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Bylaw Regulation of Public Parks and Dealing with Homelessness

Abbotsford (City) v Shantz, 2015 BCSC 1909 (“Shantz”)

Introduction

On October 21, 2015, The British Columbia Supreme Court released the decision Abbotsford (City) v Shantz, 2015 BCSC 1909 (“Shantz”). The litigation dealt with the question of whether the City’s attempts to regulate the use of public parks was constitutional in relation to how it led to treatment of the homeless population.

The Supreme Court found that Abbotsford’s Public Park bylaws were unconstitutional, but only to the extent that they did not allow homeless individuals to erect temporary shelters in public parks from the hours of 7:00 p.m. to 9:00 a.m. The reason for the finding of unconstitutionality was based on the fact that a lack of overnight shelter had a significant negative impact, established by expert evidence, on the health of homeless individuals. Another important factor was that the City of Abbotsford had shortage of affordable housing options and shelter beds.

This recent decision does not impact the current state of the law in a significant way, as the conclusion reached was similar to a case decided by the British Columbia Court of Appeal in 2008 called Victoria (City) v Adams (“Adams”). However, many of the comments made by the judge in Shantz shed light on how the courts view bylaw regulation of public places. The judge touched on not only the content of the bylaws, but also on their enforcement. Keeping these comments in mind will help local governments draft bylaws related to public spaces which will not be vulnerable to constitutional challenges, which are expensive and protracted legal disputes.

The Law before Shantz

The first case dealing squarely with the intersection of public space bylaw regulation and homelessness was Adams. The legal dispute arose after 70 homeless individuals set up a “tent city” in a Victoria public park. The City of Victoria applied for an injunction to remove the tent city arguing breach of their bylaws, and in response the constitutionality of those bylaws was challenged.

It was legal for the homeless to sleep in the parks at night, but putting up temporary overhead shelters in the form of tents, tarps or cardboard boxes was prohibited by the City’s parks and streets bylaws. It was argued that this action by the local government deprived the homeless of “life, liberty and security of the person”, which is a protected constitutional right.

Various factual circumstances were critical to the Court finding that the bylaw was unconstitutional. Evidence was led at trial establishing that there was over 1,000 homeless people in Victoria but only 104 shelter beds in normal conditions and 326 in extreme conditions. Expert evidence was led which showed that exposure to elements without adequate overhead protection from the elements created significant health risks.

The Court of Appeal was careful to limit the scope of their decision. They made sure to point out that there was no positive obligation on local governments to ensure an adequate number of shelter beds. Additionally, they were not making a declaration that there is a “free standing right” to build a shelter in a public park.

Between Adams and Shantz, there have been other cases in British Columbia dealing with similar issues. In Johnston v Victoria (City), 2011 BCCA 400, the Court of Appeal rejected the argument that it was unconstitutional to prohibit shelters during daytime hours. Vancouver Board of Parks and Recreation v Williams, 2014 BCSC 1926, was an application by the City for an injunction involving a group of individuals who took up shelter in Oppenheimer Park . The case is important for local governments, as the court commented that the government has the responsibility to show that enforcement of parks bylaws will not translate to ousting homeless people onto the streets with the effect of placing them in further danger. The court did grant the injunction, but included obligations on the City to ensure that there was an orderly transition from the Park to shelter beds. In that case, there were already enough shelter beds available for the number of homeless involved.

Summary of Shantz

In 2013, the City of Abbotsford applied for a temporary injunction trying to stop a group of homeless individuals from occupying a public park with tents and other structures, along with occupying a large wooden structure in an adjacent parking lot. This temporary injunction was granted, and in 2015 the City sought a permanent injunction to replace it. In response, the British Columbia and Yukon Association of Drug Survivors (“DWS”), on behalf of the homeless group, challenged the constitutionality of the City’s parks and streets bylaws. One of the main bylaw provisions at issue prohibited sleeping or being present in any park overnight and erecting any form of shelter without a permit. Permits for overnight camping were available on a discretionary basis, but cost $10/night per vehicle or tent, and required a valid credit card and that the applicant obtain insurance.

The factual background surrounding the dispute is important. In June 2013, City employees were found to have made efforts to evict individuals from a separate camp located on Gladys Avenue. The Court found they did this by spreading chicken manure on the campsite. In protest, a group of homeless set up another camp in Jubilee Park without the permission of the City. They were ordered to vacate this camp after the City was granted an injunction in 2013. After that, some of the homeless erected tents along the west side of Gladys Avenue. Their presence along the road was tolerated by the City and their staff while the constitutional challenge was pending.

Abbotsford has a relatively high level of “chronically homeless” individuals, defined as those who have been without a home for more than one year. The available shelter space in the City is not sufficient for the number of homeless in the city, and there is a general shortage of affordable housing.

There was also evidence that conditions in the various camps set up by the homeless contained unsafe conditions. It was common to find drug paraphernalia littered on the ground along with other waste. Assaults and fires were reported, and some weapons were found.

The City’s bylaw enforcement policy was to remove those occupying parks after receiving calls or complaints from the public. They would generally do this by issuing verbal and written notices to vacate and began with seeking voluntary compliance. They would also take measures to ensure homeless were not “squatting” on private property. There were anecdotes about the actions of City officials, including cutting the straps holding up a tent, spraying pepper spray into empty tents, cutting open a tent to see if anyone was inside, and of course the spreading of chicken manure to induce the homeless to leave the original camp. DWS sought damages in relation to these anecdotes, based on government officials breaching the Charter by abusing their powers.

