tag:blogger.com,1999:blog-75399439147038331882024-03-12T19:59:41.689-07:00Calgary LawyerAnonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.comBlogger18125tag:blogger.com,1999:blog-7539943914703833188.post-72512034972797079602014-12-05T15:39:00.000-08:002014-12-05T22:12:42.943-08:00New Condo Law Passes First Reading<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiLOBFEmczLvdDbBngwD7nooqjHS-y1RlzKCzHlQ2q9Yjwtzz-NYDw0inbFTi6wOj-K7TT9mNFSTNs5o_L381DSMUhkh3PcjoZWeZ3dwKRiMMzH-M5eti1dUupNedbLN5NQ_08Hvvt4PYG5/s1600/barceloneta_sculpture.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiLOBFEmczLvdDbBngwD7nooqjHS-y1RlzKCzHlQ2q9Yjwtzz-NYDw0inbFTi6wOj-K7TT9mNFSTNs5o_L381DSMUhkh3PcjoZWeZ3dwKRiMMzH-M5eti1dUupNedbLN5NQ_08Hvvt4PYG5/s1600/barceloneta_sculpture.jpg" height="400" width="300" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: left;">Will the new Bill provide a solid foundation for condo owners' rights?</td></tr>
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<span style="font-family: Arial;">Condominium legislation was introduced in Alberta in the 1960's. Although popular acceptance of this form of home ownership grew slowly, there are now more than 8,000 condominium corporations in the province, and condos make up 20% of homes sold in Alberta every year. With rapid increases in population and rising real estate prices, the province faces a potential shortage in affordable homes, a problem that is particularly acute for the large numbers of young couples and families moving to Alberta for jobs. Municipal governments in the larger cities are implementing policies that favour urban density in an effort to combat sprawl, and the construction of condominium buildings is consistent with that goal.</span><br />
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<span style="font-family: Arial;"><em>Need for Reform</em></span></div>
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<span style="font-family: Arial;">Many new condominium buildings and condo conversions have appeared on the market in recent years, but condo owners, developers, realtors, and lawyers have suggested that the existing legal framework is out of date. The Alberta Condominium Owners Association is concerned about the lack of professional standards and licensing for building managers. Purchasers and their realtors complain that it is difficult to obtain documents on a property in a timely fashion from boards and building management. Purchasers of new units don't always get all the information they would like to have, and existing owners can be hit with unexpected special levies for building repairs and other costs. Condo owners and condo corporations have to resort to costly court proceedings to resolve disputes.</span><br />
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<span style="font-family: Arial;"><span style="font-family: Arial;"><span style="font-family: Arial;"><em>The Condominium Property Amendment Act</em></span><br />
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</span></span><span style="font-family: Arial;">In May of this year, the government introduced a bill to improve the protections provided to condo owners under the <a href="http://www.canlii.org/en/ab/laws/stat/rsa-2000-c-c-22/latest/rsa-2000-c-c-22.html#history">Condominium Property Act</a>.</span></div>
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<span style="font-family: Arial;">According to Doug Griffiths, Minister for Service Alberta at the time, "Buying a condo is an affordable option for Albertans entering the housing market and is often their first real estate experience. After careful review and discussion with stakeholders and Albertans, our government will update the Condominium Property Act to make it easier for owners and builders to understand their responsibilities on the sale of condos."</span></div>
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<span style="font-family: Arial;">The original bill died on the order paper when incoming Premier Jim Prentice prorogued the Legislature in the fall, but the amendments were reintroduced as <a href="http://www.assembly.ab.ca/ISYS/LADDAR_files/docs/bills/bill/legislature_28/session_3/20141117_bill-009.pdf">Bill 9, the Condominium Property Amendment Act</a>, which passed first reading on December 1. Stephen Khan, the new Minister responsible for the Bill, has expressed the hope that the Bill will pass in the current sitting.</span><br />
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<span style="font-family: Arial;"><em>New Disclosure Requirements</em></span><br />
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<span style="font-family: Arial;">The amendments would improve disclosure requirements to include a final date by which the unit is to be ready for occupation and a proposed budget for the new condominium corporation. The developer is also to provide a copy of the New Home Warranty where the corporation is to be covered by the warranty.</span><br />
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<span style="font-family: Arial;">Where an existing building is being converted into condominiums, there is a concern that repairs that are needed due to the age of the building may not be apparent to buyers. Under Bill 9, the developer has to obtain a Building Assessment Report and summarise the findings for unit purchasers.</span><br />
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<span style="font-family: Arial;"><em>Special Assessments and Caveats</em></span><br />
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<span style="font-family: Arial;">Under the current law, condominium owners can be required to pay substantial assessments for building repairs, and there have been cases in which owners complain of a lack of notice regarding impending levies. Various charges imposed by the board can be registered against an owner's title, even if the amounts are in dispute, and the registration of a caveat makes it difficult for the owner to sell or finance his unit.</span><br />
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<span style="font-family: Arial;">These problems are addressed in Bill 9. Existing owners will be protected by amendments that limit the situations in which the condo board can impose a special levy. The board will be required to provide owners with information about a proposed levy in advance, and the board will have to hold a special general meeting if 15% of the owners ask for one.</span><br />
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<span style="font-family: Arial;">In addition, the registration of a caveat for unpaid contributions will be restricted to those contributions that are permitted under the Act, and that have been found by a court to be valid. The legal fees and other charges that can be included for the preparation, registration, and discharge of a caveat are capped by the amendments.</span><br />
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<span style="font-family: Arial;"><em>Condominium Management</em></span><br />
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<span style="font-family: Arial;">Under Bill 9, the Real Estate Council of Alberta is appointed to regulate condominium managers. It is intended that RECA will establish standards for education and training for property managers in this sector, and that building managers will have to be licensed.</span><br />
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<span style="font-family: Arial;">The specific licensing requirements and professional standards for managers are not set out in the amendments, however. These matters will be dealt with in regulations that are to be implemented after consultations among RECA and various stakeholders.</span><br />
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<span style="font-family: Arial;"><em>Dispute Resolution</em></span><br />
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<span style="font-family: Arial;">The amendments would establish a new Tribunal to hear disputes between unit owners and condo corporations. The Tribunal will start in a limited geographic area (probably Edmonton and Calgary), but could eventually be expanded to other parts of the province.</span><br />
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<span style="font-family: Arial;">It is intended that disputes involving money issues such as common area charges, as well as parking, pets, noise, and other operational issues, will be dealt with by the Tribunal. Disputes over title, such as foreclosure or changes to the condominium plan, will continue to be dealt with in court.</span><br />
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<span style="font-family: Arial;">Important details regarding the jurisdiction of the Tribunal are left to the regulations, so it is unrealistic to expect that the Tribunal will be up and running as soon as the amendments are passed.</span><br />
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<span style="font-family: Arial;"><em>The Regulations</em></span><br />
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<span style="font-family: Arial;">Minister Khan hopes that regulations will be put in place within a year of the passage of the Bill. A consultation process has to take place first, however, so it is unclear when the reforms promised by the Government will be fully implemented.</span><br />
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<span style="font-family: Arial;">Representatives of condominium owners have expressed concern that the amendments in their current form are incomplete, and that too much has been left up to the regulations. The Alberta branch of the Canadian Home Builder's Association has given its blessing to the new Bill, however, and expressed a willingness to work with Minister Khan to develop a set of regulations that "meets the needs of homebuyers".</span><br />
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<span style="font-family: Arial;">The Conservative government is in a position to move Bill 9 through the legislative process quickly, provided it makes this a priority, and the government's intentions should become clear over the next few months.</span><br />
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<span style="font-family: Arial;"><span style="font-family: Arial;"><span id="goog_1124290066"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span style="font-family: Arial, Helvetica, sans-serif;">Contact Richard Hayles at Billington Barristers:</span></span></span></span><br />
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Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com22tag:blogger.com,1999:blog-7539943914703833188.post-51054609168188207982014-06-25T13:18:00.001-07:002014-12-05T15:46:19.264-08:00Insurance Agents Can't Compete Against Former Brokerage<br />
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<span style="font-family: Arial;">In <a href="http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2014/2014abca0203.pdf">Renfrew Insurance Ltd. v. Cortese,</a> the Alberta Court of Appeal upheld an interlocutory injunction that prevented two insurance agents from soliciting customers and employees from their former employer.</span><br />
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<span style="font-family: Arial;"><em>Enforceability of Non-Competition Agreements</em></span></div>
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<span style="font-family: Arial;">In cases in which an employer asks the court to stop a former employee from competing, the key issue is usually the legal validity of the non-compete clause in the employment contract. Since a non-compete clause restrains trade and can prevent the former employee from earning a living, courts often declare them unenforceable on public policy grounds.</span><br />
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<span style="font-family: Arial;">The law does recognize that there are circumstances, however, in which a non-competition agreement is needed to protect the employer's interests, such as when the employee has gained access to trade secrets and developed relationships with long-term customers in the course of employment. Seeking to strike a balance between the interests of the employee and the employer, the courts scrutinize non-competition clauses carefully, upholding them only when they are reasonably necessary to protect the employer's legitimate business interests.</span><br />
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<span style="font-family: Arial;">This analysis normally focusses on the geographic and temporal scope of the non-compete. If the clause would prevent the employee from working in areas where he was not engaged by the employer, or seeks to keep the employee out of the market for a lengthy period of time, it can be struck down.</span><br />
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<span style="font-family: Arial;">In the <a href="http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2014/2014abca0203.pdf">Renfrew Insurance</a> case, insurance agents Cortese and Reed each signed a Unanimous Shareholder Agreement (the "USA") in order to become part owners in the broker, Renfrew. The USA contained a restrictive covenant that prevented them from competing in the insurance business within 60 km of Renfrew's Calgary office for 6 months after the termination of employment. The covenant also stated that they would not solicit any of Renfrew's customers or employees for 18 months.</span><br />
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<span style="font-family: Arial;">In January of 2014, both agents took jobs with one of Renfrew's competitors, BFL Insurance Services ("BFL"). They immediately started to work out of BFL's Calgary office, claiming however that they were servicing customers in Edmonton, Canmore, and elsewhere in Alberta and not within the 60 km radius prohibited by the covenant. Two Renfrew customer service representatives who had previously worked with Cortes and Reed joined BFL. Furthermore, at least two former Renfrew clients switched to BFL, although these clients were being served by another BFL agent and not by Cortese or Reed.</span><br />
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<span style="font-family: Arial;"><em>Test for Injunctive Relief</em></span><br />
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<span style="font-family: Arial;">In order to obtain a pre-trial injunction enforcing a non-compete clause, the employer has to pass a three part test:</span><br />
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<span style="font-family: Arial;">1. Is there a strong case that the clause is legally valid, and that the employee is in breach?</span><br />
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<span style="font-family: Arial;">2. Will the employer suffer "irreparable harm", meaning losses that can't be adequately compensated by an award of monetary damages, if the employee is allowed to compete until trial?</span><br />
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<span style="font-family: Arial;">3. Does the balance of convenience between the employee and the employer favour the injunction?</span><br />
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<span style="font-family: Arial;">The judge who heard the original application concluded that the covenant against competition was reasonable in scope. In reaching this conclusion, he took note of the fact that the clause appeared in a shareholders' agreement rather than in an employment contract, so the contract was more like a commercial transaction between partners in a business than a conventional employer-employee relationship. He also concluded that the agents were not pressured to sign the USA, that signing was not a condition for their continued employment, and that they had independent legal advice.</span><br />
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<span style="font-family: Arial;">The application judge held that the restriction on soliciting Renfrew customers was reasonable, having regard to the importance of the "book of business" in an insurance brokerage business. It was also significant that the two agents had built their "niche" in the business with Renfrew's assistance.</span><br />
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<span style="font-family: Arial;">Given that two other Renfrew employees had left to join BFL, and that two customers had switched brokers, the application judge was prepared to infer that the agents were in breach and that the threat to the Renfrew business was serious enough to constitute irreparable harm.</span><br />
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<span style="font-family: Arial;">The restrictive covenants in this case specified that damages would not be an adequate remedy, and this was another factor that favoured the injunction.</span><br />
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<span style="font-family: Arial;"><em>Standard of Review on Appeal</em></span><br />
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<span style="font-family: Arial;">In granting or denying an interlocutory injunction, the application judge is exercising judicial discretion. An appellate court will defer to the judge below unless he decided the case arbitrarily or applied wrong legal principles. The interpretation of restrictive covenants is a question of law, reviewable on a standard of correctness, but where factual findings are needed in order to apply the clause, the findings of the judge should be upheld in the absence of palpable and overriding error.</span><br />
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<span style="font-family: Arial;">In other words, in this kind of case, the Court of Appeal will uphold the decision of the application judge unless it is clearly wrong. The Appellate Court felt that intervention was not justified, and dismissed the employees' appeal.</span><br />
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<span style="font-family: Arial;"><a href="http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2014/2014abca0203.pdf">Renfrew Insurance Ltd. v. Cortese, 2014 ABCA 203</a></span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: 18px; line-height: 25px;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Any legal information provided is general in nature and may not apply to particular situations. It does not constitute legal opinion or advice. Please consult your lawyer regarding your specific legal issue.</span></span></span></div>
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</span><br />Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com31tag:blogger.com,1999:blog-7539943914703833188.post-5074537599783523062014-01-22T10:21:00.000-08:002014-01-22T10:21:47.024-08:00Condo Corp Ordered to Investigate Suspected Construction Deficiencies<div class="separator" style="clear: both; text-align: left;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbDnfva3DaJWFScqP9Qas-g7rqhxSt-w8Csnqns55LjW-D8zEvQ-xvYcp5DdZfOw6iEpGnRbug3VPRTberHeAvrl1RGqCH34FuIA0SGN7gyx2ZfNgGjrd6p_r2_ZKSLU44hi9FCG8Eamvv/s1600/Condominium+Towers.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbDnfva3DaJWFScqP9Qas-g7rqhxSt-w8Csnqns55LjW-D8zEvQ-xvYcp5DdZfOw6iEpGnRbug3VPRTberHeAvrl1RGqCH34FuIA0SGN7gyx2ZfNgGjrd6p_r2_ZKSLU44hi9FCG8Eamvv/s1600/Condominium+Towers.jpg" /></a></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The Condominium Corporation is responsible for the control and management of the common areas of the building, and has an obligation to keep the common property in a state of good repair: <a href="http://www.canlii.org/canlii-dynamic/en/ab/laws/stat/rsa-2000-c-c-22/latest/rsa-2000-c-c-22.html#sec37subsec1">Condominium Property Act, s. 37</a>. In a recent case involving a condominium complex in St. Albert, a Master of the Alberta Court of Queen's Bench held that this duty includes an obligation to open up walls to look for suspected deficiencies in the original construction of the building.</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The Applicants noticed cigarette smoke infiltrating their condominium unit from the unit below. As one of the Applicants was allergic to cigarette smoke, they hired an engineering firm to investigate the problem. When the engineers opened a bulkhead in the lower apartment they discovered that the fire separation between the two units had never been installed. Proper fire separation was added in this area, which reduced but did not eliminate the smoke problem. The engineering firm submitted a report indicating that the cause could be a lack of fire separation in a second bulkhead that had not been opened for inspection.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial, Helvetica, sans-serif;">There were no "as-built" drawings for the complex, so the only way to determine whether or not the fire separation was in place was to open the second bulkhead for further inspection. The Respondent Condominium Corporation refused to undertake the cost of this inspection on mere suspicion, citing a concern for the inconvenience the work would cause for the lower unit owner.</span></div>
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<span style="font-family: Arial;">The Master concluded that the evidence did not prove, on a balance of probabilities, that there was inadequate fire separation in the second bulkhead, but it did raise a case for further investigation.</span></div>
