Has Someone Failed to Pay You?

The following will outline some basic information for recovering money owed to you under a contract.

The first thing that must be considered is the likelihood of recovering the debt owed.  It is important to remember that just because someone owes you money, it does not mean that they necessarily have the ability to pay you.  It is important to weigh and consider the amount owed to you versus the time and costs of recovery.

The next thing to consider is the limitation period for collecting the debt.  Generally speaking, the limitation period for an action in debt is two years after the claim is discovered.  A claim is discovered when one knew or ought reasonably to have known that injury, loss, or damage had occurred.  If one fails to bring a claim within the limitation period that claim becomes time barred. Note that there is a special rule contained in the Limitation Act as to when a claim on a demand loan is discovered. A demand loan is discovered on the first day there is a failure to perform the obligation after a demand for the performance has been made (s. 14).

Following a determination of the likelihood of recovery and ensuring there is compliance with the limitation period, a demand letter should be sent to the debtor.  This demand letter should outline the name of the creditor, the amount of the debt and the authority of the creditor to collect the debt.  It should also be noted that some contracts provide that a demand has to have been made before any legal action is commenced.

If no payment is received as a result of sending the demand letter it may be advisable to pursue legal action against the debtor.

Before legal action is commenced, one important consideration is which court to sue in.  In BC, there are three different levels of court one can use to recover money owed to them.  The decision as to which court to elect usually comes down to the amount of money the debtor owes.

The three courts are as follows, the Civil Resolution Tribunal (“CRT”), Small Claims Court and Supreme Court.  The CRT has a monetary cap of $5,000, the Small Claims Court has a monetary cap of $35,000 and there is no cap for Supreme Court.

After court election and assuming you are successful and achieve a judgment against the debtor, the method and availability of executing on that judgment is crucial.  It is possible that you go through the entire legal process and receive nothing because the debtor has no exigible property (property that can be realized on).  This is why it is very important at the initial stage to determine whether or not the debtor has the ability to pay.

The common methods of realizing on a judgment for a debt are through seizing and selling the debtors personal property, registering the judgment against the debtor’s real property or through garnishment (a process by which money owed to the debtor gets paid to you instead).

If you would like legal advice with regard to collecting money owed to you, please contact Heath Law LLP at 250-753-2202 or toll free: 1-866-753-2202.

 

“This contract represents the entire agreement between the parties. The contract supersedes all prior negotiations, representations or agreements, either written or oral, including the bidding documents.”

This clause, or something similar to it, is known as an entire agreement clause. It is often included within commercial contracts to limit the parties’ liability to the contract’s four corners. In other words, it prevents one party from asserting that the other breached a contractual promise made but not recorded within the contract. This creates legal certainty by lifting the final contract out of the messiness of negotiations. However, there are several circumstances where entire agreement clauses will not be strictly applied.

Where the parties are sophisticated or where they have legal representation during the contract’s negotiations, an entire agreement clause may be strictly enforced.[1] Where there is an asymmetry of bargaining power between the parties, however, the entire agreement clause must have been brought to the weaker party’s attention prior to the contract’s formation.[2] Following from this reasoning, courts have held that an entire agreement clause within a standard form contract will be given less weight; this is because the parties are less likely to have read and understood the clause’s meaning.[3]

Entire agreement clauses will not necessarily prevent a party from suing for negligent misrepresentation of terms not included within the contract. Between sophisticated parties or parties with legal representation, the Supreme Court of Canada has held that protection from liability for negligent misrepresentation is implicitly included within an entire agreement clause.[4] For unsophisticated or unrepresented parties, the possibility remains open. That is, they may sue the other party for breaching a representation made prior to but excluded from the final written contract. Such lawsuits are especially likely to succeed where that representation induced them to enter the contract.[5]

Finally, entire agreement clauses will not shield parties from liability for acting in bad faith. In the 2014 decision of Bhasin v. Hrynew, the Supreme Court of Canada created a new common law duty of honest performance in contracts.[6] Parties cannot use an entire agreement clause to contract out of this duty. Therefore, fraudulent misrepresentations during a contract’s formation will always remain actionable.

If you’re entering a commercial contract be mindful of the entire agreement clause and its effect on any representations the other party has made to you during the negotiations. For more information please call our office at (250) 753-2202.

 

[1] No. 2002 Taurus Ventures Ltd. v. Intrawest Corp., 2007 BCCA 228; Power Consolidated (China) Pulp Inc. v. British Columbia Resources Investment Corp., [1989] B.C.J. No. 114 (B.C.S.C.).