The Court made a number of findings. The expert evidence established that continual displacement of Abbotsford’s homeless caused them impaired sleep and psychological pain and stress which created a risk to their health. While the judge recognized that the sustainable use of publicly owned property required the local government to create some constraints, the effect on the homeless of prohibiting temporary shelters overnight without a permit was “grossly disproportionate” to any benefit to the City or the rest of the public and so was unconstitutional. The Court found that it was also “overbroad” in relation to what the City was trying to achieve. This conclusion was almost exactly the same as what was decided by the Court in Adams.

Ultimately, the judge concluded that the best balance between the needs of the homeless and those of the City was to allow temporary shelters to be set up from the times of 7:00pm to 9:00am, to be taken down during the day. One of the factors for not allowing the camp to remain during the day was the dangerous conditions created by having a permanently established camp.

One thing the judge strongly considered ordering was that specific park land be designated for use by the homeless as it would provide some certainty for them and residents of the City, taking into account proximity of public parks to services for the homeless. However, this was not ordered as the judge felt that such a decision should be left to politicians to make and not the courts.

The judge declined to order damages for the alleged misconduct of City officials in enforcing the bylaws. However, the main reason for this was because there was a lack of evidence at trial showing that their actions harmed any particular individual, which is required for Charter damages. The judge was, however, highly critical of their actions and suggested that the individuals affected were still open to undertake separate legal action. In response to the spreading of chicken manure, the judge commented that it was “disgraceful and worthy of the Court’s disapproval.”

Implications for Local Governments

The only clear obligation that Adams and Shantz imposes on local governments is that when there is not enough shelter beds for the homeless population, it is unconstitutional to pass a bylaw prohibiting temporary shelters to be put up at night. 

In a more general sense, the Courts in British Columbia do recognize the need for local governments to regulate the use of their public spaces for the benefit of all groups. In drafting bylaws, the most important thing to consider is whether the effect of regulation will be the displacement of homeless or will have a negative impact on their health. Often, streets and parks bylaws will have this effect but are also necessary to the safe use and enjoyment of the public space by the general public. Regulations falling under this category are allowed only to the extent that they impair the right to “life, liberty and security of the person” of the affected homeless group as little as practically possible. This extends not only to the drafting of the bylaw, but also to its enforcement.

On the topic of minimal impairment, an interesting aspect of the Shantz decision was that the enforcement practices of other cities were compared to Abbotsford’s enforcement measures. Some cities ticketed and fined homeless groups without first seeking voluntary compliance, which was viewed as being more impairing. However, just because Abbotsford’s enforcement measures were less impairing on the rights of the homeless than other cities did not mean these measures were minimally impairing. It is important that measures adopted which will affect the health and safety of the homeless have the least impact necessary to achieve an important public purpose.

While the Courts are hesitant to impose positive obligations on local governments to deal with the complex issue of homelessness, they do expect that local governments will consider the impact that their actions will have on this group. In both Adams and Shantz, the argument that homelessness is a “choice” was rejected. Actions to displace homeless groups are likely to be met with criticism when those individuals have no safer place to go.

“It’s Complicated” – The Working Relationship with Dependent Contractors

In British Columbia, we have three categories of workers: employees, independent contractors and dependent contractors.

Employers often do not, but should, understand the legal concept of a dependent contractor. Complications can arise if employers misrepresent the working relationship by not identifying if the worker is a dependent contractor. Unlike an independent contractor, dependent contractors may be entitled to reasonable notice of termination (similar to an employee).

What is a Dependent Contractor?

A dependent contractor is a classification of a worker. It falls in a grey area between employee and independent contractor. Essentially, a dependent contractor has some sort of dependence on the employer unlike an independent contractor who acts as their own entity. While a dependent contractor is not exactly an employee who solely relies on the employer, they are similar in the sense that they have a level of dependence on the employer.

Test for Dependent Contractor

When testing to determine whether your worker is a dependent or independent contractor, finding the level of control an employer has over that contractor will be the main determinant. Simply calling someone an independent contractor does not make them so. The nature of the working relationship must be fully assessed. Some considerations include the following:

      • Was the worker exclusively limited to the employer.
      • Was the worker under the control of that employer? Did the employer control what, how, and when duties where performed.
      • Did the employer control or provide the tools and equipment needed by the worker to complete the work.
      • Was the risk to the worker for financial loss, risk, or additional gain of profits (in excess of the worker’s normal remuneration) minimal?
      • Was the worker involved/integrated in the employer’s business.
      • Was the relationship long lasting and/or permanent.
      • Did both the worker and employer coordinate and rely on each other.
      • Did the employer pay for the worker’s insurance, WorkSafe BC coverage, and other statutory deductions; and
      • Did the employer limit the worker’s ability or discretion to hire additional workers, often known as subcontractors?

From this test, an employer must objectively determine if the worker had a level of dependency on the employer. The more questions answered “yes” above, the more likely that the worker was a dependent contractor.

Risk of Potential Liability

If an employer does not classify their worker correctly, they could face a number of potential liabilities, including a wrongful dismissal claim, penalties for breach of the Employment Standards Act, and penalties for failing to properly withhold taxes.

We often strategize with our clients who hire contractors to ensure they are classified how the parties intend and ensure that all legal requirements that support the classification are met.

Employers should contact our Workplace Law team if they are unsure of their working relationship. Doing so will help reduce the risk of liability and disruptions to an employer’s workplace.

Realization & Insolvency

Our diverse team forms one of the largest and most experienced Realization & Insolvency practices in BC.

We offer comprehensive legal services to national and regional clients, both large and small, who know us for our dedication to excellence and value in our legal services.