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<span style="font-family: Arial;">The legislation imposes a duty on the Corporation to "keep" the common property in good repair, and to "maintain" the property of the corporation. Although on a literal interpretation this does not seem to extend to a duty to investigate for hidden defects, or to correct deficiencies in the original construction, it is well established that condominium statutes are remedial legislation that should receive a liberal interpretation. The Master concluded that the corporation cannot just preserve the existing state of the building, or maintain the status quo, especially if this could endanger the safety of unit owners: "The statute and the by-laws impose not only a duty to maintain, but an obligation to correct deficiencies or, at the very least, to investigate and bring the conclusions to a meeting of the owners."</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">The Master issued a broad order requiring the Corporation to open and inspect the second bulkhead to confirm that there was adequate fire separation meeting all Building Code requirements. In addition, if the fire separation proved to be lacking in this second area, the Corporation's Board was to consider whether additional investigations were required in other parts of the building.</span></div>
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<span style="font-family: Arial;">Construction deficiencies in condominium buildings are unfortunately too common. Defects may not be apparent at the time the condominium is registered and title to the common elements is transferred to the Corporation, however, as the building envelope and internal drywalling are normally complete by that time.</span></div>
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<span style="font-family: Arial;">In a typical case a hidden defect affects multiple units, and the Board is prepared to undertake investigations to determine the nature and extent of the suspected problem. Here, a problem that could be widespread in the building, with disastrous consequences in the event of a fire, was having an immediate impact on only one unit. It will be interesting to see if this decision is applied in other cases, and if the principle established is extended from matters that could impact health and safety to cases in which a single owner is concerned about the comfort or the appearance of his unit.</span></div>
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<span id="goog_752737628"></span><a href="https://www.blogger.com/"></a><a href="http://www.canlii.org/en/ab/abqb/doc/2014/2014abqb22/2014abqb22.html?searchUrlHash=AAAAAQAcSG5hdGl1ayBDb25kb21pbml1bSAwMzIgMjQxMQAAAAAB"><span style="font-family: Arial, Helvetica, sans-serif;">Hnatiuk v. Condominium Corporation No. 032 2411, 2014 ABQB 22</span></a><span id="goog_752737629"></span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: 18px; line-height: 25px;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Any legal information provided is general in nature and may not apply to particular situations. It does not constitute legal opinion or advice. Please consult your lawyer regarding your specific legal issue.</span></span></span></div>
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Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com9tag:blogger.com,1999:blog-7539943914703833188.post-3565916391784395392013-11-01T17:06:00.000-07:002013-11-01T17:06:58.731-07:00Would You Insure This House?<div class="separator" style="clear: both; text-align: left;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiDdmsjpAnD81jJ2SlFRHI0s6j2EKC-hXWFOxOzVk9oxMvYEqPMDUWwIDDoeXIc_Fqu1fl3cFp4zc4gtLYACVm7ZE7aD-e-l8oHtWnT_MArd1Lpb65u2S7WNEoQ60qCdPCITr6S6NtR4ksR/s1600/Condemned+House.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiDdmsjpAnD81jJ2SlFRHI0s6j2EKC-hXWFOxOzVk9oxMvYEqPMDUWwIDDoeXIc_Fqu1fl3cFp4zc4gtLYACVm7ZE7aD-e-l8oHtWnT_MArd1Lpb65u2S7WNEoQ60qCdPCITr6S6NtR4ksR/s320/Condemned+House.jpg" width="320" /></a></div>
<em><span style="font-family: Arial, Helvetica, sans-serif;">Unfit for Human Occupation</span></em><br />
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<span style="font-family: Arial, Helvetica, sans-serif;">Anyone who has applied for insurance on a house or commercial building knows that the insurance agent will want to complete a questionnaire disclosing detailed information about the condition of the building. If the insured gives false information, the insurer can revoke coverage for misrepresentation. A lot of people are probably unaware that they have an ongoing legal obligation to inform their insurance company of any significant change in the condition of the insured property, and that the insurer can deny a claim because of failure to report a "material change in the risk".</span></div>
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<span style="font-family: Arial;">The source of this obligation is a statutory condition that is incorporated into most property insurance policies in Canada: "The insured must promptly give notice in writing to the insurer or its agent of a change that is material to the risk and within the control and knowledge of the insured." Matters that might be considered material include changes in use or occupation, major renovations, or alterations to electrical, heating, alarms, or other important building systems.</span></div>
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<span style="font-family: Arial;">Insurance underwriters often dispatch an inspector to look at the home or building before issuing the policy. The inspector may or may not have any particular qualifications in engineering or construction. The fee paid for the inspection is small, and the inspections are often cursory. With home insurance policies, the inspector generally does not enter the house, and the review carried out is often referred to as a "drive-by" inspection as the inspector does little more than visit the location to confirm that there is a building with no obvious pre-existing damage.</span></div>
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<span style="font-family: Arial;">What happens if the inspector is in a position to note a condition about the building that is material to the risk, but that the insured has not disclosed to the insurance company? The insured could argue that the insurance company had knowledge of the state of the building, so the statutory condition doesn't apply. The same argument might be raised in the face of a misrepresentation defence.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">From the insurance company point of view, the inspection is for a very limited purpose and is not intended to confirm every detail in the insurance application. Carrying out a thorough inspection would increase underwriting costs, which would have to be passed on to the insured through higher premiums. The insured is in the best position to provide information about the property, and insurers should be able to rely on information in the insurance application without further inquiry.</span></div>
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<span style="font-family: Arial;">In <a href="http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2013/2013abca0363.pdf"><em>Mah v. Wawanesa Mutual Insurance <span style="font-family: Arial, Helvetica, sans-serif;">Company</span></em></a></span><span style="font-family: Arial, Helvetica, sans-serif;"><em>,</em> however, a majority of <span style="font-family: Arial, Helvetica, sans-serif;">the Alberta Court of Appeal</span><em> </em>was prepared to impute the knowledge of the inspector to the insurance company.</span></div>
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<span style="font-family: Arial;">The insured bought a run-down house from his brother. The house had been insured by Wawanesa, and the brokerage representing Wawanesa took an application from the new owner and agreed to bind coverage pending acceptance of the application by the insurer.</span></div>
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<span style="font-family: Arial;">The insurance company knew that the building was unoccupied. Between the date of the new owner's application and the date the policy was issued, however, an official with the regional health authority attended at the property and posted a notice on the rear door stating that the house was unfit for human occupation. The notice was on bright orange paper, and the trial judge concluded that the owner must have seen it when he came by the house to cut the grass and take away the trash. The owner did not report the health department's order to the insurer.</span></div>
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<span style="font-family: Arial;">The insurer asked the broker to check on the type of heating system and age of the house, and to provide a photo "to confirm the dwelling's continued existence". The broker sent a retired surveyor to conduct an inspection. For $100, the surveyor attended at the property, carried out a "walk-around inspection", and took several pictures. He did not enter the building. He submitted his photos to the broker, along with a one-page handwritten report describing what he had seen. The broker passed this note and the photos on to Wawanesa's underwriting department. One of the photos showed the back door; the orange notice was visible, but the print was not readable.</span></div>
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<span style="font-family: Arial;">Wawanesa issued the policy, but denied coverage when the property was damaged by fire, citing the failure of the insured to report the health authority's order declaring the house unfit. The surveyor was not called to testify at trial, so it is not known whether he actually read the health department notice or not. The trial judge dismissed the action, and the insured appealed.</span><br />
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<span style="font-family: Arial;">The fact that the insurance company did not have actual knowledge of the health department order was not in dispute. The case turned on what the surveyor knew, and whether or not that knowledge could be attributed to the insurer.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">The reasons of the trial judge were a little vague regarding the state of mind of the surveyor. The judge said that "one could assume" that the surveyor saw the health department notice, then took note of the fact that he did not testify. This suggests that the judge drew an adverse inference from Wawanesa's failure to call the surveyor. The judge had concluded that the owner must have seen the notice on one of his visits to the property. The majority in the Court of Appeal said that on the same basis, the judge's assumption about the surveyor's knowledge amounted to a fact finding that the surveyor saw the notice too.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">According to the majority, the surveyor was an agent of the broker, and since the broker was an agent of the insurer, the surveyor was "the insurer's agent's agent". In law, the surveyor's knowledge was the broker's knowledge, and the knowledge of the broker must be imputed to its principal Wawanesa.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">In addition, the statutory condition requires notice to the insurer "or its agent". In the view of the majority, the notice need not come from the insured, and the health authority was actually a better source of information about the fitness of the building. Since the surveyor/agent had notice, the condition was satisfied and the insurer could not avoid coverage.</span><br />
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<span style="font-family: Arial;">Justice O'Ferrall, in his dissent, did not take issue with the idea that the surveyor's knowledge could be imputed to the insurer, or that notice to the surveyor would satisfy the statutory condition. He did not accept that the trial judge had drawn a factual inference regarding the surveyor's knowledge, and felt that the evidence did not support the conclusion that the surveyor must have seen the health department order.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">For homeowner's policies, the costs involved in carrying out a detailed inspection cannot be justified as a routine part of the underwriting process. Nevertheless, it appears that anything visible from outside the home will be considered within the knowledge of an insurer who orders a "drive-by" inspection prior to issuing a policy. Certainly, any plaintiff's lawyer faced with a misrepresentation or non-disclosure defence will want to obtain production of the insurer's inspection report.</span><br />
<span style="font-family: Arial;"></span><br />
<a href="http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2013/2013abca0363.pdf"><span style="font-family: Arial, Helvetica, sans-serif;"><em>Mah v. Wawanesa Mutual Insurance Company,</em> 2013 ABCA 363</span></a><br />
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Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com3tag:blogger.com,1999:blog-7539943914703833188.post-57180023257201654402013-10-29T16:21:00.001-07:002013-10-29T16:30:01.651-07:00Alberta Court Upholds Land Titles System<br />
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<span style="font-family: Arial, Helvetica, sans-serif;"> <em>Homestead Record, Alberta Archives</em></span><br />
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<span style="font-family: Arial;">In Alberta, all interests in land are recorded in a Torrens registration system, often referred to as a "Land Titles" system. A title search produces a certificate listing all registered interests in the parcel of land searched. Anyone interested in acquiring the land can rely on the certificate as a complete list showing who owns the property and any mortgages, liens, or other interests effecting title. Unregistered interests are not protected. The only exception is in cases of fraud.</span></div>
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<span style="font-family: Arial;">This system can sometimes lead to harsh results, as is illustrated in a recent case in the Albert Court of Queen's Bench. A builder constructed a "show home" on a lot in a development, relying on a contract that said the developer had to transfer title in the lot to the builder once construction of the show home began. All of the lots in the development were subject to a mortgage in favour of the Bank of Montreal. The developer went into receivership without transferring title to the builder, although the builder had nearly completed the home. The receiver sold the property, and it was agreed that the value of the home (as opposed to the lot itself) was in excess of $140,000. This amount was placed in a trust account until entitlement to the proceeds could be determined in court.</span></div>
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<span style="font-family: Arial;">The court concluded that the Bank's registered mortgage had priority over the unregistered equitable interest claimed by the builder based on unjust enrichment: <a href="http://www.albertacourts.ab.ca/jdb_new/public/qb/2003-NewTemplate/qb/Civil/2013/2013abqb0596.pdf"><em>Bank of Montreal v. 1323606 Alberta Ltd.,</em> 2013 ABQB 596.</a></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The builder, Coco Homes Ltd., claimed an equitable interest in the proceeds, arguing that if the money went to the Bank it would be acquiring the benefit of the construction work without paying anything for it; essentially, an unjust enrichment argument. Coco also relied on s. 69 of the <a href="http://www.canlii.org/en/ab/laws/stat/rsa-2000-c-l-7/latest/rsa-2000-c-l-7.html?searchUrlHash=AAAAAQATTGF3IG9mIFByb3BlcnR5IGFjdAAAAAAB"><em>Law of Property Act,</em> RSA 2000, c. L-7</a>, which creates a statutory lien in favour of someone who has made a lasting improvement to land in the belief that he owned it.</span></div>
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<span style="font-family: Arial;">The Bank's case was based on s. 203(2)(a) of the <a href="http://www.canlii.org/en/ab/laws/stat/rsa-2000-c-l-4/latest/rsa-2000-c-l-4.html?searchUrlHash=AAAAAQAPbGFuZCB0aXRsZXMgYWN0AAAAAAE"><em>Land Titles Act,</em> RSA 2000, c. L-4</a>. Section 203 states that anyone dealing with a transfer, mortgage, or other interest in land is not bound by a trust or other interest in the land unless it is registered in the Land Titles system. In addition, section 203(2)(b) provides that a party dealing with the land is unaffected by any notice of a trust or other unregistered interest in the land or by any rule of law or equity that might create an interest in the land.</span></div>
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<span style="font-family: Arial;">Madam Justice Topolniski considered the public policy basis for the Torrens system, stating that the certificate of title "...is designed to meet a simple policy goal - to provide a clear, definitive mechanism to evaluate the status of land". The objective of the system is to save purchasers and mortgagees the trouble and expense involved in going behind the register in order to investigate the validity of the owner's title.</span></div>
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<span style="font-family: Arial;">The judge acknowledged that a Torrens system can impose hardships, noting that the legislation provides for compensation for those who suffer a loss out of an assurance fund.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">Relying on decisions of the Supreme Court of Canada and the Ontario Superior Court, Justice Topolniski concluded that the legislation was a complete bar to the homebuilder's claim. Under a Land Titles system, an unregistered interest has no effect on the registered title of a purchaser for value: <a href="http://www.canlii.org/en/ca/scc/doc/1976/1976canlii33/1976canlii33.html"><em>United Trust Co. v. Dominion Stores Ltd.,</em> [1977] 2 S.C.R. 915</a>. Section 203 of the Act "represents an unequivocal abrogation of the doctrine of actual notice in Alberta such that, absent fraud, an unregistered interest cannot under any circumstances trump a registered interest.": <a href="http://www.canlii.org/en/on/onsc/doc/2012/2012onsc4693/2012onsc4693.html"><em>Romspen Investment Corp. v. Edgeworth Properties,</em> 2012 ONSC 4693</a>. The effect of s. 203 of the Land Titles Act is to extinguish Coco's claim, whether it arises out of common law, equity, or statute.</span></div>
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<br />
<span style="font-family: Arial, Helvetica, sans-serif;">With respect to the argument under s. 69 of the <em>Law of Property Act</em>, the judge concluded that granting priority to an unregistered interest would defeat the intent of the legislature in adopting the Torrens system. Section 69 applies where a person improves someone else's land "under the belief that the land was the person's own". Although Coco had a contractual right to a transfer of title, it could not have held an honest belief that it owned the land at the time the developer went into receivership, so the claim under s. 69 failed.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">Coco argued that the Bank could not take title to the improvements under the <em>Nemo Dat</em> rule (<em>nemo dat quod non habet,</em> or "no-one gives what he doesn't have"). Since the developer had not paid for the improvements, it didn't own them and couldn't mortgage them to the Bank. The judge rejected this argument because fixtures permanently attached to the land become part of the land.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">Finally, the court rejected the constructive trust argument, citing Supreme Court authority stating that a constructive trust cannot apply to the prejudice of a third party: <a href="http://www.canlii.org/en/ca/scc/doc/1997/1997canlii346/1997canlii346.html"><em>Soulos v. Korkontzilas,</em> [1997] 2 S.C.R. 217</a>.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">Although the outcome may seem like a windfall for the Bank, which did not finance the construction of the model home, on reflection it is fair. The homebuilder was free to search title prior to starting work, and would have been aware that the lot was subject to a mortgage in favour of the Bank. Coco could have insisted that the developer make arrangements to have the mortgage discharged before it built the home, and could have stopped work as soon as it became clear that the developer was not going to transfer title.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">It is in the public interest that there should be a searchable registry available that provides an interested party with a complete picture of the state of title, so that people who buy, sell, and mortgage property know where they stand when they enter into a transaction. As the judge determined, the legislature intended to provide such a registry when it created the Land Titles system, and giving registered interests priority over unregistered claims based on trust or statute is a necessary consequence.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;"><a href="http://www.canlii.org/en/ab/abqb/doc/2013/2013abqb596/2013abqb596.html"><em>Bank of Montreal v. 1323606 Alberta Ltd.,</em> 2013 ABQB 596</a></span><br />
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Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com1tag:blogger.com,1999:blog-7539943914703833188.post-75575398814113047362013-10-01T16:40:00.000-07:002013-10-01T16:40:48.158-07:00When Is a Settlement Not a Settlement?<div class="separator" style="clear: both; text-align: left;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhqVNtJd5yzuVl742Rq890fvr0EmCDCppbzvgTA8IOvQJvHpqu-rE90ZFjVvnXJA3t4YbRIb59n9CoIzEM7InekKyQZ9tBkvxQCjtQYDETOgRqIvgeqqySNMhNvCylA7VuluFt1EAi9ga8D/s1600/Alberta+Court+of+Appeal,+June+6,+2013.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="239" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhqVNtJd5yzuVl742Rq890fvr0EmCDCppbzvgTA8IOvQJvHpqu-rE90ZFjVvnXJA3t4YbRIb59n9CoIzEM7InekKyQZ9tBkvxQCjtQYDETOgRqIvgeqqySNMhNvCylA7VuluFt1EAi9ga8D/s320/Alberta+Court+of+Appeal,+June+6,+2013.jpg" width="320" /></a></div>
