Force Majeure Provisions to add to Real Estate Contracts: Do you need one?

 

Generally, a “Force Majeure” clause is a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, plague (e.g. COVID-19), or an event described by the legal phrase ‘Act of God’ prevents one or both parties from fulfilling their obligations under the contract.

Before the COVID-19 Pandemic, the standard Contract of Purchase and Sale for real estate contracts in British Columbia did not include Force Majeure provisions.

Realtors, buyers, and sellers now need to consider the use of such provisions within these contracts.

The events that trigger the Force Majeure clause must be clearly defined in the clause. For example, it may not be sufficient to simply reference the phrase “COVID-19”.  It is suggested that more needs to be stated, such as:

“In this contract, a Force Majeure event is deemed to have occurred where, because of COVID-19, any of the following events make it impossible to complete a party’s obligation under the contract:

  • The closure of government offices including without limitation the Land Titles Office including the inability to register transfer or mortgage documents;
  • The closure of banks and credit unions and the inability to obtain financing, cash, credit or immediately available funds in the form of cashier’s cheques, bank drafts or official credit union cheques;
  • The inability to obtain advice from professional consultants including appraisers and engineers;
  • The inability to provide vacant possession because a tenant cannot be evicted until the Pandemic is over;
  • The closure of law and notary offices and the inability to retain and instruct counsel; and
  • The inability of counsel to close the transaction due to a lack of staff or lawyers conversant with the subject matter of the transaction;”

Such an operative clause will act as a shield for the party affected by the event of Force Majeure so that a party can rely on that clause as a defence to a claim that it has failed to fulfil its obligations under the contract.

An Operative Clause should also specifically deal with the rights and obligations of the parties if a Force Majeure event occurs and affects the transaction. In other words, should the inability to complete the transaction only continue as long as the Force Majeure event continues, following which both parties shall promptly resume performance under the contract as soon as is practicable.

 

The following is an example of an Operative Clause:

  1. Neither party is responsible for any failure to perform its obligations under this contract if it is prevented or delayed in performing those obligations by an event of Force Majeure.
  2. Where there is an event of Force Majeure, the party prevented from or delayed in performing its obligations under this contract must immediately notify the other party giving full particulars of the event of Force Majeure and the reasons for the event of Force Majeure preventing that party from, or delaying that party in performing its obligations under this contract and that party must use its reasonable efforts to mitigate the effect of the event of Force Majeure upon its or their performance of the contract and to fulfil its or their obligations under the contract.
  3. Upon termination of those Force Majeure events that have caused a party to be unable to perform, the party affected must as soon as reasonably practicable recommence the performance of its obligations under this contract.
  4. An event of Force Majeure does not relieve a party from liability for an obligation which arose before the occurrence of that event, nor does that event affect the obligation to pay money in a timely manner which matured prior to the occurrence of that event.
  5. Neither party has an entitlement or liability for:
    • any costs, losses, expenses, damages or the payment of any part of the contract price during an event of force majeure; and
    • any delay costs in any way incurred by either party due to an event of Force Majeure.

 

Heath Law LLP provides experienced legal services to realtors, buyers, and sellers. Contact us via phone or email if you require legal advice regarding a real-estate contract.

COVID-19 – Occupational Health and Safety Policy: Do you have one?

Worksafe BC requires that those employers whose employees are working from home due to COVID-19 should ensure they have a basic Health and Safety Policy.

The Health and Safety Policy should contain an acknowledgment from the employee that he or she understands their role, duties, and responsibilities and that they agree to abide by the Health and Safety Policy.

The employer would also sign an acknowledgment that they acknowledge and are aware of the contents of the Health and Safety Policy.

The Health and Safety Policy should require employees to conduct an assessment of their workplace and report any possible or actual hazards to their manager or supervisor.

If any such hazards are discovered, there should be a plan made by both the employer and employee to ensure the safety of the employee.