The Province Announces Plans for Cannabis Retail Sale & Use

The Province of BC announced plans for the regulation of the sale and use of non-medical cannabis today.

As expected retail cannabis sales will occur along the same lines as liquor sales, with the Province’s Liquor Distribution Branch serving as the sole source of wholesale distribution. Just as with liquor, there will be government-operated as well as private retail stores. Co-selling with other products (i.e. liquor, tobacco, food) will not be permitted. Sale by ‘craft’ or micro producers will be prohibited, at least for now.

Importantly for local governments, the Provincial licensing regime will begin taking applications this spring, ahead of the scheduled legalization in July, and the first licensed retailers are expected to open their doors in late summer. The licensing regime will not usurp the ability of local governments to control cannabis retail in their communities. For example, the Province will defer to local governments that wish to ban retail sales entirely (as the City of Richmond has expressed). In addition, local governments will retain the ability to restrict the locations where retailers may operate. There is also some indication that to obtain a licence, the applicant will require the support of the local government.

Also of note to local governments, cannabis use will be permitted in those areas where tobacco and vaping are permitted, although it will be banned in public places frequented by children, including parks, community beaches and playgrounds. Local governments will have the right to further restrict the use of cannabis in public. Personal cultivation will be permitted for up to four plants per household, with the caveat that plants must not be visible from public spaces. Landlords will be able to restrict or prohibit production on their property.

The Province stressed that many important policy decisions remain to be made, in particular in the areas of supply chain tracking, testing, and packaging.

Here is a summary of the Province’s plans announced today:

Retail Framework

  • Private run and government-operated retail stores, and government online sales
  • Liquor Control and Licensing Branch will be responsible for licensing stores and monitoring the retail sector
  • Operating rules to be similar to liquor sales
  • Wholesale distribution by the Liquor Distribution Branch
  • Cannabis and accessories must be sold in stand-alone stores. No co-selling of cannabis with either liquor or tobacco (or food, gas, lottery, clothing) *except in rural communities, with details to be determined (will likely be similar to liquor stores, where co-selling exists)
  • Early registration process for licenses will be open this spring (*see additional detail below)
  • Consumption lounges will not be permitted, at least initially
  • No sampling

Personal Public Possession

  • 19 years minimum age for purchase and possession
  • Up to 30 grams of non-medical cannabis permitted for possession in a public space
  • Cannabis transported in a vehicle will need to be in a sealed package or inaccessible to vehicle occupants

Public Use

  • Use permitted in public spaces where tobacco and vaping are permitted
  • Use banned in areas frequented by children (parks, community beaches, playgrounds)
  • Use banned in vehicles, for all occupants
  • Local Governments will be able to set additional restrictions, as they do now for tobacco use
  • Landlords and strata councils will be able to restrict or prohibit non-medical cannabis smoking and vaping at tenanted or strata properties

Personal Cultivation

  • Up to four plants per household, unless home is used as a daycare cultivation will be prohibited
  • Must not be visible from public spaces
  • Landlords and strata councils will be able to restrict or prohibit home cultivation

Drug-impaired Driving

  • Drug Impaired driving continues to be illegal in B.C.
  • New 90-day administrative driving prohibition to be created
  • Zero-tolerance for drivers in the Graduated Licensing Program

Retail Licensing

  • Existing dispensaries will not be given preferential treatment
  • Local government support an element of the application process
  • Local government to consider public input in the location of the proposed retail store
  • Province will not cap the number of licences, however, local governments to decide how many retailers may operate within their boundaries
  • Dried cannabis, oils, and seed permitted – no edibles, per federal requirements
  • Stores in rural communities to follow somewhat different model (i.e. regarding co-selling with other products)

Watch Mike Farnworth’s announcement here or see the following provincial government links for more information:

‱ Cannabis Retail, Driving Laws Amongst New Firm-On-Safety Policy Decisions
‱ B.C. Cannabis Private Retail Licensing Guide – Applications and Operations

Rick Heney*

It is no wonder many of Rick’s clients feel more like family than clients. More than a few of his clients have been with him for well over 25 years. Whether it is through work or play, Rick’s easy going style wins over most people before they even know they wanted to be won over. We asked his secret and he says he doesn’t know how to be any different.

On his way to becoming a lawyer, Rick applied his “trade” as a journeyman electrician (yes his puns are that bad in real life too). Drawing from his experience in the construction industry, Rick feels better “tooled” (there he goes again) to help his clients with business needs as diverse as Air Space Parcel real estate developments and Search and Rescue leasing requirements. As our senior solicitor he has not yet accepted the fact that he is the “senior” solicitor – he says he still feels like he is 30 and continues to play like he is in order to prove it (luckily for him we have a good health care plan).

For those of you who have never thought of volunteering for charitable organizations, just rethink, because Rick’s volunteering has taken him to Africa – four times.

In his free time, you will probably find Rick on or near a golf course (he lives at one), chasing the ever elusive goal of improving his golf game.

A ‘hospital bed’ Will

When does it raise suspicious circumstances?

As a person nears the end of their life, they may wish to make last-minute changes to their estate planning. If they want to change their Will, this needs to be done carefully.

For a Will to be valid, at the time of execution, the will-maker must:

  1. have the capacity to make a Will;
  2. have knowledge of its contents; and
  3. approve of the contents

Normally, the law presumes that a person had knowledge and approved the contents of a Will by making and signing it. However, “suspicious circumstances” will rebut this presumption.  When suspicious circumstances arise, the person seeking to uphold the Will must prove that the will-maker had capacity, knowledge and approval.