[2] Zippy Print Enterprises Ltd. v. Pawliuk, [1995] 3 W.W.R. 324.

[3] Turner v. DiDonato, 2009 ONCA 235, at para. 46; Wright v. 2137737 Ontario Inc., 2010 ONSC 2956;

Parkland Industries Ltd. v. Smart Gas and Auto Detailing Ltd., 2013 BCSC 1046.

[4] Bow Valley Husky Ltd. v. St. John Shipbuilding Ltd. [1997] 3 SCR 1210, 1997 CanLII 307 (SCC)

[5] Tilden Rent-A-Car Co. v. Clendenning, 1978 CanLII 1446 (ON CA)

[6] 2014 SCC 71

Can parents be held legally responsible for their children’s negligence? Yes. Under B.C.’s Parental Liability Act (PLA), “if a child intentionally takes, damages or destroys property of another person, a parent of the child is liable for the loss of or damage to the property experienced as a result by an owner and by a person legally entitled to possession of the property.”[1] The maximum liability for parents is $10,000. However, a parent can defend themselves from the lawsuit by demonstrating that they were exercising reasonable supervision over the child, and that they made reasonable efforts to prevent or discourage the child from damaging someone’s property.[2] The PLA effectively codifies the existing legal tradition (i.e. the common law). As such, this post will briefly review the common law to clarify the reason for parental liability, and it will explain this reason’s associated standard of supervision as a limiting factor to liability.

At common law, a parent cannot be held liable for damages resulting from their children’s negligent acts (i.e. their tortious conduct). In the 1860 English case of Moon v Towers the court held that “a father is not liable in damages for the torts of his child.” This principle has been applied in numerous B.C. cases.[3] In Hatfield v. Pearson, for example, three teenaged boys stole a car which was damaged in the ensuing police chase. The owner’s claim for damages against the children’s parents failed on the principle set out in Moon v Towers. Similar dismissals have arisen in response to children’s acts of vandalism,[4] arson,[5] and murder.[6] However, parents with unruly children should not take too much comfort in this knowledge, for the rule is not absolute.

Parents have a personal duty to supervise their children.[7] When careless in this duty, a parent can be held liable for any resulting damages. There is a subtle but important difference here. The parent is not vicariously liable for their child’s negligence; rather, they are personally liable for their prior negligence in not properly supervising their child to the acceptable standard of preventing foreseeable harm to others. In the 1994 B.C. Supreme Court Case of Poirier (Guardian of) v. Cholette, for instance, parents were held liable for failing to properly supervise their two adolescent boys while they wrestled on a trampoline with friends, resulting in the breakage of a young girl’s arm. As the court wrote: “had the defendants provided proper supervision, the prohibited circumstances of three or four children indulging in horseplay and wrestling on the trampoline would not have occurred.   The infant plaintiff would, on a balance of probabilities, not have fallen.”[8] Of course, this foreseeability of harm changes with the child’s age. As the child nears the age of majority (18 years old) and expectations regarding their comportment with social standards increase, the parents’ duty to supervise will correspondingly decrease.[9]

If the child demonstrates a propensity for the negligent behavior that eventually resulted in damage, the parents’ duty to supervise is increased. In the B.C. case of M.I.M. v. T.H., for example, a foster parent was found to have fulfilled such an elevated standard arising from his knowledge regarding his two foster children’s proclivity for stealing. But, their eventual arson attack was unforeseen, and therefore, the foster parent could not be held liable.[10] In other words, the supervision standard is limited to what a reasonably prudent parent would do in similar circumstances.

An “error in judgment” will not amount to negligent supervision. That is, the reasonable parent standard is broad, insofar as any circumstance will afford various courses of reasonable action. Even when one of those actions has an unfortunate outcome, its mere selection will not amount to negligence. In Arnold v. Teno, for example, the Supreme Court of Canada found that a mother allowing her children to cross a residential street to purchase items from an ice cream truck was within the community standard, even though that choice later resulted in one of the children being struck by a vehicle. While an instance of poor judgment, the decision did not amount to a failure to supervise.

Taken together, parents cannot be vicariously liable for their children’s negligent acts. Yet, they may be liable for failing to supervise their children to the appropriate community or circumstantial standards. The PLA’s codification of these common law principles bridges the distinction between vicarious and parental liability. It simply makes parents liable for their children’s negligence. However, the distinction implicitly persists with the statute’s supervision defence. Also, it should be noted that the PLA maintains a $10,000 liability limit that does not exist at common law. That said, other statutes also override the Moon v. Towers principle and impose parental liability in certain circumstances. Section 10 of B.C.’s School Act, for example, imposes liability on parents for any damage their children cause to school property.[11] There, the statue sets no upper limit on parental liability.

