31 and September 30, 2020. With respect to those provided notice, the maximum temporary layoff period is extended as follows:

For employees temporarily laid off prior to March 31, 2020 it is extended by six months, for a total of 12 months, or until December 31, 2020, whichever occurs first;
For employees temporarily laid off after March 31, 2020 and up to September 30, 2020 it is extended up to December 30, 2020 where the notice provided by the employer specifies a fix date or period of return prior to December 30, 2020;
If the fixed date or fixed period specified in the notice will be on or conclude on or after December 30, 2020, employers will have until that date to recall their employees.

These amendments do not apply to employees who are part of a collective agreement that specifies recall rights.

It is imperative for employers to understand that, depending on the jurisdiction in which they operate, they may or may not have the right to temporarily layoff employees. For example, in British Columbia, despite being addressed in the Employment Standards Act, employers do not have the right to temporarily layoff employees. Employers cannot temporarily layoff an employee unless: there is a right to do so stated specifically in their employment agreement; the employee agrees to be laid off or it is implied by industry practice. Federally regulated employers, however, are able to temporarily layoff employees pursuant to the Canada Labour Code and Canada Labour Standards Regulations as well as collective agreements.

While the stated objective of these federal and provincial amendments is to help protect jobs of private-sector employees and support employers facing economic hardship arising from COVID-19, such amendments can give rise to greater uncertainty for employers and employees as to their rights and responsibilities. Employers are encouraged to regularly review all relevant contracts and employment standards legislation prior to temporarily laying off any employee. If the employer does not have the statutory or contractual right to temporarily layoff an employee, they may choose to approach that employee to obtain and document their consent to be temporarily laid off. Once an employee is temporarily laid off, employers must keep a close watch on the time period for recall. Failure to do so may result in unwanted cost consequences arising from deemed terminations without cause or claims of constructive dismissal.

The information contained in this article is current to June 29, 2020, but is subject to change. Please contact David Edinger and Talya Nemetz-Sinchein for up to date information.

Companies’ Creditors Arrangement Act: An Overview for Canadian Creditors

The governmental restrictions and social customs implemented to combat the spread of COVID-19 have led to significant fallout throughout the economy. Many companies, particularly those with significant retail, hospitality, and personal services operations, may become insolvent and may have to consider their options for avoiding bankruptcy. Creditors looking to recover from insolvent companies may find their claims subject to a debtor’s reorganization proceedings under the Companies’ Creditors Arrangement Act, RSC 1985, c-36 (“CCAA“).

The CCAA is federal legislation that allows a debtor company to reorganize the debtor company’s debts through an agreed plan of arrangement while the debtor company continues to operate. Originally enacted by Parliament in response to the economic challenges posed by the Great Depression, the CCAA is a more flexible mechanism allowing for greater business and judicial discretion than a proposal under the Bankruptcy and Insolvency Act, RSC 1985, c. B-3 (“BIA“).[1] Although the CCAA offers a flexible reorganization process for debtor companies, it is a complicated legal process that can involve significant costs and impair the ability of unsecured creditors to collect money from a debtor company.

Scope and Application

The purpose of the CCAA is to avoid bankruptcy by allowing a court-supervised attempt to reorganize a debtor company’s financial affairs.

A debtor company may make an application under the CCAA when it is insolvent and the total secured and unsecured claims against it and its affiliates exceed $5 million. The application may also be brought by an interested party such as a creditor, the bankruptcy trustee, or the liquidator of the debtor, although in practice this is rare. The application is made in superior court, generally in the province where the head office or chief place of business of the debtor company is located. The CCAA applies to most companies aside from banks, insurance companies, trust and loan companies, and railways.

Powers of the Court

Once an application is accepted, the CCAA grants wide-ranging discretionary powers to the court to craft orders and remedies appropriate to the particular reorganization before it. In making orders, the court will do so at the instance of the company, with the support of its monitor, and in accordance with the purpose of the CCAA, often over the objections of creditors.

The CCAA mandates the court to appoint the monitor, who must be a trustee within the meaning of subsection 2(1) of the BIA, to monitor the business and financial affairs of the debtor company during the reorganization.

The standard initial order in a CCAA proceeding is to stay enforcement actions by creditors to allow the debtor company’s business to continue. The initial stay order is usually for 30 days and can be extended. Other often-used steps are:

Prohibiting parties from terminating agreements with the debtor company.
Disclaiming or terminating existing contracts entered into by the debtor company.
Authorizing post-filing security for debtor in possession financing or super-priority charges on the debtor company’s assets when necessary to allow debtor company to continue to do business during the reorganization.
Establishing the existence of creditors’ claims by way of a time-limited claims process, then creating a process to determine creditors’ claims which may be disputed by the debtor company.
Approving a plan of arrangement created by the debtor company to compromise or arrange the debts owed to some or all of its creditors, including, importantly, any claims against directors and officers for their statutory liabilities.

Whether any particular step occurs in a reorganization under the CCAA will depend on agreement between the debtor company, the monitor, and creditors, or in the absence of agreement, by court order over the objections of one or more creditors.

There are, however, limits to the powers of the court, which may limit a debtor company’s creditors ability to collect on their legitimate claims. An order made under the CCAA cannot compel third parties to advance any further money or credit to the debtor company or prohibit creditors from requiring immediate payment for services provided to the debtor company during a CCAA proceeding.

As well, if the reorganization is unlikely to be successful the stay of proceedings may be lifted by the court, which would terminate the CCAA proceedings and lead to bankruptcy proceedings under the BIA. In rare cases, there may be liquidation proceedings within the CCAA proceedings.

Concluding CCAA

There are three ways of concluding a CCAA reorganization:

The initial stay of proceedings may provide the debtor company with sufficient room to restore solvency, in which case a full CCAAreorganization does not occur and the process ends;
The plan of arrangement is accepted by the creditors and the reorganized debtor company emerges solvent from the CCAAproceedings; and
The plan of arrangement fails or is seen to be doomed to fail, so either the debtor company or a creditor(s) apply to liquidate the company’s assets under the applicable provisions of the BIA or to place the debtor company into receivership.

For creditors with claims against a debtor company in or considering CCAA reorganization, the process for recovery may be complicated and obtaining legal advice early in the process may be imperative. In particular, a landlord who suspects a tenant in default may become insolvent should consider proactively enforcing its rights under the its lease before the tenant begins a CCAA reorganization. For more information or for advice regarding specific concerns about the CCAA or debt collection and commercial litigation more generally, please reach out to: H. David Edinger, Mark C. Stacey, or Dan Barber.

[1] Century Services Inc. v. Canada (Attorney General), 2010 SCC 60 at para. 14

Real Estate Transactions and COVID: Challenges to Closing

We’ve now passed the first month end since the world was turned upside down by the novel coronavirus (COVID-19) and for many involved in the real estate market it was a bad April Fool’s joke.

April 1^st came too quickly for many people who are still trying to determine what the impact of the market upset, brought on by the global pandemic, will mean to their businesses, livelihood and future plans. However, those looking at ongoing real estate closings are well advised to be pro-active in considering what implications the current situation may have, as some parties may be struggling (or unwilling) to complete for a variety of reasons.

Below, we consider some of the novel issues confronting vendors and purchasers in this brave new world.

Vacant Possession Conditions:

Many, if not the vast majority, of residential properties are conveyed on the condition that the vendor will provide vacant possession of the property as of the possession date, for the purchaser’s own occupation. S. 49(5) of the Residential Tenancy Act allows for landlords to give notice to tenants to terminate a tenancy in these situations. This right has now been suspended by Ministerial Order M089, pronounced on March 30, 2020. Therefore, landlords are no longer permitted to terminate tenancies to provide vacant possession to the new owners.
Parties entering into purchase and sale agreements after March 30, 2020, must make accommodation for the possibility that a vendor may not be able to provide vacant possession as they will not be able to apply for and obtain an Order of Possession prior to the date of possession without tenant consent. If a contract provides for vacant possession that can longer be provided the purchaser should seek legal advice immediately. There may be remedies available in the law that could assist.
Vendors who have previously entered into a purchase and sale agreement that requires vacant possession should carefully review the conditions of their agreement and begin communicating with the purchaser that vacant possession may not be a possibility in the current circumstances. The possibility that this may constitute grounds for the purchaser to seize the chance not to complete should be considered and legal advice obtained.