The case of Sommer v British Columbia (Public Guardian & Trustee), 2015 BCSC 1947 is a reminder about the intricacies and potential pitfalls of changing a Will when a person is in failing health.

In 2010, the deceased made a Will leaving her estate to one of her two grandsons. In 2012, the 92 year old will-maker suffered a fall and was admitted to hospital. While in the hospital, and only a few days prior to her death, the will-maker revoked the 2010 Will and created a new one, leaving her estate to her other grandson’s children, and several cash legatees.

The beneficiary of the 2010 Will challenged the validity of the 2012 Will. The Court was satisfied that suspicious circumstances existed given the nature of changes to the Will, that the will-maker had suffered a fall and was in the hospital, and that she had been tested for capacity. As a result, the executor had to prove that the will-maker had capacity, knowledge and approval of the 2012 Will.

In finding that the 2012 Will was indeed valid, the Court placed significant weight on the drafting lawyer’s evidence including:

  • the lawyer met with the will-maker three times over three days;
  • the will-maker was clear that she did not want to provide in her Will for the plaintiff;
  • the lawyer was satisfied that the will-maker knew what property she owned and who the appropriate people were that would have a claim; and
  • the lawyer met with the will-maker independently and formed the opinion that she was not being influenced by others.

Further, the deceased had made previous consistent statements to other witnesses that she was intending to change her Will and remove the plaintiff as a beneficiary. Accordingly, the Court upheld the 2012 Will.

This case is a reminder of the conflicts that can arise when Wills are revoked and redone in unusual circumstances. It is also a prime example of how the lawyer’s evidence can play a crucial role in the Court’s decision to uphold the Will.  In fact, it is the lawyer’s professional duty to evaluate the will-maker’s capacity and ability to understand the nature and effect of the Will they are signing.

The best way to ensure that late in life changes or “deathbed Wills” withstand a challenge is to retain a lawyer to interview the will-maker, provide advice, prepare the Will and oversee the signing of the Will.

If you have questions, contact our Wills & Estates Team – we’re here to help.

Are You Legally Married?

The New Million Dollar Question

It’s a question we’re often asked when meeting new people. It’s a question that maybe used to be easy to answer – but, with the increasing frequency of “common-law” and other non-traditional relationships, that is no longer the case.

If you are legally married, the answer is an easy “yes”

(that is, unless you’ve separated). But, for the unmarried, then as a starting point, for the purposes of estate and family law, people are considered to be “spouses” if they have “lived together in a marriage-like relationship” for at least two years.

Why does it matter?

Unmarried spouses have essentially the same rights as do those who have gone through a formal legal marriage ceremony. This means:

  1. If one spouse dies without a Will, the other spouse is entitled to either a large share of the estate (if the deceased spouse had children) or even the entire estate (if the deceased spouse had no children);
  2. If the deceased spouse did have a Will, the surviving spouse has, because of the spousal relationship, the right to seek that the Will be “varied” in his or her favour (the right to contest the Will); and,
  3. The surviving spouse may be automatically entitled to certain benefits from the deceased spouse’s pension, depending on the terms of the pension.

How do I know whether I’m a spouse?

This is the (in some cases literally) million-dollar question – what does it mean to “live together in a marriage-like relationship”?

To determine this, the Courts will look to a number of factors, including:

  • Did they live under the same roof all the time, most of the time, some of the time?
  • Did they vacation together? Did they do other activities together?
  • Did they have a sexual relationship?
  • Did they present themselves to others as spouses? Did others see them as spouses?
  • Did they own property or other assets (like bank accounts) jointly?

While sometimes the may seem clear, be prepared for some surprising outcomes. For instance, in one case two individuals who kept separate residences (but often overnighted together at each other’s residence, as well as took holidays together and so on) were found to be in a marriage-like relationship.

The rule of thumb is – if there is real doubt, you should assume that the relationship would be found to be marriage-like, and then plan accordingly.

How does it end?

Given the uncertainty surrounding whether a certain relationship is “marriage-like”, the next question that inevitably arises is – how can we be sure that such an uncertain relationship status has, in fact, ended?

The answer given by the Courts is, it ends when one of the parties forms a “settled intention” to end the relationship. The adjective “settled” suggests an intention that arises as a result of thought and deliberation, so an impulsive breakup may not meet this standard.

Ideally, if one person does form a “settled intention” to end the relationship, that should be communicated or recorded in writing in some way (for instance, by the person taking steps to obtain a separation agreement).

Entering into a marriage-like relationship is a game-changer for a person’s legal circumstances. Before any relationship hits the two-year mark, the people involved should obtain legal advice with a view to a) update their estate planning, and b) determine whether they might benefit from a written cohabitation (pre-nuptial) agreement.

Committeeship – The Last Resort

Pre-planning is something we enjoy doing when it comes to fun activities like a weekend at the lake. However when it comes to planning for death or incapacity, we tend to avoid it. We busy ourselves with the here and now, and leave those problems for later.

Fast-forward to later. You are in your late seventies. The stairs in the family home are too much for your hip and your spouse suffers from dementia. You want to sell your home and you know your spouse is no longer capable of understanding that legal process, but you figure since you are joint owners you can handle everything and sign on behalf of your spouse. This is a common misunderstanding. You have no legal authority to sign legal or financial documents on behalf of your spouse, even if you are co-owners of the house. You need a Power of Attorney to sign legal/financial documents for your spouse.

Thus, unless your spouse granted a Power of Attorney to you (or someone else) while they were mentally capable, the only way you will be able to sell your home is to apply to a Court for a Committee Order over your incapable spouse. The Judge will need evidence that your spouse is incapable of handling their affairs, in order to declare your spouse incapable and appoint you as the legal representative. After this costly and time consuming process, you would finally be able to sign the legal sale documents, on behalf of your incapable spouse.