<em><span style="font-family: Arial, Helvetica, sans-serif;">The Alberta Court of Appeal</span></em><br />
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<span style="font-family: Arial, Helvetica, sans-serif;">Settlement agreements often contemplate formal documentation that is to be prepared and executed later, most commonly a release "in a form satisfactory to counsel". What happens if the form of the release proposed by one party's lawyer is not acceptable to counsel for the opposing party? That was the issue in <a href="http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2013/2013abca0308.pdf"><em>Tessier v. City of Edmonton</em></a>, a recent decision of the Alberta Court of Appeal.</span></div>
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<em><span style="font-family: Arial;">The Settlement Discussions</span></em></div>
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<span style="font-family: Arial;">This was an expropriation case. During a break in the hearing before the Alberta Land Compensation Board, counsel for the property owners telephoned the lawyer for the City and offered to settle for $650,000, plus an additional amount of money that had been agreed previously. Legal and expert fees were to be subject to a later negotiation. Counsel for the City called back a few minutes later and, upon receiving confirmation that the owners would sign a release, accepted this proposal.</span></div>
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<span style="font-family: Arial;">These terms, including the provision for a release, were confirmed later that day in an email from the City's lawyer to counsel for the owners. On resumption of the hearing the following day, the lawyer for the owners advised the Board that the dispute had been settled, and asked that the case be adjourned subject to the execution of final documents and the payment of funds. Two days later, however, the owners' lawyer told the solicitor for the City that his clients did not want to proceed with the settlement. Counsel for the City took the position that a settlement had been concluded and sent opposing counsel a draft release. In a letter the following day, the City's lawyer enclosed cheques for the settlement funds, to be held in trust pending execution and return of the release and the filing of a discontinuance with the Board.</span></div>
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<em><span style="font-family: Arial;">Decision of the Board</span></em></div>
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<span style="font-family: Arial;">The City applied to the Board for a determination as to whether or not there was a settlement. When the lawyer for the owners was called as a witness, he testified that there was a settlement that had to be "papered". The release he received from opposing counsel was typical of those he had previously negotiated with the City, except it had no confidentiality provision. The Board ruled that there was a binding settlement, and the owners appealed to the Court of Appeal.</span></div>
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<em><span style="font-family: Arial;">Decision on Appeal</span></em></div>
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<span style="font-family: Arial;">The Court stated that the issue on appeal involved questions of contract law outside the Board's specialized expertise, so the standard of review was correctness.</span></div>
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<span style="font-family: Arial;">The owners argued that the City's acceptance of the $650,000 offer was conditional because it contained additional terms that were set out in the release and the letter imposing trust conditions. This was a counteroffer, and there was no deal as the counteroffer was never accepted.</span></div>
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<span style="font-family: Arial;">The Court of Appeal rejected these arguments. A settlement is a contract, and the contract is formed when the parties agree on the essential terms. Once there is an agreement on essential terms, one party can tender a release on trust or escrow conditions without rescinding the agreement. Although in some cases there will be a dispute over the terms of the release or the escrow conditions, that didn't happen in this case as the owners disavowed the settlement before the draft release was delivered. In this situation, proffering a release or imposing trust conditions could not amount to a counteroffer.</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">In this case, it seems that the Board and the Court of Appeal were both influenced by the fact that the owners tried to back out of the agreement before the draft release was tendered, and that the objections to the release appeared to be an attempt to justify this after the fact.</span></div>
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<span style="font-family: Arial;"><em>Settled Law on Settlements</em></span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">What if there is a genuine dispute over the terms of the release? These documents can be lengthy and complex, and are often the subject of much back-and-forth negotiation between counsel for the parties. If counsel cannot reach an agreement about the terms of the release, is the settlement dead? Or can the court approve a release that the parties will be required to sign?</span></div>
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<span style="font-family: Arial;">This issue has been the subject of previous litigation. In <a href="http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2013/2013abca0308.pdf"><em>Tessier v. Edmonton</em></a>, the Court of Appeal referred to <a href="http://canlii.ca/en/bc/bcca/doc/1989/1989canlii2744/1989canlii2744.pdf"><em>Fieguth v. Acklands Ltd.</em></a>, a 1989 decision of the British Columbia Court of Appeal. The principles are well-established in the case law:</span></div>
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<span style="font-family: Arial;">(1) The question of whether or not a case has been settled is to be resolved by the application of the rules of contract formation;</span></div>
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<span style="font-family: Arial;">(2) Once there is an agreement on essential terms, the settlement is a binding contract;</span></div>
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<span style="font-family: Arial;">(3) A settlement implies an obligation to furnish a release, and if an action is outstanding, a consent dismissal as well;</span></div>
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<span style="font-family: Arial;">(4) A proposal to discontinue an action, with nothing more, does not amount to an offer to settle the underlying claim, so a release is not implied and need not be provided;</span></div>
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<span style="font-family: Arial;">(5) Settlement includes an implied right to a simple release of the claim that is the subject of the litigation, but unusual or additional terms, such as indemnity provisions, are not implied and have to be specifically agreed;</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">(6) Once the parties agree on terms of settlement a contract has been formed, and this stage must be distinguished from later actions directed towards the execution or implementation of the settlement contract, such as the payment of funds or the proffering of a release;</span></div>
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<span style="font-family: Arial;"></span> </div>
<div style="text-align: justify;">
<span style="font-family: Arial;">(7) Once the essential terms are agreed, subsequent conduct relating to the payment of funds, imposition of escrow terms, or the exchange of concluding documents in draft form will not vitiate the settlement unless one party goes so far as to repudiate the settlement agreement by refusing to carry out its terms;</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">(8) In order to amount to repudiation, the conduct must constitute an unequivocal refusal to perform the contract, the equivalent of frustration or rescission of the contract;</span></div>
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<span style="font-family: Arial;">(9) If counsel cannot agree on a release, either party can apply to the Court for an order enforcing the settlement, which would include an order approving the release;</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">(10) If there is an actual repudiation, the opposing party has the option of accepting the repudiation, which voids the settlement. The litigation would then proceed as if there never was a settlement agreement.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<a href="http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2013/2013abca0308.pdf"><em><span style="font-family: Arial, Helvetica, sans-serif;">Guy Tessier and Vanna Tessier v. City of Edmonton</span></em></a><span style="font-family: Arial, Helvetica, sans-serif;">, 2013 ABCA 308</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: 18px; line-height: 25px;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Any legal information provided is general in nature and may not apply to particular situations. It does not constitute legal opinion or advice. Please consult your lawyer regarding your specific legal issue.</span></span></span></div>
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Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com7tag:blogger.com,1999:blog-7539943914703833188.post-80697256776872337662013-09-10T15:48:00.001-07:002013-09-10T15:48:14.293-07:00No Juries For Insurance Misrepresentation Cases<div class="separator" style="clear: both; text-align: left;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8QDRjHuEUmCmgjPtKn0a9s9tu5M6yop-XptD4bo5_4VK5QkbNVE6aPgc3Hkl7LFw405jkAYGwfffJPm7INtUjQ4mqpnR1jh2HqgCRoyZX7ZKoUMWveEunIZyjcKngVSygX-8x8icdWYiP/s1600/Trial_by_Jury_-_Chaos_in_the_Courtroom%5B1%5D.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="236" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8QDRjHuEUmCmgjPtKn0a9s9tu5M6yop-XptD4bo5_4VK5QkbNVE6aPgc3Hkl7LFw405jkAYGwfffJPm7INtUjQ4mqpnR1jh2HqgCRoyZX7ZKoUMWveEunIZyjcKngVSygX-8x8icdWYiP/s320/Trial_by_Jury_-_Chaos_in_the_Courtroom%5B1%5D.png" width="320" /></a></div>
<span style="font-family: Arial, Helvetica, sans-serif;"> <em>Does trial by jury lead to chaos in the courtroom?</em></span><br />
<span style="font-family: Arial;"></span><br />
<div style="text-align: justify;">
<span style="font-family: Arial;">In a decision released Friday, the Alberta Court of Appeal denied the plaintiff's application for a jury trial in a life insurance claim: <a href="http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2013/2013abca0295.pdf">Coulter v. Co-operators Life Insurance Company</a>. The two Justices in the majority agreed that the insurer's misrepresentation defence was a claim for equitable relief which cannot be tried by a jury. The dissenting Justice, who characterized the misrepresentation defence as statutory rather than equitable, would have permitted a jury trial.</span><br />
<span style="font-family: Arial;"></span><br />
<em><span style="font-family: Arial;">The Misrepresentation Defence</span></em></div>
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<span style="font-family: Arial;"></span> </div>
<div style="text-align: justify;">
<span style="font-family: Arial;">The life insured was a long-time policyholder with Co-operators who applied for additional coverage less than two years before his death. After investigating the claim, Co-operators paid the benefit on the original policy, but denied the additional benefit, taking the position that it was entitled to void this coverage as the life insured had misrepresented important facts on the recent application. Co-operators relied on ss. 652 and 653 of the Alberta <em>Insurance Act</em>, R.S.A. 2000, c. I-3, which state that misrepresentation of a material fact in the life insurance application renders the coverage voidable by the insurer within the first two years after coverage takes effect.</span></div>
<div style="text-align: justify;">
<span style="font-family: Arial;"></span> </div>
<div style="text-align: justify;">
<span style="font-family: Arial;">The Alberta statutory provisions are derived from uniform life insurance legislation, and similar provisions are in effect in all the common law provinces and territories of Canada.</span></div>
<div style="text-align: justify;">
<span style="font-family: Arial;"></span> </div>
<div style="text-align: justify;">
<span style="font-family: Arial;">When the beneficiary sued, Co-operators raised the misrepresentation issue in its statement of defence, citing the <em>Insurance Act</em> provisions. The defendant was content to defend on this issue, and did not counterclaim for rescission of the insurance contract. The beneficiary applied for a jury trial, but this application was denied by the Chambers Judge, who directed that the trial should proceed by judge alone.</span></div>
<div style="text-align: justify;">
<br />
<em><span style="font-family: Arial, Helvetica, sans-serif;">The Majority Decision</span></em><br />
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<div style="text-align: justify;">
<span style="font-family: Arial;">In the majority opinion, Mr. Justice Cote referred to the historical distinction between the common law courts and courts of equity. In civil cases, the common law courts could award damages for breach of contract and other legal wrongs. A broader range of remedies was available in the equity courts, including specific performance and declaratory relief. Jury trials were available in the common law courts, but not in the courts of equity, where cases were decided only by judges.</span></div>
<div style="text-align: justify;">
<span style="font-family: Arial;"></span> </div>
<div style="text-align: justify;">
<span style="font-family: Arial;">Although the two courts are now joined into one, the distinction between common law and equity remains, and juries are not permitted in cases in which equitable relief is claimed.</span></div>
<div style="text-align: justify;">
<span style="font-family: Arial;"></span> </div>
<div style="text-align: justify;">
<span style="font-family: Arial;">There was no dispute that the plaintiff was claiming damages for breach of the insurance contract, and that this was a common law claim. According to Mr. Justice Cote, however, the defence raised by Co-operators was essentially a claim for rescission of contract. This was an equitable remedy, and since common law courts are restricted to damages, a jury could not decide the misrepresentation question. The Chambers Judge was therefore correct in denying the application for a jury trial.</span></div>
<div style="text-align: justify;">
<span style="font-family: Arial;"></span> </div>
<div style="text-align: justify;">
<span style="font-family: Arial;">Justice Cote was careful to point out that although the reasons for denying the plaintiff a jury trial may seem to be based on a technical historical distinction, there are sound policy reasons for restricting equitable relief to judges. Equitable remedies are discretionary. In exercising their discretion judges are guided by previous cases, and by principles established in maxims such as "Delay defeats equities", and "He who seeks equity must do equity". In the view of Mr. Justice Cote, the distinction between the principled exercise of a discretion and "mere sympathy or fairness" would be "almost impossible" to explain to a jury. These cases are therefore unsuited to trial by jury.</span></div>
<div style="text-align: justify;">
<span style="font-family: Arial;"></span> </div>
<div style="text-align: justify;">
<span style="font-family: Arial;">In a claim for breach of contract or tort, on the other hand, the judge instructs the jurors that they must award damages if they conclude that the evidence supports certain findings of fact; there is no discretion involved.</span><br />
<span style="font-family: Arial;"></span><br />
<em><span style="font-family: Arial;">The Dissent</span></em></div>
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<span style="font-family: Arial;"></span> </div>
<div style="text-align: justify;">
<span style="font-family: Arial;">In his dissenting judgment, Mr. Justice O'Ferrall seemed to accept that equitable claims involving the exercise of discretion are unsuited to trial by jury; in his view, however, the insurance company was not claiming equitable relief at all.</span></div>
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<span style="font-family: Arial;"></span> </div>
<div style="text-align: justify;">
<span style="font-family: Arial;">"Rescission" was not specifically pleaded. In its statement of defence, Co-operators said that it was entitled to "void the policy" by virtue of the <em>Insurance Act</em> provisions. This was a statutory defence rather than an equitable claim, and "What the jury would be asked to do in this case is determine whether or not the insured ... made a misrepresentation with respect to a fact or facts material to the insurance." In his opinion, this was the kind of factual question that juries are especially well qualified to decide. There is a presumption in favour of the right to trial by jury, which should be respected.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">For the majority, however, Mr. Justice Cote pointed out that the <em>Insurance Act</em> provisions did not purport to displace the role of equity or replace the equitable remedy of rescission of contract. The statute did not provide a comprehensive code for misrepresentation cases, such that it could be concluded that the legislature intended to occupy "the whole field" and do away with the role formerly carried out by courts of equity.</span><br />
<span style="font-family: Arial;"></span><br />
<em><span style="font-family: Arial;">A View From the Bleachers</span></em></div>
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<span style="font-family: Arial;"></span> </div>
<div style="text-align: justify;">
<span style="font-family: Arial;">Justice Cote is right to prefer a principled or policy-based approach over reliance on the historical accident of the division between equitable and common law courts. Where legal issues are more important to the case than factual issues, judges have an extensive knowledge of the law that jurors lack. Jurors, on the other hand, are just as qualified as judges to decide whether or not a witness is lying, or to assess evidence and make findings of fact.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">The jury is an important institution in our society. Justice is delivered by members of the community who can bring a diversity of background and experience to the courtroom, rather than by a judicial "expert" with extensive, but perhaps narrow, training in one area (the law). The jury introduces a populist, democratic element into our system of justice. Trial by jury is a long-standing right that should only be taken away for cogent reasons.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">It is conventional wisdom that an insurance company never wants to face a jury. The man in the street will always be blinded by sympathy and emotion, it is thought, and will side with the individual plaintiff over the big, impersonal corporation every time.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">This is not necessarily the case. Several years ago, defence-side insurance lawyers in Ontario began to serve jury notices routinely in personal injury cases, believing that their clients would be better served by the practical, common-sense approach of jurors. Whether to seek a jury trial is a question that both plaintiff and defence counsel should ask themselves in every case; it is a strategic decision that depends on more than just the sympathy factor. A precedent that denies the life insurance beneficiary her claim to a jury trial cuts both ways, as insurers will not be able to put their defences to juries in future cases.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">What about the <em>Coulter</em> case? Although it is easy to see how the discretionary aspects of certain equitable remedies, such as injunctions and specific performance, might be difficult for jurors without any legal training, it is unclear how equitable principles or maxims could come up in a misrepresentation case. The issue is whether or not the insured misrepresented important facts on the application. This is something a jury can decide. Since the conduct of the insurance company is not in issue, maxims like "He who seeks equity must do equity" or "He who comes to equity must come with clean hands" don't have any bearing. </span><span style="font-family: Arial;">Delay is not a factor, as the insurer can only raise non-fraudulent misrepresentation within the two year incontestability period established by the insurance legislation.</span></div>
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</div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">The availability of jury trials in misrepresentation cases should be based on a pragmatic assessment of the real issues in the case, and not on the somewhat arbitrary fact that "rescission" of contract is historically a remedy granted by courts of equity.</span></div>
<div style="text-align: justify;">
<span style="font-family: Arial;"></span> </div>
<div style="text-align: justify;">
<em><span style="font-family: Arial, Helvetica, sans-serif;">Coulter v. Co-operators Life Insurance Company, </span></em><a href="http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2013/2013abca0295.pdf"><span style="font-family: Arial, Helvetica, sans-serif;">2013 ABCA 295</span></a></div>