Contract Frustration and “Force Majeure;”

Many purchasers’ economic conditions may have drastically changed and they may be looking at closings from a different perspective come the end of the month. Few, if any, deals made prior to mid-March will have contemplated in their contract the current change in circumstances.
Each situation has to be evaluated separately looking into the wording in each contract and the various facts of that situation. Having said that, generally, contracts of purchase and sale are still fully enforceable and purchasers who do not close are risking both their deposit and normal contractual damages including being liable to the vendor for any damages they may incur such as the potential carrying costs and loss in resale value the purchaser suffers in a falling market. Also, purchasers should also be alive to the “chain” of deals which may be prevented from closing by their withdrawal from their specific deal and should seek legal advice on the remoteness of their potential exposure.
Mere changes in economic conditions are unlikely to be enough in themselves to base a finding that the contract is “frustrated”. The doctrine of frustration, when it applies, relieves one or both parties from performance under a contract. Additionally, unless a contract has a “force majeure” clause that specifically refers to a pandemic or similar situation a force majeure clause is unlikely to justify refusal to complete.

Statements of Adjustments:

At closing, the parties to a real estate transaction will prepare one or more statements of adjustments to confirm balances owing on adjustable expenses related to the property, including taxes, utilities, rent, deposits paid and commissions payable. In the normal course, these statements are a simple calculation for the allocation of annual and monthly expenses between purchaser and vendor, prepared in accordance with normally accepted practise standards.
The new policies being announced by the provincial and local governments with regard to tax deferrals, utility credits, and the very real potential that tenants’ ability to pay rent may be in question, whether presently or in the future, may impact statements of adjustments. It is important to review these statements carefully in light of the facts known to both parties at the time of closing and the deferrals, credits, and income anticipated, many of which may be very different from the pre-COVID norms.

Going forward:

The above are just a few of the new issues confronting practitioners and participants in the real estate industry. They are far from the only ones. Even on the most basic level, new rules around social distancing and mandatory quarantines will need to be navigated to comply with verification requirements for execution of contracts. Guidelines and temporary solutions have been approved by regulatory bodies to ensure that transactions can continue to be completed and registered. Forethought, a steady hand and a willingness to seek out and apply novel solutions, bringing purchasers and vendors together will be necessary to navigate these new circumstances.

For assistance with property and lending transactions, contact Mark S. Thompson and Dalene Visser. For assistance with a dispute over a closing, contact Claire Immega and Matthew Milne.

COVID-19: Prime Minister Trudeau announces more help to Individuals and Businesses

The Prime Minister has confirmed that while discussions are being held at all levels of government regarding the eventual “re-opening” of the economy, our physically distanced reality will not be coming to an end within the coming weeks.

To ensure as many Canadians as possible are assisted through this crisis the Federal Government will provide additional assistance to individuals and businesses who are struggling as a consequence of COVID-19. The government has now announced a number of amendments to existing programs such as the CERB, as well as a slate of new relief programs for affected individuals and businesses.

Help for Businesses

Changes to the Canada Emergency Business Account

The Canada Emergency Business Account (CEBA) provides $40,000 in interest-free financing to eligible small and medium sized businesses who find themselves with a cash flow shortage during the ongoing economic downturn. Further, repayment of 75% of a CEBA loan by December 31, 2022 will result in the forgiveness of the final 25%. See our previous article for more information on the CEBA.

The CEBA has been widely accessed by small and medium enterprises since its was introduced in March 2020. However, today, the Prime Minister announced that the eligibility criteria for the CEBA is being relaxed to allow more businesses to access the program. The threshold for accessing the loans has been both decreased ( the business’ 2019 payroll requirement as been decreased from f $50,000 to $20,000) and increased (the benefit is now available to businesses with payroll of up to $1.5 million).

A business may qualify for CEBA financing if:

it is a Canadian business, operating as of March 1, 2020; and
paid between $20,000 and $1.5 Million in total payroll remuneration in 2019.

The Federal Government advises businesses that are interested in applying for CEBA financing to contact their existing financial institution to assess their eligibility and financial needs.

Commercial Rent Assistance

The Prime Minister also announced that the Federal Government would be working with the provinces to establish a commercial rent assistance framework for small and medium sized businesses. The program would assist businesses in meeting their rental obligations for the months of April, May and June 2020.

Details of this program are still sparse, but we expect to be updated soon and anticipate that Partner, Claire Immega, will be monitoring the development of the Commercial Rent Assistance Program in order to provide you and your business with up-to-date insight on this program and how it may be of assistance to you.

Assistance for individuals

Changes to the Canada Emergency Response Benefit (CERB)

The Prime Minister announced that the CERB was being expanded to reach those who were previously ineligible for the program. For more information regarding the eligibility requirements for the CERB, please see our previous article. Moving forward, the CERB will be also be available to those Canadian workers who:

Continue to earn employment income of up to $1,000 per month;
have run out of EI eligibility since January 1, 2020 and are unable to find employment due to COVID-19; or
have lost a seasonal employment opportunity as a result of COVID-19.

Temporary wage top-up for essential workers.

Finally, in response to the incredible strain that COVID-19 has imposed on essential workers and services, the Prime Minister also announced that the Federal, Provincial and Territorial Governments are working together to establish a temporary salary top-up program for low-income essential workers. Presumably, this assistance program will be available to employees of hospitals, long-term care facilities, grocery stores, food production facilities, gas stations, and other essential service providers.

The salary top-up will be available to those workers who have been deemed “essential” in their province of residence and who earn less than $2,500 per month, on a full-time basis.

Details regarding the eligibility criteria and application process have yet to be released.

We will continue to monitor the developments of the Federal and Provincial relief programs to ensure that you and your business have the information you need to take advantage of the assistance and financing that is available during this uncertain period.

Business is shut down. What happens with your lease now?

Almost all store-front businesses have been required to close their doors in an effort to reduce the spread of Covid-19 in British Columbia. But, what does that mean for the landlords and tenants of these premises? What do you do if there is a default that happens because of having closed doors? The answer is tricky. There may a suspension of certain obligations under a lease either contractually or by way of the common law.

The first place to start in determining what impact this required closures will have on any given lease is to review the lease itself. Many leases have what is called a force majeure clause or otherwise a clause that suspends operation or suspends the obligations that one or more parties to the lease has/have in certain circumstances. For example, a clause may suspend certain action if “restrictive government laws or regulations” were to be put in place. This could potentially include the current restrictions put in place for the pandemic and could suspend certain obligations such as repairs, construction or other actions that are required under the lease. Importantly, however, many of these clauses specifically do not relieve the tenant from paying rent in accordance with the lease.

Force majeure clauses are a contractual remedy that have been added to many contracts to increase certainty after the doctrine of frustration emerged in the common law. The doctrine of frustration was an evolution to accommodate supervening and unforeseeable world events such as war that interfered with business’ abilities to meet their contractual obligations. Prior to the development of this doctrine, strict liability was applied to the law of contracts and this led to some perverse and unfair outcomes. The doctrine of frustration was solidified in a series of cases from the United Kingdom and has since then been incorporated into Canadian contract law.

The doctrine of frustration relieves one or more parties in a contract from performance in certain circumstances. Specifically, the doctrine of frustration has a two part test. First, the parties must be unable to perform part of the contract which renders the contract substantially different from what the parties agreed. Second, the parties must not, in either express or implied terms, have made provisions for the event.

In application, the doctrine of frustration has primarily been applied in situations where performance has become impossible. For example, in a service contract where the service provider dies or where the government has made the action illegal or where a performance halls burns down making a performance impossible. The doctrine has also been applied in situations where the purpose of the contract is defeated. In these latter cases, the contract can technically be performed; however, the underlying reason for its performance has been lost. That being said, the application of the doctrine of frustration in these loss of purpose cases has been varied and fact dependent.