This E-bulletin will briefly overview the Committee process, but the most important point you should take-away is this: the whole process can be avoided if you make a Power of Attorney, while you are still capable.

What is a Committee?

A Committee is a person appointed by the Court to make decisions for an adult who is mentally incapable of making those decisions for him or herself.

Two types of Committees can be appointed depending on the incapacity of the adult:

  • A Committee of Estate (to make financial and legal decisions on behalf of the adult) and
  • A Committee of the Person (to make personal and medical decisions on behalf of the adult).

In most cases, both types of Committees will need to be appointed.

The adult who has lost capacity is referred to as the “patient”, and the person applying to become a Committee is the “Applicant”.

Applying to become a Committee (the “Applicant”)

Who can apply?

Any person, including the Public Guardian and Trustee (the “PGT”) as a last resort, may apply to the British Columbia Supreme Court for an order declaring that an adult is incapable and that the Applicant be appointed as Committee. This can result in contested applications if 2 or more persons feel they should be appointed, or if someone feels the Applicant should not be appointed.
The Court will consider the best interests of the Patient when making the decision of whom to appoint as Committee.

What documents are needed?

Medical evidence is needed from two physicians who are of the opinion that the patient is incapable of managing his/her affairs. An Applicant must also disclose to the Court information about the patient’s age, living situation, family and financial situation along with a proposed care plan, if there is one.

Who needs to know?

The court documents must be served on the patient as well as any persons who may be affected by the order, such as next of kin.

The PGT must also be served with the materials, and they may give input to the Court as to whether the Applicant should be ordered to post security (such as a security bond), or that the Court place restrictions on how the Applicant can deal with assets (which can cause additional costs and headaches for the Applicant).

Duties & Responsibilities of a Committee

A Committee has almost all the rights, privileges and powers that the Patient would have if they had capacity. Of course, the Committee cannot make, change nor revoke a Will on behalf the Patient.

A Committee must exercise its powers for the benefit of the Patient and their family, and this includes fostering independence to any extent possible. A Committee is not permitted to use or receive benefits from their position as Committee. A Committee must always place the Patients interests ahead of their own and their interests must never conflict.

A Committee must keep accurate records of all expenses paid on behalf of the Patient, because the Committee must provide an “accounting” to the PGT whenever the PGT requests. The PGT will assess the reasonableness and necessity of any expenses occurred by the Committee on behalf of the Patient.

Remuneration

A Committee may be permitted reasonable compensation from the Patient’s estate for services rendered. The PGT will fix the amount of remuneration upon the passing of accounts.

Remuneration is based upon numerous factors which include the value of the assets in the Patient’s estate, how much work and responsibility is required from the Committee, the length of the appointment, how well the Committee performs their duties, and if the Committee has engaged in any extraordinary services for the Patient.

Costs

The associated costs, such as legal fees, doctor’s fees for preparing evidence, the security bond and Committee remuneration, are all usually appropriate to be paid from the Patient’s estate.

This process is an expensive and time consuming last resort, available when no other provisions have been put in place to plan for incapacity. It is much easier, cheaper and better to make sure that incapacity planning is done early and done well.

Firing an Employee for Off-Duty Drinking and Driving: A Cautionary Tale

Klonteig v. West Kelowna (District), 2018 BCSC 124

Introduction

The British Columbia Supreme Court recently released a decision confirming that local governments should proceed with caution when considering whether to fire an employee for off-duty conduct – in this case, driving under the influence in the employer’s truck. Only when such conduct can be shown to prejudice the local government’s reputation or interests is dismissal justified.

The challenge remains in determining whether a particular incident of misconduct crosses that threshold.

Factual Background

The plaintiff, Mr. Klonteig, was an Assistant Fire Chief for the District of West Kelowna. By all accounts, he was an exemplary employee with a bright future with the District’s Fire Department. He had the respect of his co-workers, including his superiors and the unionized firefighters with whom he interacted in the context of labour negotiations and human relations.

Mr. Klonteig was a 5-year veteran of the District’s Fire Department in October 2013 when the incident that ended his employment occurred. Mr. Klonteig had been out with his spouse in Kelowna one evening. On his way home in the early morning hours, he was pulled over and failed a breathalyzer test twice. He was handed a 90-day administrative driving prohibition. To make matters worse, he was driving a District-owned truck allocated to the Fire Chief (although unmarked), and the truck was impounded.

Mr. Klonteig advised his employer of the incident immediately, and expressed remorse for his actions.

While Mr. Klonteig’s direct superior and a human resources advisor preferred a lesser sanction, the District’s Chief Administrative Officer held the view that Mr. Klonteig’s conduct deserved immediate dismissal, citing concerns over the liability to which Mr. Klonteig had exposed the District, and public safety concerns. The human resources advisor urged the CAO to reconsider given Mr. Klonteig’s record and value to the District, to no avail.

Decision

At trial, the District argued that Mr. Klonteig’s conduct was incompatible with his duties as assistant fire chief, especially considering his responsibility for ensuring public safety, and that therefore the District had just cause to terminate his employment.

The Court held otherwise. The Court remarked that off-duty conduct may give rise to dismissal, but only where the conduct is likely to be prejudicial to the interests or reputation of the employer. In this case, the truck was unmarked, Mr. Klonteig was not representing the District, and the public was unaware of the driving suspension.

Furthermore, the Court remarked that the conduct was not of the same moral reprehensibility as other cases in which dismissal was justified (including child pornography in one case, and a dishonest tax scheme by a chartered accountant in another case).