[1] Parental Liability Act, Part 2, s. 3

[2] Ibid., ss. 9 & 10

[3] Moon v. Towers (1860), 8 C.B.N.S. 611, 141 E.R. 1306; also see, The Law Reform Commission of Ireland, Report On The Liability In Tort Of Minors And The Liability Of Parents For Damage Caused By Minors Ireland, <https://www.lawreform.ie/_fileupload/Reports/rDamagecausedbyMinors.htm>

[4] M.I.M. v. T.H., [1991] 5 WWR 699, 82 DLR (4th) 609, 57 BCLR (2d) 1.

[5] Smith v. British Columbia, 1997 CanLII 3267 (BC SC),

[6] D.L. et al. v. C.P. et al., 2019 MBQB 42

[7] Arnold v. Teno, [1978] 2 S.C.R. 287; Hatfield v. Pearson (1956), 6 D.L.R. (2d) 593 (B.C.C.A.)

[8] Poirier (Guardian of) v. Cholette, 1994 CanLII 1182 (BC SC)

[9] Lelarge v. Blackney, (1978) 92 D.L.R. (3d), 440 (N.B.C.A.) at pp. 446-7.

[10] M.I.M. v. T.H., 1991 CanLII 5722 (BC CA), at para 138.

[11] School Act, RSBC 1996, c 412, s 10; also see School District No. 43 (Coquitlam) v. T.W.D., 1999 BCCA 95

Generally, when asking a Court to find that a promise between two parties is legally enforceable, the Court will require the elements of a contract to be present. The basic elements of a contract include, among other things, offer, acceptance, and consideration. While all of the elements are vital, consideration (some benefit flowing to both parties) is important as it is an objective measure that both parties intended to enter into a legal relationship. Without these elements present between a party, generally, a Court will not enforce a contract.  However, the Supreme Court of Canada, in Cowper-Smith v Morgan (2017 SCC 61) has recently affirmed the use of proprietary estoppel in Canada. Proprietary estoppel might allow people to protect their rights and interests without consideration being exchanged between the parties.

The SCC acknowledged that proprietary estoppel is commonly concerned with interests in land but acknowledged that the constraint is arbitrary. The court noted that the BC Court of Appeal in Sabey v. von Hopffgarten Estate (2014 BCCA 360 at para 32) entertained the question but did not make a decision on the issue. The Court will consider the following elements to determine whether equitable interests arises:

  1. a representation or assurance is made to the claimant, on the basis of which the claimant expects that he will enjoy some right or benefit over property;
  2. the claimant relies on that expectation by doing or refraining from doing something, and his reliance is reasonable in all the circumstances; and
  3. the claimant suffers a detriment as a result of his reasonable reliance, such that it would be unfair or unjust for the party responsible for the representation or assurance to go back on her word.
  • Cowper-Smith, supra, para. 15.

Unlike other forms of estoppel, proprietary estoppel can be the foundation for a lawsuit. The purpose of proprietary estoppel is to avoid unfairness or injustice that would result to one party if the other were to break their work and rely on their strict legal rights. For example, English courts have used the doctrine in relation to chattels, insurance policies, intellectual property rights, commercial assets, and other forms of property. However, the SCC did not make any decisions on this issue.

Currently, it is somewhat of an open question to determine how far Canadian Courts will extend proprietary estoppel. If you have relied on someone else’s promise to your detriment, please give us a call to discuss your possible legal remedies.

 

What is an Examination for Discovery?

In nearly all litigation matters, parties will undergo what is termed an “Examination for Discovery” or “Discovery” for short. Typically, a Discovery means that you will be questioned under oath by a lawyer acting for the other party in your legal action. The main purpose is to learn more about the case, assess your credibility and reliability as a witness, and to have evidence provided under oath to rebut contrary evidence that you may give at trial.

While the foregoing description makes many parties nervous, Discoveries are oftentimes quite casual. You will be in a room with the lawyers, often times the other party, and a Court Reporter. The lawyer who is conducting the Discovery will ask you a series of questions about your case in an effort to obtain admissions to prove certain facts at trial. The Court Reporter will record and transcribe the Discovery, and produce a transcript afterwards.