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Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com7tag:blogger.com,1999:blog-7539943914703833188.post-34849666040278928102013-08-16T15:51:00.000-07:002013-08-16T15:51:03.728-07:00Zoning Error No Bar to Sale of Business<div class="separator" style="clear: both; text-align: left;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhzxgozXUvzV7ztXlx297HUE69k6hXYcQe9FM4Zl3_80FB4hoKHzQwWe9n92zqfCEcJZw8Us4fZpK6wxATWffna6S8mIKP21_4AMdxZJ2HGgfLCRe8phNRTv7Hd5CVJ9kbQxHeYfnzGwTxM/s1600/Dry+Cleaning.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhzxgozXUvzV7ztXlx297HUE69k6hXYcQe9FM4Zl3_80FB4hoKHzQwWe9n92zqfCEcJZw8Us4fZpK6wxATWffna6S8mIKP21_4AMdxZJ2HGgfLCRe8phNRTv7Hd5CVJ9kbQxHeYfnzGwTxM/s1600/Dry+Cleaning.jpg" /></a></div>
<em><span style="font-family: Arial, Helvetica, sans-serif;">The purchaser learned the business</span></em><br />
<em><span style="font-family: Arial;"> wasn't zoned for a dry cleaning facility</span></em><br />
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<span style="font-family: Arial, Helvetica, sans-serif;">Chang Lee agreed to buy a Toronto dry cleaning business. Although the business had been in operation for more than 15 years, neither the purchaser nor the vendor knew that the City had changed the zoning two years before the date of sale, and that the location was no longer zoned for the operation of an on-site dry cleaning facility. Could Mr. Lee get out of the deal? The Ontario Court of Appeal said no.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">The decision contains a concise summary of the law on mistake in contracts, covering mutual mistake, common mistake, and equitable mistake. This area of law can be confusing. It often seems that the rule is that a mistake doesn't get you out of a contract, except when it does. This well-reasoned decision of the Court of Appeal shows how the policy basis for the law should determine the application of the doctrine in specific situations.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<em><span style="font-family: Arial;">The Zoning Change</span></em></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">The parties negotiated an agreement of purchase and sale through a real estate broker using a standard form provided by the Ontario Real Estate Association. Mr. Lee was to buy all the assets of the business, including the lease, goodwill, and trade name, for $340,000. Neither Vendor nor Purchaser consulted a lawyer until after the agreement had been signed.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">The contract contained an "entire agreement" clause stating that there were no representations, warranties, or conditions other than those expressed in the agreement itself. The only reference to zoning was a clause stating that the parties weren't relying on the broker for information on zoning, and that they had been told to seek professional advice.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">The business had been operated as a dry cleaning plant continuously since 1995. The Vendor acquired it in 2005, and had obtained a license every year from the City authorizing the operation of a dry cleaning business. Apparently the business license was renewed at least once after the change in zoning. Although the City had given notice of the change as required by statute, the Vendor was unaware of the change and the topic of zoning never came up during the negotiations.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<em><span style="font-family: Arial;">Summary Judgment</span></em></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">The case was decided on a summary judgment motion. The motion judge considered mutual mistake, where each party is mistaken about a different matter and there is no contractual consensus, as well as the doctrine of common mistake, where the parties share an erroneous assumption about a fundamental fact. She concluded that there was a common mistake that "the property was properly zoned, such that the dry-cleaning business was a permitted use."</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">The motion judge also concluded that Mr. Lee was entitled to relief on equitable grounds. Although equitable mistake seems to have been abandoned by courts in England after the 2003 decision of the Court of Appeal in <em>Great Peace Shipping v. Tsavliris Salvage</em>, [2003] Q.B. 679, this decision has not yet been adopted in Canada. In equity, a contract can be set aside where the parties are under a common misapprehension as to a fundamental fact and the party seeking to avoid the contract is not at fault. The motion judge found that the Vendor would be unjustly enriched if the deal went through, as the purchase price was based on a shared belief that the location was properly zoned.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<em><span style="font-family: Arial;">The Court of Appeal Decision</span></em></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">The decision of the Court of Appeal was delivered by Strathy, J.A. He concluded that the motion judge had made three errors:</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">(1) She made a palpable and overriding error in the assessment of the evidence when she found that the parties both assumed that dry cleaning was a "permitted use";</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">(2) She erred in law by putting the onus on the Vendor to show that the business could continue to operate as a dry cleaners, when the onus should have been on the Purchaser to show that it could not;</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">(3) She erred in law by putting the risk of mistake on the Vendor, when under the principle of <em>caveat emptor</em> it should have been on the Purchaser.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">The decision turns on a principle in zoning law called the doctrine of "legal non-conforming use". A change in zoning law does not prevent a property from being used for a particular purpose where that use was legal at the time of the change, so long as the property continues to be used for that purpose.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">Although dry cleaning was no longer a "permitted use" after the change in zoning, it was likely still a "lawful use" in that the Purchaser would be able to continue that use as a legal non-conforming use. The parties shared a lay person's understanding that the Purchaser would be able to operate the business as it had been operated by the Vendor. If the Purchaser had a more technical understanding of the difference between a permitted use and a use that could be lawfully continued, his mistake was unilateral. If he shared the Vendor's belief that the use could be continued, this was not a mistake unless it could be shown that the business could no longer operate as a dry cleaner. This is where the onus of proof becomes an issue.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">In response to an inquiry from the Purchaser's lawyer just before closing, the City had advised that dry cleaning was not a permitted use, but took a neutral stand on whether it constituted a legal non-conforming use. No-one had applied to the City for that determination. The motion judge said there was no evidence that the City would allow the current use to continue. In doing so, she put the onus on the Vendor to show that the use would be allowed by the authorities. Since the Purchaser was a Plaintiff seeking to rescind the contract, the onus was actually on the Purchaser to demonstrate that the use could not be continued. In the absence of any evidence, the Purchaser had failed to establish this part of his case.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">Strathy, J.A. also pointed out that the law of mistake could not be used to transfer contractual risk from one party to another. The Purchaser had not insisted on making the contract conditional on zoning, although there were other conditions in the contract and zoning conditions are often inserted in such agreements. The contract contained an acknowledgement that the parties had been urged to obtain independent advice on zoning. By signing the agreement without any zoning conditions, and by failing to obtain independent confirmation of the zoning, the Purchaser had assumed this risk.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">Placing the risk of zoning problems on the Purchaser is also consistent with the principle of <em>caveat emptor,</em> under which the buyer is expected to inquire into risks associated with the transaction.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">For the same reasons, equitable mistake could not assist the Purchaser. Relief in equity is only available where the Plaintiff is not at fault. Mr. Lee was at fault in that he had failed to take reasonable measures to protect himself, either by investigating the zoning or by negotiating a warranty with respect to the use.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<em><span style="font-family: Arial;">Analysis</span></em></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">The law of mistake in contracts seeks to reconcile two competing values. On the one hand, the economy will function better if business people can be sure that contracts will be enforced as written. Thus the law favours certainty. On the other hand, fairness seems to require that a contract should be set aside where the parties' agreement is based on a set of facts that turn out to be untrue.</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The decision of Strathy, J.A. illustrates how the courts balance the values of certainty and fairness by putting limits on the scope of the doctrine of contractual mistake. The mistake must be mutual. It must involve facts that are fundamental to the contract. The onus is on the Plaintiff to show that there was a mistake. The doctrine of mistake cannot be used to reallocate a risk that one party assumed in the contract itself, or to reverse the rule of "let the buyer beware". Mistake does not assist someone who failed to conduct an investigation before signing the contract, or to insert standard provisions into the contract that would have protected his interests.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">It is unclear why the parties to this case did not seek a ruling that the continued operation of a dry cleaning facility was a legal non-conforming use; this could have saved a lot of time and legal costs.</span></div>
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<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">Query: shouldn't a standard form agreement for the purchase of a business contain a provision dealing with zoning? A clause stating that the Vendor warrants that the current use can be continued could be deleted in transactions where it doesn't apply.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;"><em>Lee v. 1435375 Ontario Ltd.,</em> <a href="http://www.ontariocourts.ca/decisions/2013/2013ONCA0516.htm">2013 ONCA 516</a></span></div>
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Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com1tag:blogger.com,1999:blog-7539943914703833188.post-74205018718172670502013-07-11T10:01:00.000-07:002013-07-11T10:01:29.627-07:00Supreme Court: Disqualification Is Not the Only Remedy for Law Firm Conflict of Interest<div align="left" class="separator" style="clear: both; text-align: center;">
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<span style="font-family: Arial;"> <em>The Supreme Court of Canada</em></span><br />
<span style="font-family: Arial;"></span><br />
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<span style="font-family: Arial;">McKercher LLP is a substantial law firm in Saskatchewan. The Canadian National Railway Company retained McKercher from time-to-time on a variety of matters, and as of late 2008, McKercher was representing CN on three files: a personal injury claim, a real estate acquisition, and a receivership. In that same time frame McKercher accepted a retainer to act against CN in a class action claiming that CN had overcharged farmers in Western Canada for the transportation of grain.</span><br />
<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">McKercher did not inform CN that it planned to initiate the action on behalf of the class. The law firm hastily terminated its existing CN retainers before serving CN with the statement of claim in the class action, claiming $1.75 billion. This was the first notice that CN received that McKercher was acting in a class action against CN. CN applied for an order removing McKercher as solicitor of record for the class action plaintiffs, claiming conflict of interest, and the motion judge granted the order. This decision was reversed by the Saskatchewan Court of Appeal.</span><br />
<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">A further appeal to the Supreme Court of Canada raised two issues: (1) can a law firm act against a current client on a matter unrelated to the client's existing files? (2) if not, does the firm's conflict of interest result in automatic disqualification, or should alternative remedies be considered?</span><br />
<span style="font-family: Arial;"></span><br />
<em><span style="font-family: Arial;">The "Bright Line Rule"</span></em><br />
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<span style="font-family: Arial;">In a decision released July 5, the court found that McKercher was in a conflict position, invoking the "bright line rule" from its earlier decision in <em>R. v. Neil,</em> <a href="http://www.canlii.org/en/ca/scc/doc/2002/2002scc70/2002scc70.html">2002 SCC 70, [2002] 3 SCR 631</a>. Under the bright line rule a law firm cannot represent clients adverse in interest without first obtaining the clients' consent, even if the two matters are unrelated.</span><br />
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<span style="font-family: Arial;">In its ruling in the <em>McKercher</em> case, the Supreme Court emphasized certain important aspects of the bright line rule. The rule is based on a fiduciary's duty of loyalty. It assumes that conflict of interest is inherent and inescapable in certain situations. For that reason the rule cannot be rebutted or attenuated.</span><br />
<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">The scope of the rule is limited, however. It only applies where the immediate interests of the client are directly adverse in the two matters. It applies only to the client's <em>legal</em> interests, as opposed to business or strategic interests, so the rule is not triggered where the firm accepts a retainer on an unrelated matter from a company that is a business competitor of another client. It should not be raised as a tactic in an effort to disqualify the law firm when the client has no real concern that its interests will be adversely affected (the Court suggested that an institutional client would not be permitted to abuse the rule by retaining a single lawyer in one office of a national firm, expecting that this would disqualify all other lawyers with that firm from acting against the client). It does not apply in circumstances where it is unreasonable for the client to expect that the firm will not act against it in unrelated matters. For instance, it is accepted practice that lawyers who handle work for "professional litigants" such as governments, banks, and other large institutions may act against these clients in unrelated matters.</span></div>
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<span style="font-family: Arial;">The decision of the Court was delivered by Chief Justice McLachlin, who said that McKercher's concurrent representation of CN and the class action plaintiff "fell squarely within the scope of the bright line rule." The legal interests of CN and the Western farmers who made up the class were adverse. CN was not trying to abuse the rule, and it was reasonable for CN to expect that its lawyers would not act for plaintiffs that were suing CN for $1.75 billion.</span><br />
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<span style="font-family: Arial;">McLachlin, C.J. went on to find that McKercher was in breach of other duties. A law firm has a duty of commitment to its client's cause, and should not summarily drop a client in order to avoid a conflict of interest. The firm also owes its client a duty of candour and is required to advise the client of any developing matters that could effect the retainer. The failure to advise CN of its intention to act for the class action plaintiff constituted a breach of this duty of candour.</span><br />
<span style="font-family: Arial;"></span><br />
<em><span style="font-family: Arial;">The Disqualification Remedy</span></em><br />
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<span style="font-family: Arial;">Disqualification from acting in the pending litigation is the normal remedy when a law firm is in breach of the bright line rule, and this is the remedy that the motion judge had granted to CN. The Court recognised that disqualification is not always appropriate, however, and sent the case back to the motion judge for a determination of the proper remedy.</span><br />
<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">The Courts exercise a supervisory jurisdiction over the administration of justice. This includes an inherent jurisdiction to remove law firms as solicitors of record in pending litigation. The factors that militate in favour of disqualification are: (1) the potential for the misuse of confidential information; (2) the risk of compromised or impaired representation; and (3) the need to uphold the integrity and reputation of the administration of justice.</span><br />
<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">McLachlin, C.J. was of the view that there was no potential for the disclosure or misuse of confidential client information in the instant case. There was no prior or current retainer giving McKercher access to confidential information that would be directly relevant to the claim brought by the Western grain farmers. The motion judge concluded that McKercher, by virtue of its involvement in previous CN litigation, had acquired a unique understanding of the strengths, weaknesses, and attitudes of CN with respect to litigation, and that this general knowledge was confidential information. The Court of Appeal, on the other hand, said that a general understanding of CN's litigation strengths and weaknesses did not constitute confidential information. The Supreme Court seems to have accepted this view, as the Chief Justice concluded that there was no confidential information at risk.</span><br />
<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">Since McKercher's other CN retainers had been terminated, there was also no concern that McKercher would fail to provide CN with strong representation in the concurrent matters out of a desire to favour its new clients. The only remaining concern, then, was whether or not allowing McKercher to continue to act for the class would damage the integrity and reputation of the administration of justice.</span><br />
<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">Where there is a need to protect confidential information, or a risk of impaired representation, Madame Justice McLachlin said that disqualification is generally the only suitable remedy. In cases where the concern is the protection of the reputation of the justice system, disqualification may be required in order to send a message that the law firm's disloyal conduct is condemned by the courts; this is not, however, necessary in every case.</span><br />
<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;">In cases involving the protection of the integrity of the judicial system, factors that may point in another direction include: (1) delay in bringing the motion for disqualification; (2) prejudice to the new client's ability to retain counsel of choice; (3) difficulty on the part of the new client in finding alternative counsel; and (4) the fact that the law firm acted in good faith, reasonably believing that acceptance of the new retainer did not breach the bright line rule or law society conflict regulations. Since these issues were not before the motion judge, and there was no evidence on these points, and it was necessary to remit the remedy question to the lower court.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">Up to now, lawyers might have thought that a finding of conflict of interest would automatically result in disqualification. It is understandable that the Supreme Court would want to allow flexibility in the area of remedies; disqualification is a blunt instrument that cannot suit every case. If a firm is disqualified, even early in litigation, new counsel will have to be retained and briefed. This causes delay. Some of the work that the former firm has done will have to be repeated by the new firm, and thousands of dollars in fees may be wasted and unrecoverable. Although the Supreme Court ruling does not permit a litigant to use disqualification for purely tactical purposes, even when this is not the case disqualification constitutes a serious tactical disadvantage to the party that has to retain new counsel. This party, the new client, has not done anything wrong, so there is always an element of unfairness when a litigant's counsel of choice is disqualified.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">Although in principle remedial flexibility is a good idea, it is difficult to understand how it could be applicable in this case. The fact that the bright line rule applies even when the two retainers are unrelated was established by the Court's decision in <em>R. v. Neil</em> in 2002, so it seems unlikely that the McKercher firm had a good faith belief that the new retainer fell outside the rule. Certainly McKercher could not have been surprised when CN moved for disqualification.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">In addition to the finding that McKercher was in conflict, there are also the findings that McKercher breached its duty of commitment by terminating the earlier retainers in order to get around conflict rules, and that the firm breached its duty of candour by failing to advise CN that it was putting together a massive class action against CN. If the Court wants to send a firm message condemning this kind of conduct on the part of lawyers, this case would seem to support that message. CN did not delay in bringing its motion, the class action litigation was then in an early stage, and the Western grain farmers ought to be able to find another Western firm that has the capacity to handle a large and complex class action lawsuit.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">It seems improbable that any remedy but disqualification could be appropriate, but we will have to await the decision of the motion judge on the issue of remedy.</span><br />