The Health and Safety Policy should also specifically refer to the following:

  • The procedure for the employee to evacuate from the home or temporary workplace to a safe location in case of emergency; this can only be done by the employee as the employer should not access the home at this time due to COVID-19.
  • The manner in which the employee is to contact the employer in case of an emergency; identify the contact person of the employer, their office, and cell number and e-mail.
  • A statement from the employer to the employee that the employee working at home should use the same safe workplace practices that are expected from them at work.
  • A statement from the employer to the employee describing the procedure for how an employee should report a work-related incident or injury to their employer; identify the contact person of the employer, their office and cell phone numbers, and e-mail.
  • A statement from the employer to the employee that the employee should be as cognisant at home as they are at work about ergonomics; that the employee should take steps to mitigate the risk of developing a musculoskeletal injury.
  • A statement from the employer that the physical risk factors associated with an employee developing musculoskeletal injury by working at home include without limitation repetition and work posture.
  • A statement by the employer that the employee can learn more about musculoskeletal injury, assess the risk in their home, and actively take steps to reduce the risk by reading the following: https://www.worksafebc.com/en/health-safety/hazards-exposures/ergonomics

 

Heath Law LLP provides a full range of services to employers in British Columbia. If you require assistance contact Heath Law LLP by phone or email.

COVID-19 and Parenting Time: What are your rights for parenting time during a pandemic?

Two recent cases from the Courts of British Columbia have discussed COVID-19’s effects on a parent’s right to parenting time.

In N.J.B v S.F., 2020 BCPC 53 (April 1, 2020) a father began denying the mother parenting time.  His justification for doing so was based on the changed landscape arising from the COVID-19 crisis and the health and safety issues arising from it. More specifically, the father asserted that the mother is unlikely to be able to comply with social and physical distancing measures and other protocols currently recommended by public health authorities.

The facts and procedural history are as follows:

The parents separated in October 2018.

After the parents separated the mother’s parents submitted a report to the Ministry of Children and Family Development (the “MCFD”) regarding the mother being unable to care for the child due to the mother’s mental health, parenting skills, and substance abuse.  This report resulted in the MCFD and the father agreeing not to permit the mother to have any unsupervised access to the child.

Over the next few months, the mother and father attended multiple Family Case Conferences, the first being on February 14, 2019, which made orders allowing for the mother to have supervised parenting time.

On March 24, 2020, the father’s lawyer sent a letter to the mother’s lawyer stating that due to concerns related to COVID-19, the mother would not be permitted to exercise her parenting time.  The father had two reason for refusing the mother parenting time.  First, given the mother’s history of mental health challenges, which appear to result in her fabricating ideas and experiencing delusions, the present COVID-19 crisis is likely to impact her mental health further, and cause her to behave in a manner that will pose a risk to the child.  Second, there are seven people who live in the mother’s home.  The father claimed that the large number of people residing in the mother’s home will increase the child’s risk of contracting the virus.

The Courts Decision:

The Court ordered compliance with the parenting order. The father was unable to point to any concrete concerns about the mother and her family’s lack of compliance with COVID-19 protocols.  His concern appears to be based on the mother’s historical, and likely ongoing, challenges with her mental health which has sometimes manifested in paranoid or conspiratorial ideas.  The court accepted that the mother’s variable mental health gives rise to concern, but that concern has been addressed by the fact that all of her parenting is supervised. The court did not find concerns in relation to the mother are any greater under COVID-19 than they were before COVID-19, and as such, ordered compliance with the parenting order.

In another case

In SR v MG, 2020 BCPC 57 (April 7, 2020) a father was denying a mother her agreed to parenting time.  The father’s reason for denying parenting time was due to the mother being a licenced practical nurse.  He believed that her exposure as a nurse to the COVID-19 virus would create undue risk for their child.

In considering a multitude of factors, the Court found the mother to be entitled to her parenting time despite the father’s concerns.  While there was some risk that the mother would catch the virus, it was appropriately mitigated by the mother abiding by the precautions placed upon all front-line workers.

The Court noted that if the child was particularly vulnerable, it would not expose the child to even the slightest risk.

Conclusion from the two cases:

Using COVID-19 as a rationale for not complying with parenting time orders is not prima facie accepted by the Courts.  The parent withholding the child from the other has to supply the Court with concrete evidence which shows that the child is either particularly more vulnerable to COVID-19 or the other parent has created undue risk for the child by disregarding COVID-19 protocols.

 

If you think you may have cause to deny a parenting order due to safety concerns during Covid-19, or if your parenting time is being denied and you would like to discuss your options, call Heath Law LLP or email us.