Finally, the Court noted that it could not conclude that the public would lose confidence in Mr. Klonteig, considering that his fellow firefighters, whose role it is to attend accident scenes involving impaired drivers, had not lost confidence in him. On that point, 24 firefighters had signed a letter in support of Mr. Klonteig following his dismissal.

In these circumstances, the Court held that the District’s interests and reputation were not prejudiced. In the result, the Court awarded damages to Mr. Klonteig equal to 5 months wages.

Implications

This case serves a reminder of the risks of dismissing a well-regarded employee, in cases of a single instance of misconduct. While the District likely felt justified in dismissing Mr. Klonteig considering the misconduct in this case, ultimately the Court has the last word.

There are two other noteworthy aspects to this case.

First, Mr. Klonteig’s employment contract limited the District’s liability to give notice or pay severance, to a period of one month per year of service. In this case, the notice period equated to 5 months. Setting out the applicable notice period in the employment agreement eliminates the uncertainty that comes with asking a court to determine what would be a reasonable notice period in all the circumstances.

Second, the court was critical of the dismissal letter in this case, because it cited factors for dismissal that turned out to be false or at least misleading. For example, the dismissal letter remarked that Mr. Klonteig was aware that he should not have been using the Fire Chief’s truck for personal use. However, the court found that there was no evidence that Mr. Klonteig was aware that he should not have been using the truck for personal use, and there was no evidence of such a policy prohibiting personal use of District vehicles. Further, the letter remarked that it would be impossible for Mr. Klonteig to regain the respect of the members of the Fire Department. However, the evidence showed that they continued to support Mr. Klonteig. The message for employers is to ensure that the factors cited in support of dismissal are legitimate and supported.

Employers Need to Know: New Pay Transparency Laws

NOTE: On Nov 23/23, join our team for a noon webinar on this topic. Register HERE.

On May 11, 2023, the BC government passed the new Pay Transparency Act (the “Act”) which places new requirements on BC employers in order to address systemic discrimination in the workplace. The legislation was enacted to address the current pay gap between men and women, especially Indigenous women, women of colour, immigrant woman, women with disabilities, and non-binary people.

Employers Obligations and Prohibitions

The Act mandates new obligations surrounding pay transparency for provincially regulated employers.

Pay History Information

Employers in BC can no longer ask job applicants about what they have been paid at positions with other employers. However, employers may still use the pay history information they already have about that employee to determine the pay for a new position and rely on publicly accessible information on the pay for similar positions.

Pay Secrecy

Employers in BC cannot dismiss, suspend, demote, discipline or harass an employee who:

  • inquires about their pay;
  • discloses their pay to another employee or to a prospective employee;
  • questions their employer about a pay transparency report or its contents;
  • requests their employer to comply with the Act; or
  • makes a report to the Director of Pay Transparency with respect to their employer’s compliance with the Act.

Publicly Advertised Job Postings

Beginning November 1, 2023, all employers in BC must include the expected pay or the expected pay range for a specific job opportunity that they advertise publicly.

Pay Transparency Report

Employers above a certain size will be required to complete and post pay transparency reports by November 1st of each year. The report will have to be distributed to all employees and published on a publicly accessible website. This requirement will apply in stages over the next four years:

November 1, 2023

BC government and six Crown corporations (BC Hydro, BC Housing, BC Lottery Corp., BC Transit, ICBC and Work Safe BC)

November 1, 2024

All employers with 1,000 employees or more

November 1, 2025

All employers with 300 employees or more

November 1, 2026

All employers with 50 employees or more

The pay transparency report will include information about the reporting employer, the composition of its workforce, the differences in pay in relation to employees’ self-identified gender and other characteristics, and any other information set out in future regulations. However, there is currently not a prescribed manner in which a reporting employer must collect the information from the employees pursuant to the Act. The Act requires that reporting employers “make reasonable efforts” to collect the required information from each employee. When collecting the information, reporting employers must inform the employee that their disclosure of personal information for the purpose of the pay transparency report is voluntary.

By June 1 of each calendar year, starting in 2024, the provincial government will publish an annual report that includes information about pay differences, trends, and reports of non-compliance, amongst other things.

Employees and Privacy Concerns

Employees can decline to give their gender information to their employer for the purposes of preparing the pay transparency report. During Parliamentary discussions, privacy concerns were a main topic, including questions on anonymizing the aggregate data. Officials made it clear that privacy and personal safety are paramount throughout this process, and they will continue to work with employers on the effectiveness of the reporting tools and develop regulations where needed.

Enforcement

The Act does not currently set out penalties for noncompliant employers or oblige employers to disclose any inequities in pay. It also does not designate a particular body, such as the Employment Standards Branch, to investigate or discipline employers, so it is unclear what enforcement of the Act may look like. Currently, there are no enforcement mechanisms in the Act. It is possible that enforcement may be addressed by a future regulation. The government is taking a “name and shame” technique for compliance focusing on reputational risk. It has exempted the legislation from the Offence Act as it does not provide any formal compliance and enforcement mechanisms currently.

Nevertheless, BC employees already have the ability to bring a complaint to the BC Human Rights Tribunal if they feel that they have been discriminated against on the basis of their sex and gender identity, for example, which are protected grounds of discrimination under the BC Human Rights Code (the “Code”). In addition, section 12 of the Code specifically prohibits BC employers from employing an employee of one sex for work at a pay rate that is less than the pay rate at which an employee of the other sex is employed for similar work.