<span style="font-family: Arial;"></span> </div>
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<span style="font-family: Arial;"><em>Canadian National Railway Co. v. McKercher LLP,</em> <a href="http://www.canlii.org/en/ca/scc/doc/2013/2013scc39/2013scc39.html">2013 SCC 39</a></span><br />
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Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com0tag:blogger.com,1999:blog-7539943914703833188.post-89740489080879217252013-07-02T22:16:00.004-07:002013-07-02T22:20:15.344-07:00Court Upholds "Wind-Driven Rain Exclusion"<div class="separator" style="clear: both; text-align: left;">
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><i>A Little Rain Must Fall</i></span></div>
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<span style="font-family: Arial;">You asked your broker to make sure you had good coverage for your business, so you figure you can focus on your customers now and shouldn't have to worry about high winds, rains, or ice storms. Maybe you should think again.</span><br />
<span style="font-family: Arial;"><br /></span>
<span style="font-family: Arial;">Many commercial property policies exclude water damage to the interior of the building or building contents unless wind or hail creates an opening in an exterior wall, allowing rain or other precipitation to enter the building. This type of exclusion, known as a "Wind-Driven Rain Exclusion", can be an unwelcome surprise to the business owner when rain seeps into the building during a storm.</span><br />
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<span style="font-family: Arial;">That's what happened to Vernon and Judy Smith, Alberta farmers who returned from a summer vacation to find that the insulation and contents of their barn had suffered water damage. There had been a heavy snowfall the previous winter, and according to an expert who examined the roof after the loss, the weight of a 4' accumulation of snow in March had loosened seams and fasteners in the metal roofing. Damage to the building and contents from the rain in July amounted to some $70,000.</span><br />
<span style="font-family: Arial;"><br /></span></div>
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<span style="font-family: Arial;">The barn was covered under a Farm Property Policy issued by Wawanesa. That policy contained an exclusion for damage to the interior of the building caused by rain, "unless an opening in the roof or wall is made by wind or hail and the rain...enters concurrently through this opening".</span><br />
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<span style="font-family: Arial;">The case was tried by Madam Justice Veit in Grande Prairie on the basis of an agreed statement of facts. The judge relied on the established principles of interpretation applicable to insurance policies:</span><br />
<span style="font-family: Arial;"><br /></span></div>
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<span style="font-family: Arial;">the insurance company bears the onus of establishing that an exclusion clause applies;</span></div>
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<span style="font-family: Arial;">the insurer's burden of proof is on a balance of probabilities;</span></div>
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<span style="font-family: Arial;">the words in the policy are to be given their natural and ordinary meaning;</span></div>
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<span style="font-family: Arial;">exclusion clauses in insurance contracts should receive a narrow interpretation in favour of the insured;</span></div>
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<span style="font-family: Arial;">coverage provisions, on the other hand, are construed broadly;</span></div>
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<span style="font-family: Arial;">the court may consider the reasonable expectations of the parties, but only if that will help to resolve an ambiguity in the language of the exclusion clause.</span><br />
<span style="font-family: Arial;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The Smiths argued that the policy must be ambiguous, because they thought they would be covered for the kind of damage that occurred. The judge pointed out, however, that the standard for ambiguity is not the subjective expectations of the insured, but the objective intention of the parties as determined by reading the policy as a whole. Like any contractual language, the words in an insurance policy mean what an impartial bystander would think they mean.</span><br />
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<span style="font-family: Arial, Helvetica, sans-serif;">Based on this objective or "reasonable man" test, the judge was unable to find any ambiguity. There was therefore no basis to bring in evidence outside the contract, or to consider the expectations of the parties.</span><br />
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<span style="font-family: Arial;">There was also no reason to invoke the <i>contra proferentem</i> doctrine and construe the policy against the insurance company. This principle applies where there are two reasonable interpretations of the policy language; the court is to prefer the interpretation that advances the position of the insured over an interpretation that is in the interests of the insurance company. Although the plaintiffs argued that the exclusion clause could have been written in a way that would make the meaning more clear, the possibility that different wording might better convey the insurance company's intent didn't mean that there was ambiguity or that there were two possible interpretations. Justice Veit concluded that she had to give effect to the plain language of the policy and reject the claim for interior damage.</span><br />
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<span style="font-family: Arial;">The judge did not analyze the wording of the exclusion closely, but it is easy to see why she thought that the exclusion applied. Although the loosening of the roof seams and fasteners might be construed as an "opening" in the roof, this damage was clearly caused by the weight of the snowfall in March and not by wind or hail. Furthermore, the rainwater didn't enter the building "concurrently" with the damage to the metal roof - the roof seams had been damaged in March, but the water penetrated the building in July.</span><br />
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<span style="font-family: Arial;">The decision is in keeping with established insurance law. Nevertheless, this kind of exclusion, as well as other common exclusions such as the exclusion of damage caused by overland flooding, do not meet the expectations of business and home owners who rely on insurance to protect them against weather-related disasters.</span><br />
<span style="font-family: Arial;"><br /></span>
<span style="font-family: Arial;">People don't have the time to read their policies and carefully and consider every clause that might limit coverage in the context of every contingency that could arise. Insurance buyers are not insurance professionals; they lack the background and specialized knowledge to fully understand common policy provisions. It is anomalous that documents created by insurance specialists are to be interpreted under a "natural and ordinary meaning" standard. The words used in insurance policies and the way the policies are structured do not really have any equivalent in natural and ordinary communication.</span></div>
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<span style="font-family: Arial;"></span><br /></div>
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<span style="font-family: Arial;">Most business people place their insurance through brokers. The broker has an obligation to inquire about the business, figure out what assets need to be protected, obtain appropriate coverage, and explain any exclusions or limitations in coverage. If the insured could have purchased a policy without the exclusion, and the broker failed to recommend this or caution the insured about the effect of the exclusion, the insured may have recourse against his broker.</span><br />
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<span style="font-family: Arial;"><em>Smith v. Wawanesa Mutual Insurance Company,</em> 2013 ABQB 369, <a href="http://www.albertacourts.ab.ca/jdb_new/public/qb/2003-NewTemplate/qb/Civil/2013/2013abqb0369.pdf">http://www.albertacourts.ab.ca/jdb_new/public/qb/2003-NewTemplate/qb/Civil/2013/2013abqb0369.pdf</a></span></div>
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Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com4tag:blogger.com,1999:blog-7539943914703833188.post-24489866030181576102013-06-27T16:02:00.000-07:002013-06-27T16:02:49.933-07:00Bank Wins Conspiracy Case<div class="separator" style="clear: both; text-align: left;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZVwEvpHt8gdEm96AGJ_l958WxfqAved08Mhjfh9TyFBCDOCrAYuCs-6kI_vkfXdh4NDkHY_-rGwUm0c-Rr5trC3AgjWjNwu_QqCd1qkndeK6ys2IWjp4yMN1117GEkvysSShvvJrObC-p/s1600/Alberta+Court+of+Appeal.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZVwEvpHt8gdEm96AGJ_l958WxfqAved08Mhjfh9TyFBCDOCrAYuCs-6kI_vkfXdh4NDkHY_-rGwUm0c-Rr5trC3AgjWjNwu_QqCd1qkndeK6ys2IWjp4yMN1117GEkvysSShvvJrObC-p/s320/Alberta+Court+of+Appeal.jpg" width="239" /></a></div>
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><i>The Court of Appeal of Alberta</i></span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In <i>HSBC Bank Canada v. Fuss</i> the Court of Appeal of Alberta upheld a conspiracy judgment against corporate directors. The defendants had stripped a company of its assets and diverted its business to a new company they controlled in order to prevent the secured creditor from recovering on a loan.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><i>Factual Background</i></span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Electronics Wholesale had an operating line of credit with HSBC Bank of Canada. The line was secured by a General Security Agreement ("GSA") which provided that any money collected by the borrower was subject to a trust in favour of HSBC.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Cameron Kendrick was the sole director and shareholder of Electronics Wholesale. David Fuss was a director of Ariza Technology Inc. and of Incredible Electronics Inc., two companies that were suppliers to Electronics Wholesale. He was also director of a third corporation that became a 50% shareholder in Electronics Wholesale. His wife, Rhonda Thuna, was then made a director of Electronics Wholesale. She was also a director of Ariza and the company that owned half the shares in Electronics Wholesale.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Electronics Wholesale began to encounter business difficulties in 2003, but it still had sufficient assets and income to meet its obligations to HSBC. Kendrick, Fuss, and Thuna created companies to take over the business of Electronics Wholesale. One of their new companies was called Electronics Wholesale (Edmonton) Ltd. ("EWE"). They opened an account at the TD Bank in the EWE name, and all three were signing officers for that account. All of the receivables coming to Electronics Wholesale, as well as the proceeds of the sale of that company's inventory, were deposited in the TD account. They also incorporated a numbered company, which eventually took over the business operations of Electronics Wholesale, including its inventory, receivables, and staff.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In June of 2004 HSBC appointed a receiver and manager for Electronics Wholesale. The company was petitioned into bankruptcy a month later, but the remaining assets were of little value and HSBC was unable to realize on its security. In addition, Kendrick produced misleading financial information for Electronics Wholesale and destroyed the company's electronic records.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><i>The Judgment at Trial</i></span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">HSBC sued Kendrick, Fuss, Thuna, and the companies they controlled for conspiracy to prevent HSBC from recovering the debt owed by Electronics Wholesale. The trial judge found that there was a conspiracy against the Bank and awarded damages of $1.7 million. Fuss and Thuna appealed. In a decision released June 25, 2013 the Court of Appeal of Alberta upheld the trial judgment.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><i>The Decision on Appeal</i></span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The Memorandum of Judgment of the Court of Appeal contains a useful summary of the elements of the tort of "unlawful conduct" conspiracy, and a careful analysis of the factual and legal conclusions of the trial judge.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The only legal question in the case was the test for conspiracy by unlawful conduct. Although the standard for appellate review on this issue is correctness, the parties agreed that the trial judge had stated the test correctly.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The appellants' critique of the trial judgment involved issues of mixed fact and law, as well as inferences that the trial judge had drawn from the facts. On appeal, the findings of the trial judge on these kinds of issues are entitled to deference and will not be overturned unless the appellants can show "palpable and overriding error".</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The elements of unlawful conduct conspiracy are:</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">(1) An agreement to act in concert;</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">(2) Unlawful conduct in furtherance of the agreement;</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">(3) The unlawful conduct must be directed towards the plaintiff;</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">(4) Knowledge that the conduct is likely to injure the plaintiff; and</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">(5) The conspirators' conduct must actually cause injury to the plaintiff.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><i>Agreement</i></span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The alleged conspirators must act in combination, or with a common design. They must know the facts of the agreement and intend to participate in it. Where direct evidence of the agreement is not available, the court can resort to circumstantial evidence.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Fuss and Thuna argued that in order to be participants in the conspiracy, they would have had to know about Kendrick's misstatements to HSBC and his destruction of corporate records. The trial judge had found that they were not aware of these fraudulent activities.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The appellate court said that this argument misconceived the findings of the trial judge. The agreement which supported the conspiracy finding was not based on fraud; it was based on a common design to divert the assets and business of Electronics Wholesale to the new companies. Fuss and Kendrick had agreed to repay debt owed to Ariza in preference to payments due to the Bank. Although Thuna was less active in the conspiracy, she knew that Electronics Wholesale was in trouble and that its business was transferred to EWE. Her participation in the common design consisted in carrying out her husband's instructions while knowing that the effect would be to deprive HSBC of its security.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><i>Unlawful Conduct</i></span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><i><br /></i></span>
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Unlawful conduct means actions that are legally wrong, but the conduct does not have to be actionable. Highly competitive commercial activity that is not otherwise illegal does not qualify.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The trial judge found that Fuss and Thuna had breached their statutory fiduciary duties as directors. As a director of Electronics Warehouse, Thuna had a duty to see to it that the company met its obligations to the bank. The transfer of the company's assets with no legitimate business purpose and for inadequate consideration was against the interests of Electronics Warehouse, and also a breach of her duty to see to it that the company could meet its obligations. The judge also said that Fuss breached his duty as a fiduciary of the numbered company by authorizing it to take over the assets of Electronics Warehouse, effectively appropriating trust property.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">These conclusions on the fiduciary responsibilities of directors seem to imply that a director is obliged to ensure that the company carries on business in a responsible and ethical manner, and not just in a manner that promotes the company's business goals. The Court of Appeal did not feel it was necessary to consider this interesting idea. The assets of Electronics Warehouse were transferred, with the approval of the appellants, at less than fair market value. This constituted a conversion of the property of Electronics Warehouse, which was unlawful conduct sufficient to meet this branch of the test for conspiracy.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><i>Other Elements of the Conspiracy</i></span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The appellate court had little difficulty supporting the conclusions of the trial judge with respect to the remaining branches of the test for conspiracy. The diversion of the receivables and other assets of Electronics Warehouse was a deliberate scheme to separate the assets of the business from the liabilities. The appellants knew that their actions would prevent the Bank from recovering on its security, and HSBC suffered a substantial loss as a result.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><i>Damages</i></span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The principal amount of the debt was about $670,000. The trial judge added in interest, collection costs, insurance premiums, the receiver's charges, and legal fees as all of these amounts were to be added to the debt under the terms of the GSA. This brought the total to $1.7 million. The Court of Appeal supported this calculation of damages.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br /></span>
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Conspiracy requires illegality, either as the goal of the conspiracy itself or in the means for carrying it out. Hard-headed business tactics that do not involve illegality are not actionable. Business people who have been harmed by corporate machinations often struggle to find the requisite "unlawful conduct" they require in order to succeed in an action for conspiracy. If the Court of Appeal had upheld the views of the trial judge regarding the statutory duties of directors, it would expand the scope of the tort of conspiracy considerably; a ruling in the other direction would limit the scope of the tort. As the Court of Appeal did not find it necessary to deal with the question, it will have to be resolved in another case on a different set of facts.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><i>HSBC Bank Canada v. Fuss,</i> 2013 ABCA 235, <a href="http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2013/2013abca0235.pdf">http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2013/2013abca0235.pdf</a></span></div>
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Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com0tag:blogger.com,1999:blog-7539943914703833188.post-22784150902669067762013-06-25T22:06:00.000-07:002013-06-25T22:06:06.537-07:00Live-In Girlfriend Can Pursue Wrongful Death Claim<div class="separator" style="clear: both; text-align: left;">
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<i>Court Case Has Implications for Couples Living Together</i><br />
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<span style="font-family: Arial, Helvetica, sans-serif;">After an evening of drinking a group of young men are driving home in the early morning hours. They get into an altercation with a group in another vehicle. One fellow approaches the other vehicle, ready for a fight. The driver of the other car runs him over, and the victim dies in hospital six days later.</span><br />
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<span style="font-family: Arial;">Does the dead man's live-in girlfriend have a claim for the loss of his care, companionship, and future financial support? Considering how common "common law" relationships have become, it is surprising that the law on this question is unclear.</span><br />