Does Shared Custody Mean No Child Support?

In Canada, child support obligations are usually dictated by the federal child support guidelines.  The guidelines work on the principle that both parents should share the same portion of their income with their children as if they lived together.  The guidelines set out monthly child support amounts in a table that uses the paying parent’s level of income and the number of children eligible for child support.

In almost all cases, judges are required to follow the guidelines when determining the amount of child support.  There are however exceptions one of which is when the parents have split or shared custody of the children.

Split custody refers to a child custody arrangement in which one parent has sole custody of one or more children while the other parent has sole custody of the remaining siblings.

In split custody situations the child support is guided by s.8 of the guidelines which states:

Where each spouse has custody of one or more children, the amount of a child support order is the difference between the amount that each spouse would otherwise pay if a child support order were sought against each of the spouses.

In other words, if parent A’s obligation to parent B for the children in B’s care is $1,000 per month, and that parent B’s obligation to parent A for the children in A’s care is $250 per month, A would pay $750 per month in child support, the difference between A’s obligation and B’s obligation, and B would pay nothing.

Shared custody refers to a child custody arrangement where a child spends about an equal amount of time in the care and home of each of the two separated parents, and the parents share the legal rights in regards to the child.

In shared custody situations the child support is guided by s.9 of the guidelines which states:

Child support must be determined by taking into account the amounts set out in the applicable tables for each of the spouses, the increased costs of shared custody arrangements and the conditions, means, needs and other circumstances of each spouse and of any child for whom support is sought.

The analysis starts by determining each parent’s income, finding each parent’s support obligation amount under the applicable Guidelines tables then offsetting the two numbers to come up with a figure that the higher earning parent owes the other. If parent A would pay $940 per month under the guidelines, and parent B would pay $1,040 per month under the guidelines, then the set-off amount is $100.

Shared or split custody does not mean no child support but a different formula is used to determine what the child support obligation should be.

 

What is the Duty of a Driver to Yield to an Emergency Vehicle?

 

When travelling on a roadway or highway it is inevitable that you will encounter an emergency vehicle.  What are your obligations on the road in relation to this emergency vehicle?  Section177 of the British Columbia Motor Vehicles Act (MVA) states:

On the immediate approach of an emergency vehicle giving an audible signal by a bell, siren or exhaust whistle, and showing a visible flashing red light, except when otherwise directed by a peace officer, a driver must yield the right of way, and immediately drive to a position parallel to and as close as possible to the nearest edge or curb of the roadway, clear of an intersection, and stop and remain in that position until the emergency vehicle has passed.

 

In short, section 177 states that if the emergency vehicle is giving an audible signal and showing a visible signal there is an obligation on drivers of the road to yield to the emergency vehicle.  However, as stated in the BC case of Watkins v Dormuth, 2014 BCSC 543:

“The duty imposed by s. 177 of the MVA to yield to an emergency vehicle is not absolute. A driver must have time to perceive and react.”

 

In Watkins, a police officer crashed into another driver while attempting to overtake the vehicle.  The police officer claimed that the other driver should have pulled over by virtue of s.177 of the MVA.  The court placed 100% of the blame on the police officer as the police car was behind her for only a short period of time. The driver of the police car did not show that this time was long enough such that a reasonably alert driver would have perceived the lights and sirens of the police car and pulled over.

Emergency vehicles do not have free rein in exercising their driving privileges.  They are constrained by the duty to drive with regard to due safety.

 

If you would like legal advice as a result of a car accident, please contact Heath Law LLP at 250-753-2202 or Toll-free: 1-866-753-2202.