Takeaways for Employers

Employers should be informed of their new obligations under this legislation which is aimed to promote pay transparency. Employers should review their hiring practices and policies to ensure compliance. While most employers will not have to produce a pay transparency report in 2023, all employers should prepare to be able to meet their reporting obligations once required to do so.

If you have questions or need assistance with updating policies, contact a member of our Workplace Law Group – we’re here to help.

Court Dismisses Appraiser Negligence Claim

The BC Supreme Court’s recent decision in RBC v Westech Appraisal Services Ltd. et al. 2018 BCSC 473 reaffirms some important aspects of appraisal negligence decisions, including the need to identify clear errors and departures from professional guidelines in the underwriting appraisal in order to be successful in appraisal negligence claims. The case also is a reminder of the importance for expert reports supporting the negligence claim to be thorough, accurate, clear and completed by professionals with proper experience and training.

The action concerned an appraisal by the Defendants for a large rural/residential estate property in Abbotsford. The Plaintiff RBC commissioned the Defendants to produce the appraisal in 2007 for the purposes of second mortgage financing. The first mortgage, from Mount Lehman Credit Union, was for $1.45 million.

The Defendants appraised the property at $2.5 – $3.0 million and, on the strength of that appraisal, RBC loaned the property owners $700,000 to be secured by a second mortgage on the property.

The borrowers made the required payments for two years, and then defaulted on RBC’s mortgage as well as the Credit Union’s first mortgage. Both foreclosed, and the property was sold out of foreclosure by the Credit Union for $1.35 million in 2013. As the sale proceeds did not cover the amount owed to the Credit Union, RBC received nothing and so suffered a loss of some $720,000.

RBC sued the underwriting appraisers for negligence and breach of contract, alleging that they had misstated the value of the property and caused RBC’s loss. RBC obtained a retro-appraisal putting the value at the time of the underwriting appraisal at $2.0 million. Notwithstanding the alleged overvaluation by up to $1.0 million, RBC was unsuccessful in its lawsuit against the appraisers, as the Court found that the appraisers had not fallen below the standard of reasonable care and were therefore not liable for RBC’s loss.

The most important points affirmed by this decision are the following:

  1. It is not sufficient for the plaintiff lender simply to show that the underwriting appraisal overvalued the property. Rather, the plaintiff must demonstrate that the appraiser made a mistake that caused or significantly contributed to the overvaluation.
  2. In a similar vein, appraising real property is not an exact science. Rather, there is a range of values that an appraiser might reasonably reach. For the plaintiff to succeed, the value reached in the underwriting appraisal must be below the reasonable range of values that might have been reached at that time.
  3. The professional standards for appraisers are very important in these cases as they provide a framework against which an appraiser’s work can be judged. A plaintiff must be careful to identify and focus on substantive and important breaches of standards, and not simply technical breaches that do not appear to have substantial effect on value.
  4. These cases frequently become “battles of experts” where each side relies heavily on an experienced appraiser who produces a report (or reports) and testifies as a witness at trial. The
    experience and training of these experts, as well as the thoroughness, accuracy and clarity of their reports and testimony, are central to the determination of these cases. An ounce of prevention is worth a pound of cure. Appraiser negligence claims carry risk and it is important to delve beyond what might be appear on its face to be a significant overvaluation by the
    underwriting appraiser.

Preventing Workplace Discrimination: Best Practices for Employers

Over the past few years, B.C. Human Rights Tribunal has seen a drastic spike in claims of discrimination.  The tribunal is currently so backlogged that employers may only notified by the tribunal that a complaint of discrimination has been raised against them about two years after the alleged incident.  As a result, both the complainant and the workplace suffer.

As an employer, the best thing to do to avoid being blindsided with a complaint nearly two years after the fact, is to focus your workplace culture on preventing discrimination now.

Workplace discrimination

is the unjust treatment of employees based on a protected characteristics of Indigenous identity, race, colour, ancestry, place of origin, religion, marital status, family status, physical or mental disability, sex, sexual orientation, gender identity or expression or age.  Discrimination claims pose significant challenges in modern workplaces. To ensure fairness, foster inclusivity, and uphold legal standards, employers must implement comprehensive strategies to prevent discrimination.
 

Understanding Workplace Discrimination

Workplace discrimination encompasses various forms of bias and unfair treatment. It can manifest in hiring practices, promotion decisions, assignment of tasks, salary discrepancies, microaggressions, and hostile work environments. Discrimination not only denies individuals equal opportunities but also undermines their dignity and sense of belonging in the workplace.

Importance of a Comprehensive Policy

First and foremost, a well-defined anti-discrimination policy serves as the cornerstone of any effective strategy. This policy should explicitly prohibit discrimination based on race, gender, age, religion, disability, sexual orientation, or any other protected characteristic. It should be communicated clearly to all employees, emphasizing the company’s commitment to diversity and inclusion.

Consequences of Workplace Discrimination

Failure to address discrimination can have severe repercussions for both employees and organizations. Beyond legal liabilities and reputational damage, discrimination erodes employee morale, trust, and engagement. It fosters an environment of fear and resentment, leading to decreased productivity, increased absenteeism, and high turnover rates.

Actual Steps Employers Can Take:

  1. Training and Education: Provide regular training sessions to raise awareness about unconscious bias, stereotypes, and respectful workplace communication and behaviour. Equip your management and employees with the knowledge and skills to recognize and challenge discriminatory practices.
  2. Transparent Reporting Mechanisms: Establish confidential channels for employees to report instances of discrimination without fear of retaliation. Take all complaints seriously, investigate them thoroughly, and implement corrective actions swiftly.  Take reports seriously.
  3. Promotion of Diversity: Actively recruit and promote individuals from diverse backgrounds. Create opportunities for underrepresented groups to participate in decision-making processes and leadership roles.
  4. Review and Update Policies: Regularly review and update anti-discrimination policies to align with evolving legal standards and best practices. Seek input from employees and diversity experts to ensure policies are comprehensive and effective.
  5. Lead by Example: Demonstrate a commitment to diversity and inclusion from top leadership down. Leaders should model respectful behaviour and hold themselves accountable for fostering an inclusive workplace culture.