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<span style="font-family: Arial;">The issue came before a Master of the Court of Queen's Bench of Alberta in <em>Dotto Estate v. Thickson</em>. Tracy Atkin and David Dotto planned to marry but were not formally engaged. He was an apprentice electrician and she was a university student. They had been living together for 16 months when Wesley Thickson killed Mr. Dotto in the circumstances described above. Ms. Atkin brought an action against Mr. Thickson and the owner of the car he was driving, claiming in her own right as the "common-law spouse of the deceased". She also made a derivative claim through Mr. Dotto's estate for loss of services and financial support.</span><br />
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<span style="font-family: Arial;">The company that insured the car brought an application to dismiss Ms. Atkin's claim. Master Schlosser reviewed the authorities on wrongful death actions, going back to the 1808 case of <em>Baker v. Boulton</em>, 1 Camp 493; 10 RR 734, in which Lord Ellenborough proclaimed that "In a civil court the death of a human being could not be complained of as an injury". That principle is at odds with the modern law of negligence, which imposes a duty on us all to avoid causing foreseeable harm to others. Nevertheless it has remained in force for two centuries, subject to specific statutory exceptions.</span><br />
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<span style="font-family: Arial;">Master Schlosser agreed that the rule in <em>Baker v. Boulton </em>is inconsistent with the development of the tort of negligence, which would seem to favour the imposition of a duty of care in these circumstances, but since the rule remained law Ms. Atkin would have to find a way to fit her claim into one of the situations in which an individual who has suffered no physical injury can recover damages for pure economic loss arising out of physical injury to another. Since none of the common law exceptions fit the facts, the Master went on to consider statutory exceptions to the <em>Baker v. Boulton </em>rule.</span><br />
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<span style="font-family: Arial;">Section 5(2)(c) of the <em>Survival of Actions Act </em>bars any recovery by the estate for loss of future earnings, so Ms. Atkin's derivative claim through the estate could not succeed.</span><br />
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<span style="font-family: Arial;">The plaintiff's direct claim was based on an argument that she qualified as an "adult interdependent partner" under the <em>Fatal Accidents Act.</em> This legislation gives a statutory right of action to the children, parents, spouse, and adult interdependent partner of the deceased. Ms. Atkin did not qualify as a "spouse", as this term is limited to partners who are legally married.</span><br />
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<span style="font-family: Arial;">In order to succeed, Ms. Atkin had to show that it was at least arguable that she fit within the definition of adult interdependent partner in the legislation.</span><em></em><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"> Section 3(1)(a) of the <i>Fatal Accidents Act</i> says that such a relationship exists where two people have lived together in an interdependent relationship for three years, or if cohabitation is "of some permanence" and they have a child. Ms. Atkin did not come within either branch of s. 3(1)(a).</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Under section 3(1)(b) Ms. Atkin would be the adult interdependent partner of Mr. Dotto if they had entered into an adult interdependent partner agreement under s. 7, which provides that two people who are living together or who intend to do so may "enter into an adult interdependent partner agreement in the form provided for by the regulations." The Master found that the couple were in a close and committed relationship, and that they had an agreement that amounted to an adult interdependent partner agreement although it was not in written form.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The legislation does not expressly require that the agreement should be in writing. It could be argued, however, that the form provided by the regulations implies that it should be in writing. The Master described the Act as remedial legislation that provides a statutory claim to close relatives of the deceased. Since informality is a hallmark of many adult interdependent partnerships (in that the partners have decided to forego the formality of marriage), it seemed unlikely to the Master that the legislature intended that a lack of formality would defeat the statutory remedy.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The Master concluded that there was a triable issue, and dismissed the insurer's motion for summary judgment.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Master Schlosser was quite critical of the principle set down in <i>Baker v. Boulton.</i> This principle is inconsistent with contemporary negligence law and at odds with the expectations of the public in society today, in which cohabitation is common and most people believe that there are legal consequences to such relationships. A further easing of the common law rule makes sense.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">It is hard to fault the Master for concluding that a lack of formality should not defeat a claim based on a relationship that by definition is informal.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Ms. Atkin was living with Mr. Dotto at the time of his death, and a claim based on cohabitation is verifiable. Insurers will have a legitimate concern, however, arising from the fact that s. 7 of the Act permits two persons who merely "intend to live together" to enter into an adult interdependent partner agreement. If verbal agreements are recognized, it will be difficult if not impossible for insurers to corroborate a claim by a surviving girlfriend or boyfriend based on a verbal agreement to cohabit in the future.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The case raises an issue that is important to the automobile insurance industry; it also has significant public policy implications regarding the legal consequences of relationships that involve cohabitation but not marriage. We can expect that this issue will eventually reach the appellate court level. When it does, it will be interesting to see whether the court chooses to overrule <i>Baker v. Boulton</i> and articulate a comprehensive threshold test for wrongful death claims, or continue to chip away at Lord Ellenborough's rule on a case-by-case basis.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><i>Dotto Estate v. Thickson,</i> 2013 ABQB 348; <a href="http://www.albertacourts.ab.ca/jdb_new/public/qb/2003-NewTemplate/qb/Civil/2013/2013abqb0348.pdf">http://www.albertacourts.ab.ca/jdb_new/public/qb/2003-NewTemplate/qb/Civil/2013/2013abqb0348.pdf</a></span></div>
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Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com1tag:blogger.com,1999:blog-7539943914703833188.post-45560625431446886472013-06-24T15:07:00.001-07:002013-06-24T22:29:51.344-07:00Insurance for Flood Damage to Your Home<div class="separator" style="clear: both; text-align: left;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLqdz1N8aDLUUSOkiguGB68PEbzIaN5pFu7q94UuAiF9JdB-P9H1IwwYv5Fae1UJ1PIOSkKtwHJ7Pj9PobzujYETO62yqhHqD2_Panvb4TKsPWe98w-B6Grpj2U5AoTQ4d1lX6_qg3Vgt1/s1600/photo-pumping+water+into+the+Bow.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="239" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLqdz1N8aDLUUSOkiguGB68PEbzIaN5pFu7q94UuAiF9JdB-P9H1IwwYv5Fae1UJ1PIOSkKtwHJ7Pj9PobzujYETO62yqhHqD2_Panvb4TKsPWe98w-B6Grpj2U5AoTQ4d1lX6_qg3Vgt1/s320/photo-pumping+water+into+the+Bow.jpg" width="320" /></a></div>
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><i>Pumping flood water back into the river</i></span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Standard homeowner's policies issued by Canadian insurance companies contain an exclusion for damage caused by flood. Here is a typical flood damage exclusion:</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">"This policy does not <span class="term0 lmrp lexumSolrWhiteBackground" id="g23-0" style="background-color: white; border-bottom-color: rgb(255, 255, 255) !important; border-bottom-style: solid !important; border-bottom-width: 2px !important;">insure</span> … loss or damage caused directly or indirectly by <span class="term1 lmrp lexumSolrWhiteBackground" id="g24-0" style="background-color: white; border-bottom-color: rgb(255, 255, 255) !important; border-bottom-style: solid !important; border-bottom-width: 2px !important;">flood</span>, and the word "<span class="term1 lmrp lexumSolrWhiteBackground" id="g25-0" style="background-color: white; border-bottom-color: rgb(255, 255, 255) !important; border-bottom-style: solid !important; border-bottom-width: 2px !important;">flood</span>" means waves, tides, tidal waves, and the rising of, the breaking out or the overflow of, any body of water, whether natural or man-made…"</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The exclusion clause is carefully drafted so as to provide the insurance company with the widest possible protection against this type of claim.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The language employed is quite comprehensive. Damage arising "directly or indirectly" from flood is excluded from coverage, and the word "flood" is defined broadly so as to include things that people would not normally think of as flooding, such as tides and waves. Flooding from any body of water, including man-made sources such as reservoirs, is excluded.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Courts in a number of Canadian provinces have upheld this form of exclusion clause. In <i>Catalano v. Canadian Northern Shield Insurance Company, </i>2000 BCCA 133, municipal workers diverted water from overflowing culverts so that it inundated the plaintiff's business. The B.C. Court of Appeal held that the diversion was not a separate intervening cause of the damage, and that since the original source of the water was overflow arising from heavy rainfall and melting snow pack, the loss came within the policy definition of "flood" and was excluded.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In the recent emergency in Alberta, work crews in certain locations have erected berms and other barriers to divert overflow from rivers. Although these actions are intended to protect residential areas from flooding, some property owners have probably found that the diverted water increased the flow over their land. Assuming that the Alberta courts adopt the B.C. interpretation, the ensuing flood damage would be excluded under the typical home insurance policy.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In an Alberta case, the Court of Queen's Bench also accepted the insurer's interpretation of this clause. In <i>MacNichol v. Insurance Unlimited (Calgary) Ltd.,</i> 1992 CanLII 6185 rising water in the Peace River breached a dam, causing blocks of ice to go over the dam and crash into a pump-house that was under construction. Although the immediate cause of the damage to the pump-house was the action of the ice blocks pounding against it, the court concluded that the direct cause was the rise and overflow of the river, which triggered the exclusion clause.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In another B.C. case, however, the Court of Appeal adopted an interpretation more favourable to the insured. In <i>B.C. Ferry Corp. v. Commonwealth Insurance Co. </i>(1987), 40 D.L.R.(4th) 766, the insured owned a ferry terminal which was damaged by heavy waves during a severe storm. Since the evidence showed no abnormal rise in the water levels, however, the appellate court concluded that the event did not come within the extended definition of "flood" in the policy, which encompasses waves, tides, and tidal waves. Although it was wave action that damaged the terminal, there was no rising of, breaking out, or overflow of any body of water - the flood exclusion did not apply.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Although the Insurance Bureau of Canada has said that there is no coverage for "overland flooding" in Canadian home insurance policies, there is an alternative point of view. If the original source of the water is overflow from a river, the damage comes within the standard flood exclusion and is not covered. The exclusion does not use the word "overland", however, so the wording does not extend to any water that enters a home from outside regardless of the source.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">There has been heavy rainfall in many areas of the province over the last week, and water that seeps or leaks into a home due to excess precipitation, and that does not originate in an overflowing river, stream, or reservoir, would not trigger the flood exclusion. Such water damage would come within the coverage provided in an "all risks" policy, and would likely be covered as "storm" damage in a specified perils policy.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Here are some other kinds of losses that might be covered, even if the home policy contains a standard flood exclusion:</span></div>
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<li style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Sewer backup - many home insurers provide sewer backup coverage as an add on for an extra premium. If your home policy has a sewer backup endorsement, you are covered where waste water from storm or sanitary sewers has entered the basement through floor drains, tubs, shower stalls, or toilets. You may also have coverage where some of the water entering your home is backup from sewers and some is overland flow from river flooding.</span></li>
<li style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Electrical disruption - electrical failure or interruption that is not caused by flood damage could be covered. It seems that municipal authorities decided to cut power to certain areas once an evacuation order had been issued. The spoiled contents of a fridge or freezer could be covered in this situation. If the power loss was due to flood damage to a transformer, however, it would likely come within the flood exclusion. The contrary argument is that the authorities cut power as a precautionary measure in areas that might be flooded, so the power disruption is analogous to the water diversion in the <i>Catalano</i> case.</span></li>
<li style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Evacuation costs - if you were evacuated, but your property was not in fact flooded, it is arguable that your accommodation costs such as hotel, restaurants, and parking could be covered. Such losses would likely not be covered under a specified perils policy, but they should fall within the coverage of an all risks policy in the absence of an exclusion for government orders or actions. Losses due to electrical disruption could be covered under the same argument.</span></li>
<li style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Theft, vandalism, arson - whether your property was flooded or not, damage caused by third parties while you were ordered to evacuate and unable to protect your home should be covered.</span></li>
<li style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Vehicle damage - cars are insured separately, and flood damage to a vehicle should be paid if the insured purchased comprehensive coverage.</span></li>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">All of the above applies to insurance for residential premises. Business insurance is in an entirely different category.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Although standard business policies contain a flood exclusion similar to the one in home policies, business owners can purchase flood coverage for an extra premium. This option is not available to home owners.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Even if a business policy does not have a flood endorsement, the flood exclusion often contains language stating that the exclusion does not apply to "resulting damage". Under this exclusion to the exclusion, direct flood damage is not covered, but if building systems such as fire alarm and suppression, refrigeration, or security are damaged by flood waters, and then there is additional damage caused by the failure of one of those systems, this is "resulting damage" and it is covered. An example might be the loss of the contents of an industrial freezer to spoilage where water shorts out electrical systems, causing the freezer to shut down.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">If you are a business owner you should look at the specific terms of your policy and consult your broker, public adjuster, or legal counsel for assistance in determining what is and is not covered.</span><br />
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Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com3tag:blogger.com,1999:blog-7539943914703833188.post-8926400248354028072013-06-22T10:48:00.000-07:002013-06-24T18:04:49.138-07:00How To Make a Home or Business Insurance Claim<div style="text-align: justify;">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjcSjpf_NwhoslHc3FOePD-pl9c00NPt9FQoc0oN7-bmpv-5_vysohvSp0CiNdURHnfvN-_Wp0f41AXxTE_JIxYD9UDuiT6yLKiZI-pDyMTfsqV6ibiPn-r32JpVWiqtGbj9M9x7y_9DHkP/s1600/2013-06-21+Bow+River+near+Prince's+Island.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="239" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjcSjpf_NwhoslHc3FOePD-pl9c00NPt9FQoc0oN7-bmpv-5_vysohvSp0CiNdURHnfvN-_Wp0f41AXxTE_JIxYD9UDuiT6yLKiZI-pDyMTfsqV6ibiPn-r32JpVWiqtGbj9M9x7y_9DHkP/s320/2013-06-21+Bow+River+near+Prince's+Island.jpg" width="320" /></a></div>
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"> <i>Bow River Near Prince's Island, June 21, 2013</i></span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Early yesterday morning my wife and I were evacuated from our home along with thousands of other Calgary residents. My office is closed after the City issued an order for the controlled evacuation of the downtown area.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Although people living near the Elbow River are starting to return home this morning, it looks like the evacuation order for areas along the Bow River will remain in place for the time being. Power may not be restored in downtown for a few days, so many offices and businesses will remain closed.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Watching Global TV yesterday we saw incredible scenes of devastation, with many residential streets covered in water. There was muddy water flowing around numerous warehouses and commercial buildings, as well as trucks and other vehicles half submerged.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Thousands of Alberta homeowners and tenants will be looking to their insurers to cover the damage to their houses, gardens, and possessions. Many business owners will have claims for property damage and business interruption. Insurance company claims departments will be inundated with new claims, and it will be difficult for people to get answers to their questions about what is covered, how to document a claim, and how much (if anything) the insurance company will pay.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The most important thing right now is to give your insurer written notice of your claim right away. Delay in giving notice won't just delay the resolution of your claim; it can provide grounds to deny the claim altogether. The insurance company has the right to inspect the damage as soon as possible (even if it doesn't have enough adjusters available to handle all the claims right now).</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Send your notice by fax or email, as these methods provide a record of the date and time notice was received.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The initial notice should be short and sweet. You don't need to provide any details about what happened or what was damaged - that can come later. All you need to do is provide the name of the insured, the policy number, and the address of the insured premises. For date of loss, you should say "June 21, 2013 and continuing", as the damage may be ongoing.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Avoid using terms like "flood" or "water damage", as flooding from water sources outside the building is excluded from many policies. At this point, all you need to do is provide notice of a "loss" or "property damage" at the insured address.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">If you know that your property is in an affected area but you can't inspect the damage because an evacuation order is still in place, you should send notice of claim anyway. It is very important to provide notice as soon as possible, and you don't need to state any details or estimate the amount of your claim yet.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The Insurance Bureau of Canada has stated publicly that there is no insurance coverage for "overland flooding" in Canada. This may or may not apply to your claim - coverage always depends on the wording of the policy, and insurance policies are subject to interpretation. Legal principles of interpretation generally favour the insured. You should not give up on a potentially substantial claim based on a general statement from an insurance industry organisation that may not apply to your policy and your situation.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Many policies do include coverage for back up from storm or sanitary sewers. If water entered your home from floor drains, showers, tubs, or toilets, at least part of the damage could be covered.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">There may be other provisions in your policy that bring parts of the damage into coverage, even if your insurer is telling you it is excluded. You should still send the insurer notice of claim, photograph the damage thoroughly, and keep all your receipts.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span style="font-family: Arial, Helvetica, sans-serif;">Contact Richard Hayles at Billington Barristers:</span></span></div>