British Columbia is the First Canadian Province to Introduce Benefit Corporations

 

In May 2019, British Columbia amended its Business Corporations Act (BCA) to allow for the inclusion of “benefit corporations.”[1] This new business entity provides an intermediary position between the existing non-profit and for-profit options. Specifically, it allows new and existing companies to include a benefit provision within their articles of incorporation. This provision alters the corporate executives’ responsibilities by including a non-shareholder interest that must be factored into all major business’ decisions. In this respect, it differs from the traditional corporate structure where the corporation’s executive body is principally tasked with maximizing shareholders’ interests. The amendment was introduced as a private member’s bill by Andrew Weaver, the B.C. Green Party Leader. In his address to the legislature, Mr. Weaver explained that the introduction of benefit corporations would “provide…companies with the legal framework to operate in an environmentally sustainable and socially responsible way and to pursue public benefits, in addition to pursuing profits.” [2] While British Columbia is the first Canadian province to authorize benefit corporations, this new corporate structure has been widely recognized throughout the United States. In June 2018, 33 States, plus the District of Columbia, had passed similar legislation.[3]

 

What function does the benefit corporation serve? Similar to third-party certification programs which label a company as environmentally sustainable, committed to fair-trade practices, or otherwise, the designation of being a benefit corporation signals to prospective clients, investors, and businesses that a company is committed to a broader social, cultural, or environmental purpose. As Mr. Weaver argues, “by incorporating as benefit companies, businesses would achieve clarity and certainty for their directors and investors about their goals and mandate, thus enabling them to attract capital investment while staying true to their mission as they grow.”[4] That is, the benefit provision can serve to stabilize a company’s activities by ensuring it adheres to broader principles over the long-term. This may assist some companies in attracting new owners, investors, or clients, but simultaneously, it ensures that these new business participants cannot fundamentally alter the company’s foundational purpose. This stability can preserve a company’s brand by ensuring its reputation is not undermined by fundamental changes to its value-based practices, e.g. sourcing materials from certified supply-chains.

How do benefit corporations differ from Canada’s existing Community Contribution Company (C3) designation? The C3 framework is a share-capital corporate structure that incorporates both for- and not-for-profit elements. These companies adhere to market principles related to growth; however, they are subject to restrictions regarding their distribution of assets by dividends or dissolution. Benefit corporations, by contrast, have no such restrictions. Instead, a benefit corporation’s adherence to their beneficial purpose will be monitored by new transparency and accountability requirements that will be assessed against an independent, third-party standard. This structure is commonly observed in existing certification programs such as: Clean Marine B.C., The Forestry Stewardship Council, Leadership in Energy and Environmental Design, et cetera.

 

By special resolution, a majority of shareholders may alter a company’s articles of incorporation to become a benefit corporation. This requires the addition of a benefit statement. What is this statement? Under the Act, all participating corporations must include the following statement within its articles:

“This company is a benefit company and, as such, has purposes that include conducting its business in a responsible and sustainable manner and promoting one or more public benefits.”[5]

To clarify, all participating corporations must commit to responsible and sustainable business practices generally. This means that the company will “take into account the well-being of persons affected by the operations of the benefit company, and endeavour to use a fair and proportionate share of available environmental, social, and economic resources and capacities.”[6] Thereafter, companies must select a specific public benefit. Under section 51.991(1) of the amended Act, this benefit can include “artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific or technological” objectives. However, the benefit must accrue to a class of persons, communities, or organizations other than the shareholders qua shareholders. That is, shareholders may indirectly benefit from an improved community, environment, etcetera, but they cannot be the class of person for whom the benefit is directed. Due to these provisions, benefit corporations cannot amalgamate with regular corporations, unless the amalgamation results in a benefit corporation.[7] Alternatively, a majority of shareholders may discontinue a corporation’s beneficial designation by simply removing the above provisions via a special resolution.

 

 

Once established a benefit corporation’s public commitment is assessed through annual benefit reports. These reports are to be published along with the corporation’s existing financial auditing obligations under the BCA.[8] As mentioned, these reports must be accompanied by and be evaluated against a third-party standard, e.g. a standards-setting body such as the Forestry Stewardship Council.[9] While the company may select this third-party comparator, there are various restrictions on this selection process to ensure the evaluation’s independence. For example, a standard-setting body is not independent whenever “a person who beneficially owns shares of the benefit company, or an associate of such a person, is a member of the governing body of, or controls the operation of, or otherwise controls, the third-party standard-setting body.” In other words, there can be no relationship between the principle company and its third-party comparator when that comparator is a standard-setting body (i.e. a charity or non-profit organization).[10] The report itself must specify what activities the company took to pursue its general and specific benefit provisions and any impediments experienced therein over the previous year.[11] It must be approved by the directors, signed by one or more of them, and published on the corporation’s website.[12]