What does this mean for people who would be rendering insolvent or are in capable of paying rent due to our current pandemic measures? Well, it’s not clear. The interpretation and application for the test in the doctrine of frustration to leases has been varied. Though most scholars agree that the doctrine of frustration would apply to leases, its application may be thwarted by the inclusion of a force majeure clause which potentially does make provision for the supervening event. In the current situation, it is best to have the lease reviewed by a lawyer to determine if this doctrine may apply to your situation.

However, if the doctrine of frustration is found to apply, then the British Columbia Frustrated Contract Act outlines a party’s entitlement to restitution: i.e. if money has been paid and then the contract frustrated, the party can apply for restitution; or, if money was payable and then the contract was frustrated, the money would no longer be payable.

During the world wars, governments passed legislation that prevented people from enforcing contractual obligations if the reason the contract was breached was because the company has been co-opted into the war effort. While, there is currently no legislation being proposed by the government to legislatively deal with breaches that may arise during this current Covid-19 crisis, the stimulus packages and other governmental responses may be a starting point to address some of these situations.

Nonetheless, the law moves slowly to address new and unprecedented situations. From a practical perceptive, many business will more than likely have to negotiate a solution with their landlords (which was often the approach taken during previous world events, such as the world wars). However, knowing what possible remedies are available under the law could bolster a party’s negotiating position. We do recommend, should you have questions about your own circumstances, to speak with your lawyer about what remedies are available to you under your lease, and within law, as every situation will be fact dependent.

COVID-19: The Canada Emergency Wage Subsidy receives Royal Assent

On April 11, 2020, the Parliament of Canada passed the Covid Emergency Response Act, No. 2 (the “Act”), giving force and clarity to the long awaited Canada Emergency Wage Subsidy (CEWS). We write to provide insight on the features of the new Act, and what those features mean for you, your business, and retaining your employment relationships though the financial uncertainty resulting from the CIVID-19 pandemic.

As is noted in our previous article on this subject, the CEWS is one prong of Canada’s three pronged COVID-19 financial response package. The CEWS is designed to help businesses avoid mass terminations by providing assistance aimed at meeting payroll obligations during the current economic downturn and specifically in response to the loss of revenue occasioned by the unprecedented shut-down of the Canadian economy mandated by the Canadian response to the COVID-19 pandemic.

The CEWS provides a wage subsidy directly to employers of up to 75% of the first $58,700 of an eligible employee’s “pre-crisis” remuneration. This is equivalent to a maximum weekly payment of $847. “Pre-crisis” remuneration is defined in the Act as an employee’s average weekly remuneration from January 1, 2020 to March 15, 2020, excluding any 7 day periods in which the employee did not receive any remuneration. Eligible remuneration includes: salaries, wages, and taxable benefits, and excludes items such as: severance pay, stock option benefits, and vehicle allowances.

The CEWS will cover the wages of all individuals who are employed in Canada, other than those who have been laid off, and who have not been re-hired in specific response or anticipation of the CEWS, or who have not otherwise earned wages from their employer for at least 14 consecutive days during the eligibility period.

Subsidies for New Employees

The CEWS is available to employers who hire or re-hire new, arms-length, employees during the crisis period. However, the subsidy is not available in respect of non-arms length employees (i.e.: family members) who were not employed prior to March 15, 2020.

These provisions are in place to encourage employers to hire and re-hire staff during the crisis period, while limiting the possibility for abuse of the program.

Refunds for payroll contributions

Businesses that qualify for CEWS assistance are also entitled to a 100% refund on certain employer contributions to Employment Insurance and the Canada Pension Plan. This refund covers 100% of those employer contributions for eligible employees for each week that those employees are on paid leave and for which the employer is eligible for CEWS assistance in respect of those employees.

Employers do, however, retain the obligation to collect and remit source deductions and employer contributions during the crisis period; refunds will be issued at a later time. Businesses will be expected to apply for this refund at the same time that they apply for the CEWS.

Calculating decreases in revenue

The subsidy is available to corporations, partnerships, individuals and non-profits who pay wages and have experienced a 15% decrease in their revenues in March 2020 and who experience 30% decreases in revenue in April and May 2020. Demonstrating a loss in revenue may be done using a year over year comparison with March, April and May of 2019 as comparators, or by demonstrating the required decrease in revenue when compared to the business’s average revenue in January and February 2020.

The Act recognises three (3) distinct and separate “eligibility periods” as follows:

Period 1: March 15 – April 11, 2020;
Period 2: April 12 – May 9, 2020; and/or
Period 3: May 10 – June 6, 2020.

To receive assistance, a business will have to qualify for each individual period. However, to provide greater certainty to applicant businesses, any business that qualifies for a specified period will presumptively automatically qualify for the subsequent period, though not indefinitely.

For example, a business that qualifies for assistance in Period 1 will automatically qualify for assistance in Period 2. The business would then have to re-apply in Period 3, demonstrating its continued need and eligibility for assistance.

Revenue will be calculated based on the business’s normal accounting method and may be calculated on either a cash or accrual basis, but not a combination of the two. An applicant business is required to elect one accounting method and one method of demonstrating decreases in revenue when it applies for initial assistance under the CEWS, and continue to use the elected methods for subsequent applications and/or for evidence of continued assistance.

Sanctions for abuse

The Prime Minster has previously hinted that sanctions and penalties would be levied against businesses that abuse the CEWS. The Act provides parliament and/or the CRA the power to levy fines against those businesses that engage in transactions or accounting practices which have the effect of artificially reducing the business’s revenues for the purposes of qualifying for the CEWS. Businesses that engage in such behaviour will be ordered to repay any monies received through the CEWS and will be subjected to an additional fine of 25% of the value of the subsidy claimed.

Applications for the CEWS

Applications for the CEWS will be available through the CRA’s My Business Account portal. We expect the portals to be open in the coming days. We continue to monitor the federal and provincial responses to the COVID-19 crisis, and will continue to provide commentary on those measure to ensure that you and your business have the information you need to take advantage of these important programs.

Ministerial Order Confirms All BC Builders Lien Act Limitation Periods Continue to Apply

Ministerial Order M098 clarifies that the British Columbia construction industry will be able to operate without the potential uncertainties introduced by the Original Order.

On March 27, 2020, the Government of British Columbia issued an order that suspended all limitation periods as a result of the COVID-19 pandemic (the “Original Order“). [1] The Original Order was issued by the Minister of Public Safety and Solicitor General via Ministerial Order No. M086. The authority pursuant to which the Original Order was issued arises out of Section 10 of the British Columbia Emergency Program Act.

The Original Order may have had significant impacts on BC’s construction industry with respect to claims of lien, holdbacks, lien-enforcement actions, and the many other issues that may arise under the British Columbia Builders Lien Act (“BLA“). The broad wording of Section 2 appeared to apply to at least some of the limitation periods and filing deadlines as set out in the BLA.

On April 8, 2020, the Solicitor General and Minister of Public Safety repealed the Original Order and issued a new order addressing some of the ambiguity that the Original Order created (the “Replacement Order“). [2] The Replacement Order, Ministerial Order No. M098, came into force on April 15, 2020.

Specifically, the Replacement Order states:

Limitation periods in court proceedings

2 (1) Subject to subsection (2), every mandatory limitation period and any other mandatory time period that is established in an enactment or law of British Columbia within which a civil or family action, proceeding, claim or appeal must be commenced in the Provincial Court, Supreme Court or Court of Appeal is suspended.

(2) Subsection (1) does not apply to a mandatory limitation period and any other mandatory time period established under the following enactments:

(a) the Builders Lien Act;

(b) Division 5 [Builders Liens and Other Charges] of Part 5 [Property] of the Strata Property Act.

The Replacement Order, Ministerial Order No. M098, expressly exempts from the suspension of limitation periods – in other words continues the application of – the BLA and all limitation periods in any way relating to the BLA, including the 45-day claim of lien filing and 55-day holdback periods.

As well, the Replacement Order exempts Division 5 of Part 5 of the British Columbia Strata Property Act (“SPA“), which deals specifically with builders’ lien issues with respect to stratified property.