As everything you say is being recorded and transcribed, the following are important reminders:

  • Listen to each question carefully and think before your answer
    • It is always acceptable to answer with an “I don’t know” if you do not know an answer a question asked of you
  • If you do not understand a question, ask the lawyer to rephrase it for you
  • Disclose only as much information as necessary to answer the question asked of you;
    • For instance, if asked “what color was the car” it would not be in your best interest to provide a vivid description of the car, the surrounding circumstances, and the weather that day
  • Answer the question truthfully and to the best of your ability
    • You are under oath, and are legally obligated to tell the truth. Answers contrary to available evidence could lead to a Judge not accepting your evidence at trial due to credibility concerns
  • Make sure to answer with a verbal response
    • The transcript will not pick up cues such as “mhm” or “uh huh”, nor will the Court Report record that you made hand gestures

The best way for a witness to act at a Discovery is calm, collected, and with confidence. Lawyers know that parties who do well at Discovery will do well at trial.

If you require assistance with your legal matter, contact Heath Law LLP.

Hiring a contractor to perform work around your house or property can be a long and complicated process. It is worse when the work is not done properly, resulting in delays or requiring repairs to the work completed by the contractor. If a contractor refuses to remedy the defects, a lawsuit might be the best option to ensure that you are compensated appropriately for the breach of contract. If you ultimately decide to sue the contractor, a Court will determine if the contractor acted negligently when performing the work.

The Provincial  Court of British Columbia provides a good summation of the law in the case of Morgan and Gaiga v. Pacific Coast Floor Covering Inc., 2018 BCPC 236. In that case, the Court was considering if flooring had been installed negligently. When determining if the flooring had been installed negligently, the Court opined that a contractor is required to perform the work to a usually ascertained objective standard. A contractor, when completing a job, must ensure that:

  1. The materials are of proper quality
  2. The work is performed in a good and workmanlike manner;
  3. The materials and work, when completed, must be fit for their intended purposes; and
  4. The work must be completed without undue delay.

When determining if work is completed to the standard required by law, a Court will consider a broad category of factors. A Court will consider the industry standards associated with that particular type of construction, any regulatory standards for the work performed, or the manufacturer’s installation instructions for the product. When considering these elements, no one element will be determinative, but a Court will attempt to determine if the contractor performed the work negligently. Ultimately, the Court did find that the flooring was not installed with generallyaccepted practices and standards in the industry.For example, the Court reviewed the manufacturer’s Installation Instructions and the industry standards adopted by the Canadian Wood Flooring Association. Consequently, the Court awarded a judgment to repair the negligent flooring.

If you have concerns regarding work completed in or around your home, please give us a call to discuss the matter. Deciding on the best course of legal action will require a careful analysis of the specific circumstances.

The Civil Resolution Tribunal is designed to provide affordable access to justice in BC.  As stated in the Supreme Court of Canada in Hryniak v Mauldin, 2014 SCC 7, “Ensuring access to justice is the greatest challenge to the rule of law in Canada today.  Most Canadians cannot afford to sue when they are wronged or defend themselves when they are sued, and cannot afford to go to trial”.

The Civil Resolution Tribunal has attempted to combat the access to justice problem by making the process cheaper, expedited, easier to understand and more navigable.  One of the more interesting facets of the Tribunal is that it is Canada’s first online tribunal.  The entire process from initiating a claim, negotiations and the final decision of the tribunal is done online.

The Tribunal started off as a forum for strata property disputes but has expanded into facilitating small claims disputes of $5,000.00 and less.  Interestingly, the Tribunal is going to expand further into Motor Vehicle Accidents and certain Societies Act and Cooperative Associations Act disputes.  Motor Vehicle Accident disputes are expected to begin being heard by the Tribunal in April of 2019 but there is no specified date yet for the Tribunal to start hearing issues related to disputes under the Societies Act and Cooperative Associations Act.  It is likely that the Tribunal will only hear matters related to Motor Vehicle Accidents that are fairly simple in nature with damages capped at around $50,000.00.

The Tribunal contemplates active participation by those who will actually end up being effected by the dispute, namely the plaintiff and defendant.  The Tribunal will only make a decision for the parties if the parties are unable to agree to a solution on their own.  The Tribunal is available 24 hours a day, seven days a week from a computer or mobile device that has an internet connection.

The Tribunal’s online dispute resolving program is ground-breaking, being the first of its kind in Canada.  It is likely that the jurisdiction of this Tribunal will continue to expand within BC once the public gains more confidence in the process.

What is a Certificate of Pending Litigation and How it is Removed?

What is a Certificate of Pending Litigation?

A certificate of pending litigation (CPL) is available to a party to a proceeding where that party claims an estate or interest in land.  The party may register a CPL against the land in the land titles office in the same manner as a charge is registered.  The CPL burdens the land and warns the public of the pending litigation.