 

The benefit corporation model could advantage entrepreneurs looking to gain market-share or attract capital investments by espousing a societal benefit. Should they fail to adhere to their self-selected third-party standard, their liability is limited. Under section 51.994(2)(b), stakeholders are barred from pursuing legal action against a company simply because it failed to realizes its espoused benefits. This limitation is supported by section 51.994(2)(a) which excludes persons “whose well-being may be affected by the company’s conduct, or … who [have] an interest in the public benefit specified in the company’s articles.” As for shareholders, their remedies are limited with regards to the company’s benefit provisions. Directors and officers cannot be found to have breached their fiduciary duty under section 142(1) simply because they failed to meet their beneficial duties under section 51.994(1). Should shareholders of a public corporation seek a remedy against their directors or officers for failing to adhere to the company’s third-party standards, they must—in aggregate—represent at least the lesser of 2% of issued shares or their shares must have a fair-market value equal to or greater than $2,000,000. Finally, shareholders are precluded from pursuing a monetary award under section 51.994(5). Rather, they are limited to injunctive relief.

 

In summary, the benefit corporation model introduces a legislative framework for third-party certification programs which enables companies to integrate a beneficial purpose into their articles of incorporation. This may strengthen a company’s brand by solidifying its value-based practices over time and over ownership arrangements. It may also help attract ethically motivated consumers and investors. To ensure compliance, participating companies are required to evaluate and publish their beneficial activities against independent third-party standards. Should directors or officers fail to abide by these standards, shareholders may seek injunctive relief. This limitation on directors’ and officers’ liability ensure that corporations can pursue their benefit provisions without facing onerous financial liabilities from their shareholders. If your company is interested in becoming a benefit corporation, please call our office for further information.

 

[1] Business Corporations Amendment Act, 2018, BC Legislature, Canada.

[2] Weaver, Andrew, “Introducing a bill to enable BC companies to be incorporated as benefit corporations.”

[3] Fitzpatrick, Sarah: “B.C. Considers Benefit Corporations,” Miller Tompson Blog

[4] Supra, note 2.

[5] Ibid., s. 51.992(2)

[6] Iibd., s. 51.991 (1)

[7] Ibid., s. 51.998

[8] Ibid., s. 51.996(1)

[9] Ibid., s. 51.996 (3)

[10] Ibid., s. 51.991(1)

[11] Ibid., s. 51.996 (2)(d)

[12] Ibid., s. 51.996 (4)-(5)

When dealing with a divorce or separation from a spouse, determining the date of separation could be crucial.  For example, if the value of an asset is being divided as of the date of separation (a bank account, for example), then the date of separation could be crucial if the balance goes up or down significantly.  However, the date of separation may not be agreed upon by the spouses, and it can significantly affect property division, child and spousal support, and even the ability to bring a family law claim.

If the spouses disagree on the date of separation, the Court may look at several factors to determine which separation date is accurate:

  • Whether the spouses lived in the same house or slept in the same bedroom;
  • Whether the spouses vacationed together;
  • How the spouses participated in joint social activities and the manner in which the spouses presented themselves to others;
  • Plans for the future, including estate planning;
  • The absence of sexual relations;
  • The absence of communication between the spouses;
  • Attempts to reconcile the relationship;
  • The performance of household tasks and changes to routines;
  • Economic support and dependency between the spouses;
  • How the spouses conducted their financial affairs, including how they filed their taxes; and
  • How the spouses engaged with their children.

The Court may consider factors beyond those in this list, and the presence or absence of any particular factor is not determinative.  For instance, spouses may be separated but remain in the same house because of financial circumstances.  It only requires one spouse’s intention to terminate the relationship.  Both spouses do not need to agree that the relationship is over.  The Court will objectively assess all of the evidence and determine if or when one spouse intended to separate and communicated that intention through words or conduct to the other spouse.

If you would like to book an appointment with any of our family law lawyers, please contact Heath Law LLP at 250-753-2202 or toll free: 1-866-753-2202.

Estate Planning – Considerations when Adding a Child as Joint Tenant to your Property

Many parents put their children on title to their residence as a form of estate planning. While this can help avoid probate fees and possibly assist with ease of administration of an estate, the case of Gully v. Gully, 2018 BCSC 1590 [Gully], demonstrates that parents must be careful when adding children onto title to their residence.