This means that all limitation periods and deadlines with respect to the following BLA matters are unaffected by the suspension of limitation periods as a result of the COVID-19 pandemic:

The 1-year limitation period to commence a lien-enforcement action in the Supreme Court of British Columbia (section 33 of the BLA);
The 1-year limitation period with respect to BLA trust claims (section 14 of the BLA);
The 2-year limitation period with respect to Shimco actions [3] by which plaintiffs may advance a common-law claim against the holdback fund, in the event money was in fact held back and has not yet been paid out;
The 45-day claim of lien filing period (section 20 of the BLA and Section 88(1) of the SPA);
The 1-year limitation period to register a certificate of pending litigation with respect to a lien-enforcement action (section 33 of the BLA);
The 21-day limitation period with respect to a notice to commence an action (section 33 of the BLA); and
The 55-day holdback period (section 8 of the BLA and section 88(2) of the SPA).

For clarity, all limitation periods and deadlines with respect to claims of lien, trust claims and lien-enforcement actions pursuant to the BLA and/or Division 5, Part 5 of the SPA are exempt from the Replacement Order, meaning that all relating limitation periods and deadlines remain in full force and effect.

Lien holders may continue to register claims of lien and certificates of pending litigation because the Land Title and Survey Authority of British Columbia continues to operate and the Supreme Court of British Columbia still permits the commencement of proceedings by the electronic filing of a Notice of Civil Claim.

In the event you have held off on taking steps (potentially as a result of uncertainty surrounding the applicability of the Original Order on the BLA), and there is a risk that a limitation period is running out or has run out, we recommend that you immediately contact a lawyer to determine what steps, if any, you are able to take to remedy the situation.

Update May 14, 2020:

The Supreme Court of British Columbia announced that it is preparing to resume some regular operations as set out in its COVID-19 Notice #19, released May 13, 2020. [4]

All civil matters scheduled for hearing between March 19 and May 29, 2020, including hearings involving the construction industry, were adjourned due unless the Court otherwise directed.

As of June 1, 2020, judicial case conferences, trial management conferences and chambers matters already scheduled for hearing on the trial list will resume by telephone. Trials scheduled to start on or before June 5, 2020 are adjourned unless the Court otherwise directs. All civil trials scheduled to begin on or after June 8, 2020 will resume unless the Court otherwise directs.

While COVID-19 Notice #19 confirms that the suspension of limitation periods will remain in place, as noted above the suspension of limitation periods does not apply to the BLA or Division 5, Part 5 of the SPA. All BLA and SPA (Division 5, Part 5) limitation periods and deadlines remain in full force and effect.

[1] The Original Order

[2] The Replacement Order

[3] Schoenhalz v. ICBC, 2016 BCSC 661.

[4] Notice to the Profession, the Public and the Media Regarding Civil and Family Proceedings (COVID-19 Notice #19)

[5] Civil and Family Matters – Resumption of Trial Management Conferences and Trials (COVID-19 Notice #20):

Construction Act to be Exempt from Suspension of Procedural Time Limits

The Attorney General of Ontario announced on April 9, 2020 that the government would be revising a previous emergency order (O. Reg. 73/20, made under the Emergency Management and Civil Protection Act) in order to exempt the Construction Act from the suspension of limitation and procedural time periods retroactive to March 16, 2020. The suspension will be lifted from the Construction Act on April 16, 2020, in order to give the construction industry time to prepare for the change. Once the suspension is lifted, limitation and procedural time periods will resume with the same amount of time remaining as on March 16, 2020.

Most significantly, this revision will enable the release of holdback payments, which process was unintentionally captured by the emergency order in its original form and which created significant cash flow problems for those in the construction industry (particularly those players further down the construction pyramid). Accordingly, the order will put an end to significant uncertainty for the construction industry and the construction bar alike; as readers will appreciate, this has been a central topic of discussion and debate since the original emergency order came into effect.

Nevertheless, construction industry players would be well advised to carefully consider the legal and practical impacts that may flow from this revision, as well as the intervening period between now and April 16, when the revision comes into effect. From a legal perspective, and to the extent that any litigation or dispute in respect of holdback or limitation periods is ongoing, it will be important for parties to re-evaluate their positions to take into account the revival of these procedural timelines (including the retroactive effect back to March 16, 2020). Given these significant changes, construction industry participants will have to think carefully about their options (e.g. ADR rather than pursuing relief through costly and time-consuming proceedings).

From a commercial perspective, the intervening time between now and April 16, 2020 may still represent a period of significant uncertainty. Given the significant business disruptions caused by the COVID-19 pandemic, a period of six further days without the possibility of holdback release may nevertheless represent serious risk to parties facing cash flow and/or payroll problems. In the circumstances, parties can look for opportunities for compromise while communicating fairly until these issues are resolved.

In these uncertain times, this development represents a welcome – if small – measure of certainty for the construction industry. We caution, however, that the full contents of these amendments remain unknown at this time, and will likely only be known when the amended regulation is finally published on April 16, 2020. Accordingly, the current uncertainty is not fully resolved.

A cautious optimism may therefore be more appropriate, although ‘caution’ remains the watchword until further notice. In the meantime, we recommend speaking to a lawyer so that parties understand the legal and commercial risks of proceeding with any course of action between now and the coming into force of the revisions, as well as after they have come into effect.

Witnessing Wills During Quarantine

The challenges of completing or revising your Will while in quarantine has emerged as a common topic amid the wider conversation of how lives are being affected by the coronavirus outbreak. Hopefully, necessity will once again become the mother of invention as the current, dated, wills legislation does not set out an express solution for this problem. Specifically, a will-maker must have two witnesses present when the Will is signed. Generally, it is assumed the legislation contemplates and requires the witnesses to be physically present.

It may still be feasible for most will-makers who (after having the Will drafted by their lawyer) simply need to find two people to stand the recommended 6 feet way and adhere to all the usual hand washing protocols. However this may be a challenge or some people who must practice strict quarantining. Perhaps these unprecedented times provide ample basis to revisit this strict requirement.

Some clarity on this topic may be coming. Globe and Mail reporter, Christine Dobby, reported recently that an Ontario court has agreed to hear, on an urgent basis, a case involving a will that was witnessed online. Specifically, the Court will consider whether such a Will might be considered to be properly executed, and under what circumstances. The case involves two wills made for an elderly couple, who are adhering to strict quarantine guidelines, requiring the will to be “witnessed” via an online video meeting platform.

Before now, caselaw has pondered whether the requirement that two witnesses be “present” for the signing of the Will extends simply to being “visually present.” So far, no case has clarified whether that may extend to a circumstance where one or both witnesses was in visual contact with the will maker by way of a web cam.

British Columbia also enacted s.58 of the Will, Estates and Succession Act, (“S.58”) which empowers the Court to confirm the validity of a non-compliant Will. It is assumed (although it has not been confirmed) that a Will witnessed in this way, though not formally valid, could be confirmed by the Court under this provision.

Further to the requirement that two people (who are capacitated adults and not beneficiaries under the Will) witness a Will, the will-maker must also understand the process and otherwise have adequate mental capacity to complete the Will. It may be feasible to accomplish that step over a virtual meeting platform. If it is not feasible to find two people to witness the Will, steps can be taken by the lawyer to make sure the Will and process are as robust as possible in case a later application must be made under S.58. Of course, the outcome still remains uncertain and could be vulnerable to attack by a disappointed heir.

We will be watching for the outcome of the case in Ontario and then seeking to apply the same principle in British Columbia.

Until then, there remains some uncertainty as to whether a remotely witnessed Will may be found valid in British Columbia.

COVID-19: Updates to the Canada Emergency Wage Subsidy

As part of our series of publications aimed at keeping you, and your business, informed with respect to Federal and Provincial responses to the COVID-19 pandemic, we provide a brief update in respect of the Canada Emergency Wage Subsidy (“CEWS”) and the Federal government’s recently announced changes to eligibility.

Today, April 8, 2020 the Prime Minister announced changes to the upcoming CEWS to make it more widely available to businesses in need. Previously, it was anticipated that the CEWS would be available to those businesses that demonstrate a 30% decrease in revenue over the same month in 2019. For more information about CEWS, generally, and the eligibility requirements, please see our previous article.

This morning’s announcement introduced two changes to the eligibility requirements of the CEWS; both making it easier for businesses to qualify.