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Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com2tag:blogger.com,1999:blog-7539943914703833188.post-58972205061636686582013-06-14T13:10:00.000-07:002013-06-24T07:38:14.513-07:00Insurance Company Must Defend Condo Developer<div class="separator" style="clear: both; text-align: left;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7psprTTNqwqJlckL4KgLUMPu6ix_8QGEBcFFFYVKnSL-aeQGE03YWs6WIyh_p0PPZm7O_tFeZGeauph6bnT_G91A5L_mHawiOb8mJvURubfE8hwGuhsxAV2CHRgr0Fl546_Xnpz2Vjab3/s1600/tall-buildings-under-construction-cranes-20004255.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="228" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7psprTTNqwqJlckL4KgLUMPu6ix_8QGEBcFFFYVKnSL-aeQGE03YWs6WIyh_p0PPZm7O_tFeZGeauph6bnT_G91A5L_mHawiOb8mJvURubfE8hwGuhsxAV2CHRgr0Fl546_Xnpz2Vjab3/s320/tall-buildings-under-construction-cranes-20004255.jpg" width="320" /></a></div>
<em><span style="font-family: Arial, Helvetica, sans-serif;">Condominium Construction</span></em><br />
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<span style="font-family: Arial, Helvetica, sans-serif;">Builders and developers involved in the construction or conversion of condominiums often face lawsuits over alleged deficiencies, sometimes long after the project is completed. The builders are typically covered under Comprehensive General Liability ("CGL") policies that limit coverage to damage that occurs during the policy period, and which contain exclusions for liability arising out of contract.</span><br />
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<span style="font-family: Arial, Helvetica, sans-serif;">The coverage provided by a CGL policy includes an obligation to indemnify the builder for legal liability to others resulting from the builder's negligence, and an additional, separate obligation to defend any actions claiming damages for such negligence. The duty to defend includes an obligation to retain counsel and pay the legal costs involved in dealing with litigation. Since defence costs in major construction litigation can easily run into the hundreds of thousands of dollars, and since most actions will settle before trial, the duty to defend is often as important as the obligation to indemnify.</span><br />
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<span style="font-family: Arial;">Does the insurance company have an obligation to provide a defence where the condominium corporation sues the developer/builder for damage that didn't appear until long after the project is completed? What about damage that happens after the CGL policy has expired? In Alberta, the Court of Queen's Bench dealt with both these issues in a recent case involving Canalta Construction Co.</span><br />
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<em><span style="font-family: Arial;">The Condominium Project</span></em><br />
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<span style="font-family: Arial;">Canalta was the developer and general contractor for a condo conversion in Edmonton. During the construction, Canalta obtained a CGL policy from Dominion of Canada. Canalta registered the condominium plan in 2003, the work was completed in 2005, and all of the condo units had been sold by September of 2006.</span><br />
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<span style="font-family: Arial;">The Dominion policy was renewed through to January 1, 2008. A water main failed some seven months later, and the Condominium Corporation sued Canalta in July of 2010, claiming damages for the design and construction of the water main and the failure of the roof system to repel water vapour and insulate the premises. The water main and the roof system were both common elements, and all of the damages were located in common areas rather than in individual condo units.</span><br />
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<em><span style="font-family: Arial;">The Dominion Policy</span></em><br />
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<span style="font-family: Arial;">The Dominion CGL policy covered liability for "'property damage' which occurs during the policy period." There was an exclusion for compensation that Canalta had to pay "by reason of the assumption of liability in a contract or agreement", but this exclusion was subject to an exception for liability that Canalta "would have in the absence of the contract or agreement".</span><br />
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<span style="font-family: Arial;">There were also exclusions for property that Canalta owned, rented, or occupied, and for damage to premises that Canalta has sold. The latter exclusion contained an exception where the premises are "your work", and were "never occupied, rented or held for rental by you."</span><br />
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<span style="font-family: Arial;">The coverage provisions and exclusions in the Dominion policy are common in CGL policy forms used in the construction industry in Canada. Interpretative difficulties arise when damage outside the policy period is caused by deficiencies in design or construction that took place while the policy was in force: on those facts, did the property damage "occur" during the policy period?</span><br />
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<span style="font-family: Arial;">The exclusion for liability assumed under a contract can also be problematic. Since all the builder's work on a project is done pursuant to a contract, does this mean there is no coverage for defects in any of the work? Faulty construction is usually the result of negligence, however, and the builder would be liable for negligent construction in the absence of a contract. Does the exception to the exclusion mean that all the defects are covered, and if so, what is the purpose of the exclusion for contractual liability?</span><br />
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<em><span style="font-family: Arial;">Legal Test for Insurer's Duty to Defend</span></em><br />
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<span style="font-family: Arial;">If the duty to defend is to be of any use, the insurer has to take on its defence obligations during the litigation process; otherwise the insured could incur substantial legal costs defending an action when those costs are covered under the policy. From the insurer's point of view, early involvement in the litigation is also beneficial, as the insurer is then in a position to monitor litigation costs and make decisions regarding tactics and settlement. Deferring the duty to defend decision until after the trial would not be in the interests of either insurer or insured, and would defeat the purpose of this type of coverage.</span><br />
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<span style="font-family: Arial;">Since any issues regarding the duty to defend have to be resolved before all the evidence in the action against the builder is available, this question is decided on the basis of the allegations against the builder set out in the statement of claim in that action. According to the Supreme Court of Canada, the duty to defend is triggered if there is a "mere possibility" that the claim is covered: <em>Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada,</em> [2010] 2 S.C.R. 245. This is the test that was applied by the Alberta Court of Queen's Bench in the <em>Canalta</em> case.</span><br />
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<em><span style="font-family: Arial;">Damage Outside the Policy Period</span></em><br />
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<span style="font-family: Arial;">Since the water main didn't fail until some seven months after the expiration of the policy, Dominion argued that any ensuing liability was outside the policy period.</span><br />
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<span style="font-family: Arial;">In duty to defend cases, the courts have entertained four different theories as to when damage occurs: (1) damage does not occur "until it manifests itself"; (2) damage that is undetected during the policy term is covered if it commences while the policy is in force; (3) exposure to a harmful condition constitutes damage; and (4) developing damage constitutes a continuous series of covered occurrences, starting when the property is first exposed to damage and ongoing until it is discovered.</span><br />
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<span style="font-family: Arial;">Canalta argued that since all the work was completed by January, 2005, it was open to the trial court to decide that there was ongoing damage so that the second and fourth theories would apply. Since the statement of claim issued against Canalta by the Condominium Corporation alleged negligence in design, installation, and construction, it was arguable that damage occurred before the end of 2005.</span><br />
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<em><span style="font-family: Arial;">Liability Assumed Under Contract</span></em><br />
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<span style="font-family: Arial;">Although the statement of claim contained allegations of negligence, Dominion argued that these were essentially allegations that the contract was breached by negligent design and construction.</span><br />
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<span style="font-family: Arial;">The court mentioned the exception to the exclusion. The allegations of negligent design and construction could be viewed as instances of breach of contract, or as negligence which would give rise to liability outside the contract. It was not clear that the allegations of negligence were just repetitions of the allegations of breach of contract, so the exclusion for contractual liability did not assist Dominion.</span><span style="font-family: Arial;"></span><br />
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<span style="font-family: Arial;"><i>Property Owned or Occupied by the Insured</i></span><br />
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<span style="font-family: Arial, Helvetica, sans-serif;">Since both the defects and the damage were limited to the common elements in the building, the question here was whether or not the developer "occupied" the common property during the period in question. Although duty to defend cases are normally limited to a review of the pleadings in the action against the insured, in this case an officer of Canalta testified that Canalta controlled access to the common property and hired a property manager until the condo board was in place. Since it was unclear whether or not these acts amounted to occupation of the common property, there was a possibility that the exclusion did not apply.</span><br />
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<span style="font-family: Arial;"><br /><em>Property Sold by the Insured</em><br />
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Canalta argued that even if the "alienated property exclusion" was applicable, there was a possibility that the exception for property that constitutes the work of the insured and that the insured never occupied would come into play. The court seemed to agree: it was unclear whether or not the acts of Canalta prior to the takeover of the building amounted to occupation, so the exception to the exclusion could apply.<br />
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<em>Conclusion</em><br />
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It was arguable that the damage occurred when the design and construction work was done, which was during the policy term and prior to the sale of the condo units or the transfer of the common elements to the Condominium Corporation. The judge held that the claim of negligent design and construction was a "stand alone claim", and not merely derivative of the breach of contract claim. Since there was a possibility that the claim was covered under the CGL policy and that none of the exclusions applied, Dominion had a duty to defend Canalta in the litigation.<br />
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The case illustrates how difficult it can be for an insurer to avoid its obligation to defend under a CGL policy. A duty to defend application is only interim, and the insured could still be ordered to reimburse the insurer after trial if it appears that the claim is not covered or that one of the exclusions is applicable. As a practical matter, however, a favourable decision on the duty to defend issue means that the insurer will defend and settle the action, and that the insured is unlikely to be called upon to contribute substantially to defence and settlement costs.<br />
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<span style="font-family: Arial;"><em>Canalta Construction Co. Ltd. v. Dominion of Canada General Insurance Company,</em> 2013 ABQB 325, <a href="http://www.albertacourts.ab.ca/jdb_new/public/qb/2003-NewTemplate/qb/Civil/2013/2013abqb0325.pdf">http://www.albertacourts.ab.ca/jdb_new/public/qb/2003-NewTemplate/qb/Civil/2013/2013abqb0325.pdf</a></span></div>
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Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com4tag:blogger.com,1999:blog-7539943914703833188.post-4810775404959205552013-06-12T10:33:00.001-07:002013-06-24T07:37:26.773-07:00Court Finds Fiduciary Relationship in Oil Sands Equipment Marketing Agreement<div class="separator" style="clear: both; text-align: left;">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWQyj5RuOuz_ARLTrMUxmF3ytl7HjecFQF8anArRaFILXxfJ3aL1yptyEug9BRYggVUHclUwuxY0gnBAZPLZWpH5XcRwm6DkJCL9dpNL5FgUqKgqzT8z0iLrZ_JtwiQud4zCSKYeOdzWMZ/s1600/tar-sands-010_trucks.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="192" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWQyj5RuOuz_ARLTrMUxmF3ytl7HjecFQF8anArRaFILXxfJ3aL1yptyEug9BRYggVUHclUwuxY0gnBAZPLZWpH5XcRwm6DkJCL9dpNL5FgUqKgqzT8z0iLrZ_JtwiQud4zCSKYeOdzWMZ/s320/tar-sands-010_trucks.jpg" width="320" /></a></div>
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<em><br /> Oil Sands Operations</em></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Indutech Canada Limited manufactures pipe and other speciality steel products for Alberta's heavy oil industry. Guy and Barry Gibbs marketed Indutech products for many years under two "Agency Agreements" which appointed the Gibbs and their companies as Indutech's exclusive sales force. From 2000 to 2004 the Gibbs operated a competing manufacturing business, Cladtech Canada Limited, without Indutech's knowledge.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br /></span><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Indutech eventually learned about the operations of Cladtech and sued for breach of contract and breach of fiduciary duty. The trial judge found in favour of Indutech, holding that the defendants were fiduciaries of Indutech and granting judgment for $2 million. This award consisted of some $1 million in damages, including $150,000 in punitive damages, plus $1 million representing the profits that the defendants had made from competing with the plaintiff.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br /></span><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The defendants appealed from the finding that they were fiduciaries of Indutech, and from the damages awarded, particularly the order under which they were required to disgorge the profits earned from their enterprise in addition to compensatory and punitive damages. In a recent decision, the Alberta Court of Appeal upheld the conclusions of the trial judge on both fiduciary duty and the amount of the award.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br /></span><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">The reasons of the Court of Appeal provide a useful explication of the law respecting fiduciary relationships, both under the three part test established by the Supreme Court of Canada in <i>Frame v. Smith,</i> [1987] 2 S.C.R. 99 and <i>International Corona Resources Ltd. v. LAC Minerals,</i> [1989] 2 S.C.R. 574, and under the more recently developed "<i>ad hoc</i>" analysis from <i>Elder Advocates of Alberta Society v. Alberta,</i> [2011] 2 S.C.R. 261 (S.C.C.)<i>.</i></span><br />
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<span style="font-family: Arial;">The case is also interesting for the use of the remedy of "disgorgement". The trial judge held that the plaintiff was entitled to be paid any profits that the defendants earned as a result of their breach of fiduciary duty, in addition to the traditional compensatory damages available for breach of contract. The Court of Appeal agreed.</span><br />
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<em><span style="font-family: Arial;">Fiduciary Relationships - The Principled Approach</span></em></div>
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<span style="font-family: Arial;">A fiduciary relationship is one involving trust, obligations of confidentiality, and a duty to act in the interests of or for the benefit of another. A finding of fiduciary duty allows the court to protect the vulnerable when they have been taken advantage of by those in positions of trust. Courts enforce fiduciary duties because honesty, fairness, and protecting the weak from the strong are important values in our legal system.</span></div>
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<span style="font-family: Arial;">The concept of fiduciary duty can be at odds with values of individual autonomy and self-reliance that are also important in our system of law. This conflict between competing values manifests itself in a reluctance on the part of our courts to impose fiduciary obligations in a commercial context. The role of the fiduciary can seem out of place in the business world; it often appears to be inconsistent with the notion of freedom of contract and the emphasis that the common law places on free markets and the enforcement of bargains.</span></div>
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<span style="font-family: Arial;">Historically, fiduciary obligations arose in certain established categories of relationships, such as agent and principal, solicitor and client, or trustee and beneficiary. Since it is well understood that an agent has to protect confidential information, avoid conflicts of interest, and act for the benefit of the principal, anyone who agrees to act as an agent also agrees, either expressly or by implication, to take on the responsibilities of a fiduciary.</span></div>
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<span style="font-family: Arial;">More recently, courts have recognized that the categories of fiduciary relationships are not closed. It now appears that the categories that historically gave rise to fiduciary responsibilities are only instances in which a set of principles have been applied to identify fiduciary relationships. This principled approach to fiduciary relationships, which originates in the dissenting opinion of Wilson, J. in <em>Frame v. Smith</em>, was endorsed by the Supreme Court of Canada in <em>Corona Resources</em>. Under the <em>Frame v. Smith</em> analysis, relationships in which fiduciary obligations are imposed possess three characteristics:</span> </div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The fiduciary is in a position to exercise discretion or power over the affairs of the beneficiary;</span></div>
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<span style="font-family: Arial;">The fiduciary can exercise that power unilaterally, so as to effect the beneficiary's interests;</span></div>
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<li><span style="font-family: Arial, Helvetica, sans-serif;">The beneficiary has a particular vulnerability to the fiduciary.</span></li>
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<span style="font-family: Arial, Helvetica, sans-serif;">The defendants in <em>Indutech</em> argued that they were not agents as the agreements gave them no authority to bind Indutech. Since the substance of the relationship prevails over the words used by the parties to describe it, the fact that the two contracts between Indutech and the defendants were labelled "Agency" agreements was not determinative. This meant that the courts had to struggle with the issue of whether or not to find a fiduciary relationship between two business organizations dealing with each other at arm's length.</span></div>
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<span style="font-family: Arial;">The Court of Appeal concluded that the terms of the agreements did give the defendants power and discretion, which resulted in a corresponding vulnerability on the part of Indutech. The agreements made the defendants the exclusive sales force for Indutech. The defendants were required to keep Indutech informed about the market and about sales opportunities. The defendants were subject to a duty of loyalty and were restricted from dealing with Indutech's competitors. They had unlimited access to Indutech's customers and sales data, including confidential information on pricing, timing, and market strategy.</span></div>