In Gully, a mother added her son as a joint tenant on title to her Burnaby property. She did so based on legal advice she received, including that her estate could avoid probate fees. She did not tell her son that he had been added as a joint tenant to title of the property.

In August of 2017, the son, and his company, consented to a judgment of $800,000.00 in favour of Ledcor Construction Limited (“Ledcor”). Ledcor discovered that the son was on title to the property and registered their certificate of judgment on the son’s undivided half interest in the property.

The mother sought a declaration, amongst other things, that the son held the property on a resulting trust for her estate. The court found that the son did not hold the property on a resulting trust for the estate and permitted Ledcor to retain their judgment on title, ultimately stating:

 [24]        Ms. Gully took a risk in registering her son as a joint tenant on her property. Whether she was properly advised of that risk is not before me. However, once she made the decision to register an interest in the Burnaby Property in Mr. Gully’s name, third party creditors of Mr. Gully became entitled to register judgments against Mr. Gully’s interest in the Burnaby property.

If you would like to book an appointment with any of our estate planning lawyers, please contact Heath Law LLP at
250-753-2202 or TOLL FREE: 1-866-753-2202.

After a motor vehicle accident it is very important to gather the appropriate information in case of a he said/she said battle over legal responsibility or liability.

Assuming that you do not need emergency medical attention after the motor vehicle accident you should look at and record the other driver’s licence number, the licence plate of the vehicle that hit you as well as their insurance information. It is worth stressing the importance of verifying the other driver’s licence number and not just asking for their name. This will remove the chance of the other driver providing you with a phony name. Take a picture of the other vehicle (and licence plate), the other driver and the other driver’s licence.

Also, take pictures of the scene of the accident, which would include any damages to vehicles as well as the position of the vehicles after the accident. If there are any 3rd party witnesses, their information and identity should be recorded to provide their account of the accident if there is a battle over liability.

After the accident there are also different entities that you should contact. Right after the accident you should contact ICBC. At this initial contact you should provide ICBC with the information that you gathered at the scene of the accident. Also, it may be necessary to call the police after the accident. If it is a hit-and-run accident you must contact the police; by calling the police you create a record of the accident which can be of assistance later on in the ICBC process. Finally, you should contact a personal injury lawyer. The lawyer will act on your behalf, guide you through the legal process and ensure that you are appropriately compensated from the accident.

If you or someone you know has been in a car accident contact Heath Law LLP.

On your usual commute to work something unusual happens. While driving to work, a wild animal darted across the road which resulted in you colliding with another vehicle and injuring the other driver. The other driver has sued you and the liability for the accident has currently been assigned to you at 100%. You are thinking that this is extremely unfair as there was nothing that you could have reasonably done to avoid the accident. This situation is governed by the defence of inevitable accident (the “defence”).

The defence places an onus on the person asserting the defence to prove that the exercise of reasonable care while driving could not have prevented the accident. The circumstances of the accident must have been beyond the driver’s control.

The defence has been pled in a few different scenarios in which the defendant has claimed that the accident was entirely out of their control. For example, defendants have pled the defence when a rogue bee has flown into their car, when a wild animal darts across the road and when the driver loses consciousness while driving.

For the defence to be successful the court must be satisfied that the inevitable accident was indeed inevitable and that the circumstances causing the accident were not reasonably foreseeable.

The court must be satisfied that there was nothing that the driver could have done to avoid the accident. For example, the defence may not be successful every time an animal crosses the road as the amount of time to react, the driver’s attentiveness and the type of animal will be considered. A driver’s evasive or lack of evasive action must be deemed by the court to have been reasonable in the circumstances.

The court must also be satisfied that the circumstances which caused the accident were not reasonably foreseeable. For example, if the road you were travelling on was frequented by darting deer, it would make a deer appearing on the road and causing an accident reasonably foreseeable. Also, if you have a health condition that may cause you to lose consciousness, losing consciousness on the road and causing an accident could be also be considered reasonably foreseeable. Lastly, if you know that the outdoor temperature was going to cool below freezing after a rain, slipping on ice would be reasonably foreseeable.