First, businesses need now only demonstrate only a 15% decrease in revenues in March 2020, given that the COVID-19 impacts were not realised by most businesses in Canada until mid-March. However, businesses will still need to demonstrate a 30% decrease in revenue in April and May 2020 to remain eligible for continued access to the CEWS.

Second, businesses will now be permitted to use their revenue from January and February of 2020 as comparators to demonstrate the required loss of revenue in March 2020.

Moreover, registered charities and NGO’s will have the option to include or exclude government funding from their revenue calculations when applying for the CEWS.

The Prime Minister stated that the government’s rationale was based on dialogue with stakeholders and businesses which urged that a degree of flexibility be added to the CEWS in order to make the benefit more accessible to small businesses, new businesses, rapidly expanding businesses, start-ups, and charities and non-profit organizations.

The CEWS has already inspired confidence in many businesses, as major employers such as Air Canada have recently announced that they will be rehiring thousands of employees with the anticipated assistance of the CEWS.

Finally, Prime Minister Trudeau announced that a cabinet meeting will be convened today, April 8, 2020, to discuss the updates to the CEWS and that Parliament will be called to vote on the legislation very soon. While we do not yet know the anticipated rollout date for the CEWS, we so know that it will be retroactive to March 15, 2020. In the interim, we will continue to monitor the legislation as it moves through parliament to ensure that we can advise you, and your business, of any additional changes to the proposed legislation and the available benefits and, most importantly, on how and when your business can apply.

The Implications of Force Majeure and Frustration in the Time of COVID-19

In response to the outbreak of COVID-19, governments have declared states of emergency, imposed travel restrictions, and have mandated the closure of non-essential businesses, all of which have caused significant business disruptions. These are rapidly-evolving and legally unprecedented circumstances which have had, and will continue to have, significant impacts on construction projects. This article considers the potential applicability of force majeure provisions and the doctrine of frustration in the current circumstances.

It is possible that a party may be excused from certain contractual obligations to the extent that those obligations have become impossible to perform. In such circumstances, a force majeure clause or the common law doctrine of frustration could potentially apply.

With respect to whether force majeure provisions apply, it is important to note that the determination is dependent on the scope of the relevant provision. For example, force majeure may apply to the outbreak of COVID-19 where the clause references specific events such as “epidemic” or “disease”.

With respect to the scope of force majeure in widely-used standard contracts, while many include general terms that contemplate circumstances which are beyond the control of the parties, some contracts may not specifically list “pandemic” or “disease” in the force majeure provision itself. For example, the CCDC-2 force majeure includes: labour disputes, strikes, fire, and abnormally adverse weather, among other things, but it does not specifically include disease or pandemics.

In the event that the outbreak of COVID-19 is not captured by the force majeure provision, parties may be able to seek relief from contractual performance under the doctrine of frustration. According to the Supreme Court of Canada, “frustration occurs when a situation has arisen for which the parties made no provision in the contract and performance of the contract becomes ‘a thing radically different from that which was undertaken by the contract.’”[1]

If a contract is frustrated, the parties are released from future or continuing obligations under the contract. However, rights and liabilities that accrued prior to frustration remain unaffected. In order for frustration to apply to a contract, the supervening event must make performance of the contract impossible, which is a high threshold to overcome.

It is not sufficient that the supervening event has resulted in more onerous or more costly performance.[2] Ultimately, the requirement is that the supervening event has made performance of the obligation radically different from what was originally contemplated in the contract.[3] This may include the obligation becoming a permanent physical impossibility (e.g. the subject matter of the obligation is destroyed), a legal impossibility (e.g. performance of the obligation becomes illegal), and in very limited circumstances, an indefinite physical impossibility (e.g. performance is delayed indefinitely by a state of war).

It is worth noting that some jurisdictions have enacted legislation that applies if a contract is found to be frustrated. In Ontario, the Frustrated Contracts Act, RSO 1990, c. F.34 may allow parties to recover the expenses incurred or benefits accrued prior to the supervening event. The legislation also enables the court to sever the frustrated portion of a contract from the remainder.

In any event, owners, contractors, and sureties will be carefully scrutinizing the language of the construction contracts to which they are parties, in order to determine the scope of any applicable force majeure provisions and to what extent they may apply to COVID-19. Parties should seek legal advice where appropriate – particularly with respect to assessing the limitations of force majeure provisions and the applicability of the doctrine of frustration in the circumstances.

[1] Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58 at para 53.

[2] Heintzman and Goldsmith on Canadian Building Contracts, (5th ed) at Chapter 8 §9.

[3] Davis Contractors Ltd. v Fareham Urban District Council, [1956] AC 696 (HL).

COVID-19: Limitation of Liability for Essential Service Providers

The B.C. Government has issued an extraordinary order, effective March 31, 2020, which limits certain COVID-19 related liability for those who are providing the essential services enumerated in the order (the “Order”).

The Order, issued by the Minister of Public Safety and Solicitor General for British Columbia, gives essential service providers immunity from damages resulting “directly or indirectly, from an individual being or likely being infected with or exposed to SARS-CoV-2 as a result of the person’s operating or providing an essential service”.

The essential service provider must, however, have been or reasonably believed they were compliant with all “emergency and public health guidance” to be shielded by this limitation of liability. The Order defines “emergency and public health guidance”, which includes orders made under the Emergency Program Act, as well as instructions and guidelines issued by the various entities authorized to do so. Note, however, the limitation of liability is not available if the person was grossly negligent.

For insurers and insureds alike, while the scope and protection afforded by the Order will very likely be tested in Court, the limitation of liability provided by the Order should provide some relief for potential liability exposures related to COVID-19.

The Order will be in effect until the end of the state of emergency, declared March 18, 2020. In the meantime, essential service providers and their insurers alike are well advised to be vigilant about compliance with the emergency and public health guidance required to qualify for the Order’s protection.

This is an extraordinary Order in unprecedented and uncharted times. B.C. essential services providers and insurers who need further advice about the legal implications of the Order should not hesitate to contact us.

COVID-19: What we know, so far.

We write to summarize our current understanding of the federal and provincial programs announced to assist employers and employees through the ongoing COVID-19 pandemic. Given the rapidly changing nature of both the epidemic and the governmental response(s) thereto, we write to provide you with an update on the assistance programs that are available to you, your business, and to your employees as you work to navigate through this challenging and unprecedented time.

Advice for businesses

We understand that businesses need to be able to respond to downturns in economic activity swiftly. We also understand that this may involve making difficult decisions about laying off or terminating staff.

However, businesses must act cautiously when making such decisions as the Courts in both British Columbia and Ontario have consistently held that employers do not have a free standing statutory right to lay off their employees. An employee may be laid off only if such a right is:

expressly or impliedly contemplated by the contract of employment; or
expressly agreed to by the employee.

Employers who lay off employees in contravention of their employment contracts are liable to provide those employees with reasonable notice or pay in lieu, resulting in potentially costly litigation and severance obligations. Similarly, employees who decline to consent to a layoff must be treated, and provided with notice, as though terminated without cause. The refusal of an employee to accept the proposed layoff is not a sufficient basis to allege cause for termination.

Whether the or not right to lay off an employee is contemplated by an employment contract, and whether or not a temporary lay off is appropriate for your business, requires both legal and factual analysis. As such, we suggest that you consult with our workplace law group before deciding to lay off or terminate an employee.

The Federal Programs

Assistance for Businesses

The Federal Government has put forth a three pronged response plan to assist Canadian individuals and businesses during the COVID-19 crisis. The following assistance programs are available to businesses which have suffered a loss in revenue as a result of COVID-19:

The Canada Emergency Wage Subsidy (CEWS)

The CEWS is intended to help businesses stay open and retain employees during this period of economic downturn. The CEWS will subsidize 75% of the first $58,700 of every employee’s salary for a period of 12 weeks. This is equivalent to a maximum payment of $847 per week, backdated from March 15, 2020. The CEWS is available to businesses of all forms, sizes and sectors, from non-profits and charities, to large for-profit corporations. Moreover, there is no limit on the number of employee wage subsidies for which a business may apply.

Since publishing our last article on this subject we have learned more about the eligibility requirements of the CEWS. In order to qualify for the CEWS, a business must show that it has suffered a loss of at least 30% of its monthly gross revenue when compared to its gross revenue from the same month is 2019. Businesses that are not eligible for the CEWS may still qualify for a smaller wage subsidy, covering 10% of employee salaries up to a total of $25,000 per employer.