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<span style="font-family: Arial;">Indutech gave the defendants confidential business information, treating the defendants' personnel as if they were Indutech employees. This close relationship made Indutech vulnerable as it provided the defendants with the opportunity to divert sales, manipulate prices, and influence purchasing decisions by providing Indutech customers with false scheduling information. Vulnerability by itself does not give rise to fiduciary duties, but where it arises out of the contractual relationship between the parties rather than from pre-existing causes outside the contract, a fiduciary relationship can be formed.</span></div>
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<span style="font-family: Arial;">There is a line of authority supporting the proposition that the courts should hesitate to find a fiduciary relationship when two corporations motivated by profit enter into an arm's length transaction. The court was at pains to distinguish these cases, stating that the principle is limited to a situation in which a business entity fails to take available steps to protect its interests, then turns around and complains that it was taken advantage of. In the instant case, Indutech built protections into the terms of the agreements, but the defendants gained advantage through a series of calculated breaches of those contractual protections.</span></div>
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<span style="font-family: Arial;">The Court of Appeal emphasized the fact that in the commercial context a fiduciary relationship has to be based on the terms of the contract and not on circumstances external to the contract. As in the traditional categories of fiduciary relationships, the principled analysis requires an "undertaking" on the part of the fiduciary to take on duties of trust and confidence. The court concluded that "Such a circumstance arises where, as here, the contract imposed express obligations of loyalty and non-competition."</span></div>
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<em><span style="font-family: Arial;">The "ad hoc" Analysis of Fiduciary Obligation</span></em></div>
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<span style="font-family: Arial;">The Court of Appeal also considered the applicability of the approach established in the <em>Elder Advocates</em> decision, in which a fiduciary relationship is founded on an "<em>ad hoc</em>" basis outside traditional categories. The requirements for an <em>ad hoc</em> finding of fiduciary relationship were summarized by McLachlin, J. in <em>Elder Advocates</em>:</span></div>
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<li><span style="font-family: Arial;">Vulnerability arising from the relationship, as in <em>Frame v. Smith</em>;</span></li>
<li><span style="font-family: Arial;">An undertaking by the fiduciary to act in the best interests of the beneficiary;</span></li>
<li><span style="font-family: Arial;">A defined person or class that is subject to the fiduciary's control; and</span></li>
<li><span style="font-family: Arial, Helvetica, sans-serif;">The fiduciary can adversely exercise discretion or control so as to affect the beneficiary's legal or practical interests.</span></li>
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<span style="font-family: Arial, Helvetica, sans-serif;">The Court of Appeal decided to uphold the trial judge's decision as the facts that supported the existence of a fiduciary relationship under a <em>Frame v. Smith</em> analysis also supported an <em>ad hoc</em> finding of fiduciary obligation. On the facts of the <em>Indutech v. Gibbs</em> case, the two approaches to the issue are very similar, and the Court of Appeal suggested that they may just be "different ways of stating the same thing".</span></div>
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<span style="font-family: Arial;">The common thread that runs through the cases on fiduciary relationships is the vulnerability of the beneficiary and the "undertaking" or agreement of the putative fiduciary to do something that is associated with a fiduciary role. Whether the approach is one of traditional categories of fiduciary relationship, the principled analysis from <em>Frame v. Smith</em>, or the <em>ad hoc</em> approach from <em>Elder Advocates</em>, the fiduciary has to agree to keep information in confidence, refrain from competition, safeguard another's property, give precedence to the beneficiary's interests, or otherwise undertake an obligation of loyalty and trust. If the beneficiary is vulnerable to a breach of the undertaking, a fiduciary relationship is established.</span></div>
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<em><span style="font-family: Arial;">Compensatory Damages and the Disgorgement Remedy</span></em></div>
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<span style="font-family: Arial;">The normal measure of damages for breach of contract is an amount that would restore the income that the plaintiff lost as a result of the breach. These are sometimes referred to as "compensatory" damages. Where the defendant is in breach of a fiduciary obligation, the court can go further; in addition to awarding compensatory damages, it can order the defendant to disgorge any profits arising from the breach of duty.</span></div>
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<span style="font-family: Arial;">The defendants had diverted sales and opportunities rightly belonging to Indutech in a number of different instances. The fact that the defendants were in breach of their fiduciary obligations did not justify an across the board application of the disgorgement remedy. Indutech had to establish, in each instance, that the defendants' profits result from breach of fiduciary duty and not merely from breach of contract.</span></div>
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<span style="font-family: Arial;">As the trial judge had been careful to distinguish between activities that constituted breach of contract and those that amounted to breach of fiduciary duty, and limited the award to compensatory damages where no breach of fiduciary duty was involved, the Court of Appeal upheld her use of the disgorgement remedy. The remedies for breach of fiduciary duty are discretionary, so the standard on appellate review is reasonableness. Since the trial judge had not committed any error of law in applying the disgorgement remedy, the Court of Appeal was not prepared to interfere with the exercise of her discretion.</span></div>
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<span style="font-family: Arial;"><em>Punitive Damages</em></span></div>
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<span style="font-family: Arial;">In cases involving breach of fiduciary duty, the court can award punitive damages in addition to compensatory damages; the purpose of the punitive damages is to deter the defendant and others from engaging in similar conduct, and to uphold the integrity of fiduciary relationships. In the <em>Indutech</em> case, the Court of Appeal stated that if a market is to operate smoothly and effectively, manufacturers have to be able to rely on their sales representatives to protect confidential information and trade secrets.</span></div>
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<span style="font-family: Arial;">Punitive damages have to be proportionate. In determining whether or not to award punitive damages, the court is to consider such factors as the harm caused, the degree of misconduct, the relative vulnerability of the plaintiff, and the advantage and profit accruing to the defendants. The defendants argued that the addition of the disgorgement remedy amounted to sufficient deterrence, and that an award of exemplary damages was therefore disproportionate.</span></div>
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<span style="font-family: Arial;">The Court of Appeal concluded that the trial judge had exercised her discretion reasonably. The $150,000 punitive damages award was proportionate to the balance of the award ($1.85 million), and amounted to appropriate deterrence in light of the long period of deliberate and flagrant breaches of contract and the dishonesty and deceit involved.</span><span class="Apple-style-span" style="font-family: Arial;"></span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif; font-size: small;">Indutech Canada Limited v Gibbs Pipe Distributors Ltd., 2013 ABCA 111</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif; font-size: small;"><a href="http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2013/2013abca0111cor1.pdf">http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2013/2013abca0111cor1.pdf </a></span><br />
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Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com0tag:blogger.com,1999:blog-7539943914703833188.post-6381143648712397212013-06-07T13:59:00.000-07:002013-06-24T07:36:52.036-07:00Disability Insurance 101 - What Constitutes "Total Disability"?<div class="separator" style="clear: both; text-align: left;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEizRrpPOZy-pM3V-Ewv9LyTfYnNRU4sxxl_XcaZEF87oRwB_u4U817BGr8W81btKw1GfnKRCN_vw5R2td3utMEXNr87T799qaoew9qbzPEhFyOOa1bA-F7CWyf0mDrSLCHWOuLXCuU5VrSC/s1600/Bow+River+and+Bridge.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="239" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEizRrpPOZy-pM3V-Ewv9LyTfYnNRU4sxxl_XcaZEF87oRwB_u4U817BGr8W81btKw1GfnKRCN_vw5R2td3utMEXNr87T799qaoew9qbzPEhFyOOa1bA-F7CWyf0mDrSLCHWOuLXCuU5VrSC/s1600/Bow+River+and+Bridge.JPG" width="320" /></a></div>
<span style="font-family: Arial, Helvetica, sans-serif;"><em> Peace Bridge from the north side of the Bow</em></span><br />
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<span style="font-family: Arial, Helvetica, sans-serif;"><em><em> River, June 5, 2013 (another sunny day in Calgary!)</em></em></span></div>
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</em></span><span style="font-family: Arial, Helvetica, sans-serif;"><em>Do you have a question about your long-term disability policy? Are you thinking of making a claim, or have you already put in a claim that the insurance company has denied? This post is part of a series explaining the basics of disability insurance coverage and the ins and outs of the claims process.</em></span><br />
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<span style="font-family: Arial;">Disability insurance provides protection for loss of income when an illness or injury prevents the insured from working. With other types of insurance it is usually not difficult to determine whether or not a loss has occurred - in automobile insurance, for instance, it is typically pretty clear that a collision has taken place, and it is rare for an insurance company to question a life insurance claim on the grounds that the insured is only missing and might not actually be dead.</span></div>
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<span style="font-family: Arial;">Disability insurance is different because there are degrees of disability. We have all gone to work with a minor injury or worked through a cold, and we've seen people try to work when everyone is telling them they are too sick and should take time off. At what point is the disabling condition so serious that the insured is no longer able to work, and is entitled to benefits under the disability policy?</span><br />
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<span style="font-family: Arial;">The evaluation of a claim is especially difficult in cases where the disabling condition involves chronic pain or fatigue, or where depression, anxiety disorder, or some other psychological condition is a factor. In these cases the insurer has no objective standard for determining the extent of a person's disability, and the insured can't point to a lab test or x-ray to prove that his claim is real.</span><br />
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<span style="font-family: Arial;">The majority of disability insurance disputes arise when the insurer denies that the claimant is "Totally Disabled" as this term is defined in the policy. This is also the issue that is most likely to lead to litigation.</span><br />
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<span style="font-family: Arial;">There are two common policy definitions of Total Disability, which are often referred to as "Own Occupation" coverage and "Any Occupation" coverage. In an Own Occupation policy, the definition of Total Disability typically says that benefits are payable when the insured is "completely unable to engage in his regular occupation". This type of insurance provides coverage when the claimant can't do his usual job, even if he is capable of performing another type of work for which he is qualified. Own Occupation policies provide a higher level of coverage, usually at a higher premium rate.</span><br />
<span style="font-family: Arial;"></span><br />
<span style="font-family: Arial;">Any Occupation coverage contemplates alternative employment. A standard Any Occupation definition provides that the insured is Totally Disabled when he is incapable of performing an occupation "for which he is reasonably fitted by education, training, and experience".</span><br />
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<span style="font-family: Arial;">Most long term claimants are covered under employee group policies. These insurance plans usually provide a period of Own Occupation coverage for the first one or two years of disability. At the end of the Own Occupation period the policy definition of Total Disability changes to an Any Occupation definition, and the employee is cut off if she can perform other, suitable work.</span><br />
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<span style="font-family: Arial;">The leading case on the definition of Total Disability is <em>Sucharov v. Paul Revere Life Insurance Co.,</em> <a href="http://www.canlii.org/en/ca/scc/doc/1983/1983canlii168/1983canlii168.html">http://www.canlii.org/en/ca/scc/doc/1983/1983canlii168/1983canlii168.html</a>. The insured in that case was an insurance agent who owned and managed his own brokerage. He claimed disability based on high blood pressure and an anxiety disorder. Although he could perform most of the discreet tasks involved in his business, such as making sales calls or updating policy information, the pressure of performing all of these tasks together was too much.</span><br />
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<span style="font-family: Arial;">The policy said the insured was Totally Disabled when "completely unable to engage in his regular occupation". The insurer argued that a claimant who could perform each of the tasks involved in his occupation, albeit separately, was not "completely unable" to perform that occupation.</span><br />
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<span style="font-family: Arial;">This literal approach to policy interpretation was rejected by the Supreme Court of Canada, which held that Totally Disability means the substantial inability to perform an occupation. Under Own Occupation coverage the claimant is disabled if he cannot perform any of the important duties of his job, or if he is unable to perform the work in its totality.</span><br />
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<span style="font-family: Arial;">In subsequent cases, courts have held that a claimant is unable to perform "each and every duty" of his occupation if he is substantially disabled from performing essential job duties. Disability arises when a person who has the physical capacity to perform the tasks making up the job is hindered in his performance by pain, fatigue, or prescribed medication. Total Disability doesn't require complete helplessness, and benefits are payable if the insured is unable to perform the substantial and material acts that make up his usual work.</span><br />
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<span style="font-family: Arial;">This approach to the interpretation of Total Disability is in keeping with the principles that the courts use for the interpretation of any kind of insurance policy: the words in the policy are to be applied in their plain and ordinary sense, as members of the general public would understand them. Standard form policies will be interpreted against the interests of the insurance company that drafted them, so coverage clauses are to be interpreted broadly in favour of the insured, and exclusion clauses are to be given a narrow reading.</span><br />
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<span style="font-family: Arial;">In the next post in this series, I will talk about the interpretation of Any Occupation definitions of Total Disability.</span><br />
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<span style="font-family: Arial, Helvetica, sans-serif;">Contact Richard Hayles at Billington Barristers:</span><br />
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Anonymoushttp://www.blogger.com/profile/17781509183066507969noreply@blogger.com0tag:blogger.com,1999:blog-7539943914703833188.post-68165155642332627642013-06-07T10:51:00.000-07:002013-06-27T16:04:34.708-07:00Leave to Appeal Denied in CCAA Case<div class="separator" style="clear: both; text-align: left;">
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<em><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"> </span>The Court of Appeal of Alberta, June 6, 2013</em><br />
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<span style="font-family: Arial, Helvetica, sans-serif;">Creditors who are unhappy about a decision under the <em>Companies' Creditors Arrangement Act</em> must obtain leave to appeal to the Court of Appeal. A recent decision of the Court on a leave application confirms that the standard for granting leave is high.</span><br />
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<span style="font-family: Arial;">The applicant has to demonstrate that:</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">(a) the point on appeal is significant to <em>CCAA</em> practice;</span></div>
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<span style="font-family: Arial;">(b) the point is important to the action;</span></div>
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<span style="font-family: Arial;">(c) the appeal is meritorious; and</span></div>
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<span style="font-family: Arial;">(d) the appeal won't unduly delay the <em>CCAA</em> proceeding.</span></div>
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<span style="font-family: Arial;">On factual issues, the decision of the judge below will receive considerable deference. The applicant must show that the judge committed legal error.</span></div>
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<span style="font-family: Arial;">In <em>Romspen Investment Corporation v. Arsenault,</em> the leave application involved a dispute as to which of two sets of secured creditors had priority over the proceeds from the sale of the Sorrento Inn. The Inn belonged to a company in the Shire International group of companies, which had been granted creditor protection under the <em>CCAA</em> in 2009.</span></div>
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<span style="font-family: Arial;">The applicant, Romspen Investment, challenged the priority of the respondents' mortgage on the grounds that certain terms of the deed of trust and mortgage had not been satisfied. In particular, Romspen objected that the mortgage units had not been certified by the mortgage trustee, the units were not signed by an officer of the debtor company, and the respondents were not listed in the register as holders of mortgage units.</span></div>
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<span style="font-family: Arial;">The Court of Queen's Bench judge characterized these matters as "irregularities" that did not invalidate the respondents' security.</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">In dismissing the leave application, Mr. Justice O'Brien stated that the standard of review "militates strongly against a successfull appeal". The decision of the Queen's Bench judge was consistent with precedent, and there was evidence to support her factual findings. Although the issue was important to the parties, it was not of general significance in Mr. Justice O'Brien's view.</span></div>
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<span style="font-family: Arial;">The decision is consistent with a practical approach to <em>CCAA</em> matters, in which substance prevails over technical issues.</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><em>Romspen Investment Corporation v. Arsenault,</em> <a href="http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2013/2013abca0198.pdf"></a></span></div>
<a href="http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2013/2013abca0198.pdf">http://www.albertacourts.ab.ca/jdb_new/public/ca/2003-NewTemplate/ca/Civil/2013/2013abca0198.pdf</a><br />
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<span style="font-family: Arial, Helvetica, sans-serif;">Contact Richard Hayles at Billington Barristers:</span><br />
<span style="font-family: Arial;">(403) 930-4106</span><br />
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<span class="Apple-style-span" style="font-size: 18px; line-height: 25px;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Any legal information provided is general in nature and may not apply to particular situations. It does not constitute legal opinion or advice. Please consult your lawyer regarding your specific legal issue.</span></span></div>
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