What is the Effect of a Certificate of Pending Litigation?

Once the CPL has been properly registered on the land, the Registrar of the land titles office must not make any entry in the register that has the effect of charging, transferring or otherwise affecting the land described in the certificate until registration of the certificate is cancelled.

How to Remove a Certificate of Pending Litigation?

  • S.252(1) of the BC Land Title Act states: “If a certificate of pending litigation has been registered and no step has been taken in the proceeding for one year, any person who is the registered owner of or claims to be entitled to an estate or interest in land against which the certificate has been registered may apply for an order that the registration of the certificate be cancelled”.
  • S.253 of the BC Land Title Act states: “If an action in respect of which a certificate of pending litigation is registered has been discontinued, the registrar must cancel the registration”.
  • S.254 of the BC Land Title Act states: “If an action in respect of which a certificate of pending litigation is registered has been dismissed, the registrar must cancel the registration as provided in the regulations”. This section is of course subject to any appeals that the parties to the action may bring.
  • S.255 of the BC Land Title Act allows for the cancellation of a CPL by a written request from the owner of the lands which have been burdened by the CPL or a written request from the owner’s solicitor.
  • S.256 of the BC Land Title Act provides another way of cancelling a CPL which is based on the hardship and inconvenience suffered by the owner of the land which is subject to the CPL. If the owner can prove that they are experiencing a particular hardship and inconvenience by virtue of the CPL, the court has the ability to cancel the CPL.

To summarize, once a CPL has been registered against a particular piece of land the BC Land Title Act supplies five different ways in which that CPL can be cancelled.

In addition to a CPL being cancelled through the BC Land Title Act, a CPL can be removed on the basis of having been improperly applied or filed (NextGen Energy Watervliet TWP, LLC v. Bremner, 2017 BCSC 2096).

A valid CPL requires the plaintiff in the hypothetical action to claim an interest in land.  The plaintiff must demonstrate that there is an arguable case or a triable issue.  If there is a prima facie case for an interest in land on the pleadings, a CPL may be registered, and the court should not embark upon a consideration of the merits of the claim (Quigley v. Robison, 2009 BCSC 1296 (B.C. S.C.) at para. 27).  If the owner of the lands who have been burdened by the CPL can show that the plaintiff has no merits to his or her claim, the CPL can be cancelled.

Under Section 18 of the Supreme Court Act of British Columbia and Section 29 of the Court of Appeal Act of British Columbia, a person can be deemed a vexatious litigant.  Section18 of the Supreme Court Act is stated below and Rule 29 is nearly identical.

18   If, on application by any person, the court is satisfied that a person has habitually, persistently and without reasonable grounds, instituted vexatious legal proceedings in the Supreme Court or in the Provincial Court against the same or different persons, the court may, after hearing that person or giving him or her an opportunity to be heard, order that a legal proceeding must not, without leave of the court, be instituted by that person in any court.

In a recent BC case, Hoessmann Estate v. Aldergrove Credit Union, 2018 BCSC 256, a litigant was deemed by the Court to be a vexatious litigant.  The circumstances of this case and the litigant are as follows.

The litigant was designated as the Executor of her father’s estate and proceeded to take legal action in regards to property that was devised in the Will.  The property had a mortgage that the litigant defaulted on which resulted in a subsequent foreclosure and sale.  The litigant sued the bank who foreclosed on the property as well as the purchaser of the property.   The litigant alleged fraud, bad faith and a multitude of other causes all without grounds to do so.  This commenced an over five year process of proceedings in which the litigant brought any possible proceeding she could even if the claim had no merit.

During all of this time, the other beneficiaries under the Will sought for a variation of the Will which was granted removing her as the Executor under the estate which meant that she no longer had standing to bring action on behalf of the estate with regard to the foreclosed property.

The Court stated at paragraph 57 of the decision: “As a result of the foreclosure and the choices she made in depleting the advances she received from the estate, the litigant is now destitute and lives in a women’s shelter.”  This is a very unfortunate result.  It is hard to know exactly what motivated the litigant to pursue so many frivolous claims, but it may be a lesson learned for her and other persons with similar proclivities.

When all was said and done, over 23 Masters and Judges had heard applications resulting in costs of over $200,000 being awarded against the litigant.  The costs awarded against her were more than three times the value of the mortgage on the property that was the subject of all the litigation.

The litigant was deemed a vexatious litigant which meant that she would be unable to bring action against the bank or the purchaser of the property without first seeking leave form the court.