Where possible, businesses that are in receipt of CEWS assistance are expected to make “best efforts” to recall employees who have been laid off, and to pay the portion of their employees’ salaries that are not covered by the subsidy. Moreover, businesses have been warned that every dollar received through the CEWS must be used to cover employee salaries and that abuse of the CEWS will result in sanctions. Lastly, a business will not be able to claim a salary subsidy for an employee who is also in receipt of the CERB.

Applications for the CEWS will be administered though an online portal managed by CRA. More information regarding CEWS applications is expected to be announced in the coming weeks.

The Business Credit Availability Program (BCAP).

The Federal Government also recently announced that it will be making low interest credit available to businesses that have been impacted by COVID-19. The BCAP is composed of a number of programs administered by the Federal Government in conjunction with major financial institutions. The BCAP will make approximately $65 billion in direct lending available, at market rates, to viable businesses which may not otherwise be able to access credit. Businesses are advised to consult with their financial institutions to assess their credit and financing needs.

The BCAP includes the following programs:

Canada Emergency Business Account (CEBA);
Small and Medium Sized Enterprise and Loan Guarantee System will make up to $40 Billion in lending available to small and medium sized businesses which have been impacted by COVID-19.
Co-Lending Program for Small and Medium Sized Enterprises

The CEBA will provide interest-free loans of up to $40,000 to small businesses and not-for-profits to help cover their operating costs during the current economic downturn. Up to $10,000 of the loaned amount is eligible for forgiveness if the remaining $30,000 is fully repaid on or before December 31, 2022. To qualify for the CEBA, businesses will need to demonstrate that they paid between $50,000 and $1 Million in total payroll in 2019.

The Small and Medium Sized Enterprise and Loan Guarantee System will make cash flow term loans of up to $6.25 Million available to qualifying SMEs.

Lastly, the Co-Lending Program for Small and Medium Sized Enterprises will permit eligible businesses to obtain incremental credit amounts of up to $6.25 Million.

Additionally, the Federal Government has also announced that it will permit businesses and self-employed individuals to defer Goods and Services Tax and/or Harmonized Sales Tax payments, as well as duties charged on imports, until June 2020.

The programs that make up the BCAP will become available by April 17, 2020.

Assistance for individuals

The third, and final, prong of the Federal Government’s response package is the Canada Emergency Response Benefit (CERB). This benefit that will provide $2,000 per month to eligible Canadians who have lost their income as a result of COVID-19. The benefit period under the CERB is backdated to begin on March 15, 2020 and will extend until October 3, 2020.

While the CERB is taxable, deductions will not be made at the source, ensuring that the full $2000 monthly payment makes its way into the recipient’s pocket.

The CERB is available to individuals who:

are a resident of Canada;
are at least 15 years of age; and
who had an income in 2019, or the 12 month period prior to applying for the CERB, of at least $5,000.

For the purposes of the CERB, an applicant’s 2019 income may have been received from a combination of any of the following sources:

employment income;
self-employment income;
some benefits paid to the Applicant pursuant to the Employment Insurance Act; and
some maternity and new parent allowances or benefits administered under provincial regulation.

The CERB is available to employed or self-employed individuals who “cease working for reasons related to COVID-19 for at least 14 consecutive days within the four week period in respect of which they applied for assistance” and who have not received, or do not expect to receive income or benefits during that 14 day period. This contemplates those who have been laid off, terminated, or who have otherwise lost their ability to earn an income but who remain attached to their employment.

The Federal Government estimates that applications for the CERB will be available as soon as April 6, 2020.

Provincial Programs

In addition, the Government of British Columbia recently announced the B.C. Emergency Benefit for Workers (BCEBW). The BCEBW is a one-time, tax free payment of $1,000 which is available to B.C. residents who have lost the ability to work due to COVID-19. The BCEBW is intended to compliment the CERB and other available financial assistance programs. More information regarding eligibility and the application process will become available in the coming weeks.

We will continue to monitor the Federal and Provincial Governments’ responses to the COVID-19 pandemic to ensure that we can provide you and your business with the information you need to successfully navigate these uncertain economic waters.

Electronic Signatures in a Time of Social Distancing in BC

With the declaration of the Covid-19 pandemic, and our federal, provincial and municipal action plans and responses to slow the pandemic in Canada, many people, professionals and business owners are continuing work from the safety and isolation of their homes. Many face the challenge of figuring out how to sign documents without putting pen to paper. Fortunately, a multitude of cloud based platforms have allowed electronic signatures to become a real-time solution to our current social distancing requirements. While we may never be able to go completely paperless, there is no better time than the present to understand electronic signatures.

What is an electronic signature? Generally, the term ‘electronic signature’ is a broad term for information in electronic form used by a person to sign a document or record. Electronic signatures can take a variety of forms and methods, including more traditional methods such as scanning and faxing documents to more secure solutions such as ‘digital signatures’. Defined, digital signatures are a set of algorithms and encryption protections used to determine the authenticity of an electronic signature within a digital document.

According to the federal law which governs electronic signatures in Canada, the Personal Information Protection and Electronic Documents Act (“PIPEDA”) states that an electronic signature is “a signature that consists of one or more letters, characters, numbers or other symbols in digital form incorporated in, attached to or associated with an electronic document.” For a signature to be considered a valid electronic signature, PIPEDA requires:

the electronic signature must be unique to the person signing (as an example, the letter X is not a unique signature);
the signature must be created and be under the full control of the person making the signature;
specific technology or processes must have the capability to be used to identify the person; and
there must be an audit trail, meaning the electronic signature must be linked with an electronic document in a way that allows the examiner to determine whether the e-document has been changed since the signature was attached to it.

Equally important are the traditional notions of consent, authenticity of signature and delivery; like with manually signed documents, these too must be present for a contract to be valid.

Consent: Parties can only be bound to terms which they have consented to; however, if a person is not signing on his or her own behalf, the effect of that signature depends on the authority of the person signing to bind another party. When one of the parties is an entity such a corporation or partnership, that authority may be express, (i.e. conferred by, for example, a resolution of the board of directors) or implied (i.e. a corporation holding out a person as having authority). Between two or more persons, in the absence of other terms in the agreement to indicate consent, the signature itself, is usually satisfactory.
Authenticity – Traditionally, “wet” (ink) signatures were presumed under the best evidence rule to be the primary evidence of a party’s assent to an agreement, superior to any copy made of such document or other forms of evidence such as prior conversations, certain acts or other forms of evidence (letters, emails). British Columbia, through its Evidence Act, has extended the best evidence presumption to electronic documents.[1]
Delivery – Another traditional element, delivery, may be in danger of falling by the wayside with electronic signatures, which means the parties to a transaction must be vigilant in making sure there has been proper delivery. In the same way an agreement, signed by a party, left in a locked room and stolen from that locked room, does not constitute valid delivery, electronic documents e-signed in advance by one party in preparation for a possible deal and mistakenly e-mailed to the other party does not constitute not valid delivery.

When can electronic signatures be used? E-signatures can be used for many commercial agreements. Under B.C.’s Electronic Transactions Act, if there is a requirement under law for a signature, that requirement can be satisfied by an electronic signature. Further, a record to which the Electronic Transactions Act applies must not be denied legal effect or enforceability solely by reason that it is in electronic form.

That said, in the interests of avoiding litigation, it is always good practice to add a counterpart clause to every electronic contract. A counterpart clause states that parties need not sign the same copy of an agreement and any of the copies can be treated as an original for evidentiary purposes. This clause being included in an electronic contract prevents a party to the agreement from trying to assert that the contract is invalid because there is no single original copy of the document with all of the parties’ signatures.

Both federal and provincial laws also provide exceptions to the use of electronic signatures, such as: agreements that relate to the transfer, assignment, license or other grant of specific intellectual property; wills and powers of attorney in respect of an individual’s financial affairs or personal care; certain prospectus offerings (Form 6) which are filed with SEDAR; and certain land transfer documents. For people not using documents which fall into these very specific categories, electronic signatures are a viable alternative to the traditional manual signatures.

Aside from the issues at law, there are other practical considerations that should be examined before deciding to switch to an electronic signature, especially if the decision maker is a business owner planning to implement the change to the decision maker’s entire business model. These considerations include items such as the cost of setting up the infrastructure around an electronic signature process, the number and frequency of transactions, the level of security required and protocols to be prepared, expectations of your business and the additional legislative or regulatory requirements that may be added as a result of the business using electronic signatures (as well as complying with any contractual restrictions or requirements of customers, clients and other material contracts of the business), the workload associated with implementing the proposed electronic signature process[2]. Fortunately, technology such as encryption and password protection are available to increase the security and decrease the costs of implementing the use of electronic signatures.

Whether we like it or not, Covid-19 has forced us into an increasingly paperless future of remote access and a shift from traditional brick and mortar offices, and more traditional exchanges of executed documents. It is crucial now more than ever for all of us who transact business to become familiar with electronic signatures, when they are valid and how to use them.

[1] Section 41.3, Evidence Act, “If an electronic court document is accompanied by a secure electronic signature, the electronic court document is presumed, in the absence of evidence to the contrary, to have been signed by the person who is identified in, or can be identified through, the secure electronic signature.”

[2] Electronic Signatures, Guidance for Policy Makers and Design Teams, Office of the Chief Information Officer, https://www2.gov.bc.ca/assets/gov/british-columbians-our-governments/services-policies-for-government/information-technology/electronic_signatures_guide.pdf

COVID-19: The Canada Emergency Wage Subsidy

Today, March 30, 2019, we were provided with details of Government of Canada’s (the “Government”) programs aimed at responding to the economic fallout of COVID-19. At his morning press conference, Prime Minister Trudeau particularised the Government’s three pronged plan to assist businesses and individuals though the economic uncertainties occasioned by the global pandemic.

The three prongs are:

the Canada Emergency Wage Subsidy (“CEWS”) – which will protect jobs;
The Canada Emergency Response Benefit (“CERB”) – which will help those who have lost their jobs; and
a set of government funded loans which will help businesses in need of credit when and while revenue streams are on hold.

The first prong, the CEWS, is intended to help businesses avoid layoffs and meet their payroll obligations. The CEWS will cover 75% of the first $58,700 of every employee’s salary and will be backdated to March 15, 2020. This amount is equivalent to $847 per week. The CEWS is available to all businesses in all sectors, this includes charities, non-profits partnerships, sole proprietorships and is available regardless of the size of the operation or the sector in which it operates. Further, there is no cap on the number of employee wage subsidies for which a business may apply.

In order to qualify for the CEWS, a business must demonstrate that it has lost 30% or more of its revenue due to the effects of the COVID-19 pandemic. Applications for the CEWS will be available in the coming weeks.

The Prime Minister stressed that good faith and transparency on the part of the recipients of the CEWS is expected. Despite the broad availability of the CEWS, the Prime Minister has asked that businesses that could afford to pay their employees’ regular salaries, or that could afford to pay the 25% of those salaries not covered by the CEWS, continue to do so. He also stressed that every dollar received from the CEWS must be put toward paying employee salaries and wages and warned that businesses that are found to have abused the CEWS will face “serious consequences.” We expect further details of these “serious consequences” to be announced during tomorrow’s daily briefing by the Prime Minister.

The second prong, the CERB, is intended to protect those who have lost their jobs or income due to COVID-19. This benefit will provide eligible Canadians with $2000 per month, for up to four months, starting on March 15, 2020. This benefit, while taxable, will not be taxable at source and, as such, will put $2,000 in the hands of eligible Canadians. The Government estimates that the online application portals for the CERB will be available by early April.

However, applicants are advised to set their MyCRA accounts to “direct deposit” in advance of the CERB launch date to ensure that they begin receiving funding as soon as it is available.

For those who have already applied for EI Benefits, there is no need to reapply. Existing EI Benefit applications will be transferred to the CERB as soon as it becomes available. Please see our previous article for a detailed analysis of the CERB.

Finally, the third prong of the Government’s response plan will make low interest financing available to businesses in order to fill any remaining gaps in revenue that are not addressed other government programs. See our previous article for analysis of the Canada Emergency Business Account and the Small and Medium Sized Enterprise and Loan Guarantee System.

We will continue to monitor and provide up-to-date analysis of the Federal and Provincial Governments’ responses to the COVID-19 pandemic. By staying informed of these developments, we can better advise you on the steps that you, your employees, and your business can take to navigate through this uncertain time.

Travel Restrictions and Self-Isolation Requirements in the Ongoing Spread of the COVID-19 Virus in Canada

With the continued spread of the COVID-19 virus, it is important to keep up to date with the Canadian government’s best practices and the evolving legislative landscape.

On March 21, 2020, Health Minister Patty Hajdu announced that one week of social distancing will not suffice but rather, she anticipated that these measures will likely last for months. Minister Hajdu has stated that now is the time to double down on social distancing measures because failing to do so jeopardizes civil liberties and puts lives at risk. Minister Hajdu’s announcement was that right now, social responsibility for those who have not been exposed is the key for stopping the spread of COVID-19.

Domestic Travel Restrictions

On March 28, 2020, Prime Minister Trudeau announced that domestic travel by plane or train will soon be prohibited for anyone who has symptoms of coronavirus. The domestic restrictions will take effect on March 30. During Trudeau’s announcement, he placed responsibility on operators of airlines and trains to ensure that travellers exhibiting symptoms do not board. There will likely be more information available about these domestic travel restrictions.

International Travel Restrictions

On March 16, the Government of Canada announced it has taken the following actions at Canadian borders:

Banning foreign nationals from all countries except the United States from entering Canada. This ban does not apply to air crews, travellers arriving in Canada to transit to a third country, Canadian permanent residents, diplomats or immediate family members of Canadian citizens;

Redirecting international passenger flights to arrive at four Canadian airports, those being:
Calgary International;
Vancouver International;
Toronto-Pearson International Airport; and
Montréal-Pierre Elliott Trudeau International.

Canada is also implementing additional health and safety provisions at Canadian airports, which includes the following:

Improving health screening;
Increasing airport security and staff to conduct further health screening and public outreach;
Increasing signage through the arrival areas so that travellers will follow the latest public health best practices;
Preventing all travellers who have COVID-19 symptoms, regardless of citizenship, from boarding international flights to Canada; and
Airlines will conduct a basic health assessment of all travellers based on guidance from the Public Health Agency of Canada.

On March 18, the Government of Canada announced it was closing its borders to all non-essential travel.

While these are clear restrictions, Canada has yet to implement a full halt on travel. It remains to be seen whether the Canadian government, in the coming months, will implement additional restrictions to stop the spread of the COVID-19 virus in Canada. More draconian restrictions will no doubt have further implications for the Canadian economy and business. The Canadian government is faced with conflicting considerations. Additional travel restrictions promote health and safety, while at the same time, risk negatively impacting the Canadian economy and its businesses.

Self-Isolation

Presently, all travellers arriving in Canada are asked to self-isolate for 14 days upon entry with exceptions put in place for workers who are necessary for the movement of goods and people. These travellers are being encouraged to avoid contact with others for 14 days, while monitoring themselves closely for symptoms.

The British Columbia government currently advises that if you have no symptoms, mild symptoms, were exposed to someone who has tested positive for COVID-19, or are a returning traveller and in self-isolation for the 14 day period, you do not require a test for corona virus. Only a healthcare professional can determine whether you require a test. This involves contacting your health care provider or in British Columbia calling 811 to assess if testing is required. If symptoms are severe, such as shortness of breath or chest pain, individuals are encouraged to call 911 or go to the nearest Emergency Department.

As of March 16, 2020, all travellers entering Canada are being asked to self-isolate for 14 days upon entry with exceptions for workers who are essential to the movement of goods and people. Individuals should avoid contact with other people for 14 days, while monitoring themselves closely for symptoms.

Returning to the undertone of the statement by Health Minister Hajdu, the self-isolation requirements entrust Canadian citizens to be socially responsible and conscientious of the health and safety of not just themselves and their families, but also of the rest of the population. Since the self-isolation requirements are self-regulating, it is up to Canadian citizens to be responsible and monitor their conditions and contact with other people, taking the necessary precautions when there is risk of exposure or spread of the virus.

Potential Criminal Consequences for Failure to Self-Isolate

Health Minister Hajdu advised Canadians that she is now considering criminal penalties for Canadian travelers who do not self-isolate for 14 days when they return home. Hajdu provided that Canada could implement monetary penalties up to and including criminal penalties.

The Quarantine Act (the “Act“), updated in 2005 after the SARS outbreak, gives the federal health minister the power to create quarantine zones and fine or jail travelers who disobey quarantine measures. It remains to be seen whether the Canadian government will use the Act to implement these measures.

No “Flagpoling”

Of particular interest from an immigration perspective, the Canadian government has discouraged “flag poling”. Flag poling is a term given to individuals who are currently in Canada and travel to the United States border as a means to get their immigration status issued or extended. This is a common means utilized by individuals who wish to renew their study or work permits or to process their permanent residence status.

The Canadian Border Services Agency has released a statement classifying travel to the United States border for immigration services as fitting within the non-essential travel category. These individuals are requested to refrain from travelling to the border until further notice.

Temporary residents seeking to extend their stay in Canada as students, workers, or visitors can do so remotely on the website of Immigration, Refugees and Citizenship Canada : www.cic.gc.ca.

COVID-19: New Federal Wage Subsidy

On March 27, 2020, Prime Minister Justin Trudeau announced that the Federal Government would be increasing its investment in small and medium sized businesses in response to COVID-19.

Specifically, the Prime Minister announced that the exiting federal wage subsidy, which until March 27, 2020, covered 10% of the wages paid by small and medium sized businesses up to a maximum of $25,000 per employer, would be expanded to cover 75% of those wages paid by eligible businesses for up to three months, retroactive to March 15, 2020. No maximum amount available to eligible businesses has yet been announced, or attached to this increased benefit.

The Prime Minister advised Canadians, during his daily press conference, that this increased wage subsidy will help businesses stay open and keep people on the payroll during this difficult period. Moreover, he expressed his government’s hope that the availability of the expanded wage subsidy would motivate some small and medium sized businesses to reopen and recall employees who had been previously laid off; even when the demands of work may not require it.

The CERB and EI Benefits remain available to those who are currently unable to work or who have lost their jobs as a result of COVID-19. See our previous article for a detailed analysis of the CERB and available EI Benefits.

During the same press conference, the Prime Minister also announced further actions on the part of the federal government aimed at stabilising and protecting SMEs. In particular, he announced that the Federal Government will permit all businesses and self employed people to defer Goods and Services Tax and/or Harmonized Sales Tax payments, as well as duties charged on imports, until June 2020.

Lastly, the Prime Minister announced two new programs to facilitate access to credit for small and medium sized businesses. First, the new Canada Emergency Business Account will provide up to $25 Billion to financial institutions to fund interest free loans to eligible SMEs. Eligible businesses will be able to apply for up to $40,000 in financing, $10,000 of which will be forgivable, subject to certain requirements. Second, the Small and Medium Sized Enterprise and Loan Guarantee System will make up to $40 Billion in lending available to small and medium sized businesses which have been impacted by COVID-19.

While guidelines regarding eligibility and the application processes for the newly announced benefits and programs are not yet available, the Federal Government intends to make those details available early next week.

We will continue to keep you up to date on developments regarding the new wage subsidy and any other additional programs which are announced in response to the COVID-19 pandemic. Staying informed regarding these, and other relief programs, will ensure that you can manage your business and workforce efficiently and economically in these uncertain times.

Ontario’s Plan for COVID-19 Wage-Loss and Business Protection

We aim to provide our clients with useful and timely updates regarding the Federal and Provincial responses to the COVID-19 pandemic. In the case of this update, the information is in the context of income benefits and workplace relationships.

Yesterday, March 25, 2020 the Ontario government announced a massive stimulus plan; though the Plan’s details remain unclear. Below is a summary of what we do know to date. We will, of course, continue to publish further updates as, and when, details become available.

On March 25, 2020, Ontario’s Finance Minister released Ontario’s Action Plan: Responding to COVID-19 (March 2020 Economic and Fiscal Update) detailing the province’s initiatives in response to COVID-19 vis-à-vis financial and stimulus amounts and availability of additional resources for those in need.

Of the $17 billion additional resources announced, approximately $10 billion will be available to support individuals and businesses through tax and other deferrals. The goal being to improve cash flow and to protect much needed jobs. These initiatives include:

Cutting taxes by $355 million for about 57,000 employers through a proposed temporary increase to the Employer Health Tax (EHT) exemption.
Making available $6 billion by providing five months of interest and penalty relief for businesses to file and make payments for the majority of provincially administered taxes.
Making available $1.8 billion by deferring the upcoming June 30 quarterly municipal remittance of education property tax to school boards by 90 days, which will provide municipalities the flexibility to, in turn, provide property tax deferrals to residents and businesses, while ensuring school boards continue to receive their funding.
Making available $1.9 billion by the Workplace Safety and Insurance Board (WSIB) allowing employers to defer payments for up to six months.

While the global economy remains in flux Ontario is taking aggressive measures aimed at those who may be suffering from an immediate lack of income and who will greatly benefit from reduction in, and deferral of, taxes owing to the Province.

We expect further initiatives will be detailed in the coming days.

A Whole New World during and post COVID? Virtual Examination Discovery in B.C.

Virtual Series – Virtual Oral Advocacy in British Columbia

Extensions to Maximum Length for Temporary Layoff: What Federally Regulated and British Columbia Employers Need to Know to Avoid Deemed Terminations

Companies’ Creditors Arrangement Act: An Overview for Canadian Creditors

Real Estate Transactions and COVID: Challenges to Closing

COVID-19: Prime Minister Trudeau announces more help to Individuals and Businesses

Business is shut down. What happens with your lease now?

COVID-19: The Canada Emergency Wage Subsidy receives Royal Assent

Ministerial Order Confirms All BC Builders Lien Act Limitation Periods Continue to Apply

Construction Act to be Exempt from Suspension of Procedural Time Limits

Witnessing Wills During Quarantine

COVID-19: Updates to the Canada Emergency Wage Subsidy

The Implications of Force Majeure and Frustration in the Time of COVID-19

COVID-19: Limitation of Liability for Essential Service Providers

COVID-19: What we know, so far.

Electronic Signatures in a Time of Social Distancing in BC

COVID-19: The Canada Emergency Wage Subsidy

Travel Restrictions and Self-Isolation Requirements in the Ongoing Spread of the COVID-19 Virus in Canada

COVID-19: New Federal Wage Subsidy

Ontario’s Plan for COVID-19 Wage-Loss and Business Protection

Our Firm

Join Us

A Whole New World during and post COVID? Virtual Examination Discovery in B.C.

Virtual Series – Virtual Oral Advocacy in British Columbia

Extensions to Maximum Length for Temporary Layoff: What Federally Regulated and British Columbia Employers Need to Know to Avoid Deemed Terminations

Companies’ Creditors Arrangement Act: An Overview for Canadian Creditors

Real Estate Transactions and COVID: Challenges to Closing

COVID-19: Prime Minister Trudeau announces more help to Individuals and Businesses

Business is shut down. What happens with your lease now?

COVID-19: The Canada Emergency Wage Subsidy receives Royal Assent

Ministerial Order Confirms All BC Builders Lien Act Limitation Periods Continue to Apply

Construction Act to be Exempt from Suspension of Procedural Time Limits

Witnessing Wills During Quarantine

COVID-19: Updates to the Canada Emergency Wage Subsidy

The Implications of Force Majeure and Frustration in the Time of COVID-19

COVID-19: Limitation of Liability for Essential Service Providers

COVID-19: What we know, so far.

Electronic Signatures in a Time of Social Distancing in BC

COVID-19: The Canada Emergency Wage Subsidy

Travel Restrictions and Self-Isolation Requirements in the Ongoing Spread of the COVID-19 Virus in Canada

COVID-19: New Federal Wage Subsidy

Ontario’s Plan for COVID-19 Wage-Loss and Business Protection

Subscribe to our mailing list