Preventing workplace discrimination requires a multifaceted approach that addresses systemic biases, fosters awareness, and promotes inclusive practices. By prioritizing fairness, dignity, and respect, employers can create environments where all individuals thrive and contribute to organizational success.

If you need support to prepare a policy, deal with an issue, or understand how to get started to improve your to workplace culture, reach out to Fulton’s workplace law group.

 

 

Real estate have you in a frenzy?

Since early 2020, the Canadian housing market has been increasing at a record pace. Rising housing costs combined with the increasing family needs of Canadian Millennials (ages 25-41) and the possibility of remote work have seen demand for housing surge across the country, and particularly in smaller markets like the British Columbia Interior.

First Time Home Buyers – Loans vs Gifts

With housing prices increasing 20% over 2021 alone, first time home buyers are in a pinch, and many are turning to the “Bank of Mom and Dad” for assistance with a down payment. While parental assistance is a wonderful resource for many young adults, it can lead to complications down the road if it is unclear if the assistance comes in the form of a loan versus a gift. This is particularly so in the event of divorce or if there are other siblings who have not received similar financial assistance.

Estate Planning to Mitigate Risk

Advance planning in this increasingly common scenario is strongly recommended so that the Bank of Mom and Dad and the fortunate recipients are all on the same page. Loan and/or gift agreements are simple yet strikingly effective tools to avoid complications down the road. These agreements can set out the terms of repayment and cover off various scenarios, like what would happen to the gift amount in the event of relationship breakdown or sale of the home in question, for example.

Further, with the drastic increase of housing prices and shortage of supply, advance planning surrounding the family home is absolutely necessary. As of February 2022, the median house price in Canada exceeded $815,000[1]  – and these prices are projected to rise. In British Columbia, surviving children and spouses have the right to sue an estate for redistribution of assets if they perceive the division to be unfair. If an existing will is based on housing values from even a few years ago, it may no longer be equitable and could result in an unintended, uneven distribution of assets to beneficiaries.

Now, more than ever, it is critically important to have a valid will that accounts for the drastic increase in real estate value, as Wills Variation actions can arise over inequitable distribution of assets among surviving children and spouses.

Taking time to review your estate and account for significant increases in the value of your assets can avoid legal headaches and heartache down the road. In the world of estate planning, an ounce of prevention is very much worth a pound of cure. Fortunately, our team can help you with both.

If you have questions, contact our Wills & Estates Team – we’re here to help.

 

[1] “Average Canadian house price hits $816,720 – up 20% in past year”. CBC News. https://www.cbc.ca/news/business/crea-housing-february-1.6385274

Estate News – What happens down in Mexico?

Estate Planning When You Own Mexican Property

When clients have property in Mexico, many advisors want to encourage their clients to think about a Will for that property. Common questions include: is a B.C. Will enough to deal with it? What happens when my client dies? Who will inherit it, and should my client be doing anything else now, to minimize the costs and headaches?

Here are some answers, for your clients:

Land in the “restricted zone”, and the Fideicomiso

Under the Mexican constitution, real estate located within 50 km of the ocean or within 100 km of the national border cannot be owned by foreigners. Since the most popular vacation home locations fall within the restricted zone, the way around these prohibitions is the use of the fideicomiso.

A fideicomiso is a form of Mexican trust agreement where the property is legally owned by a Mexican bank or financial entity (the “Bank Trustee”) as trustee for the foreigner, who is the foreign beneficial owner (the “Beneficiary”).

Why is that significant for estate planning? Because under the fideicomiso structure, on the death of the Beneficiary the property transfers to the next-in-line designated beneficiaries, without going through probate or any formal court process.

To ensure this outcome, the primary Beneficiary must designate one or more alternate (or substitute) beneficiaries – and this can be changed at any time with proper written direction to the Bank Trustee. An individual alternate beneficiary must be alive or conceived at the time death of the Beneficiary, but the alternates can also be corporations.

When the Beneficiary dies, the alternate beneficiaries provide the Bank Trustee with an “apostilled” Spanish translation of the death certificate. The beneficial interest in the land is then transferred directly to them without passing through probate.

However, there have been a few known instances where a Bank Trustee has either failed or refused to complete the beneficial transfer and alternate beneficiaries had to pursue a claim through the probate courts. Thus it is a good idea for the Beneficiary to mirror the alternate beneficiary designations in a Will, just in case.

Plan Ahead with a Mexican Will in your Estate Plan

The fideicomiso only applies to real estate that a foreigner cannot own outright. If you own any non-land assets in Mexico (such as vehicles, watercraft, or bank accounts), or own any Mexican real estate outside of the restricted zone, those assets will pass through your estate.

If you rely on a Canadian Will alone, your estate essentially needs to go through a double-probate process. Although it may be legally valid in Mexico, a Canadian Will still needs to be officially recognized and acknowledged by the Mexican courts. Only after your Will has been probated and legally recognized in Canada can your heirs can start the Mexican recognition process, which is expensive and can take upwards of 6 to 9 months, all in addition to the time and expense of the Canadian probate process.

To streamline the process after your death, we advise you to also prepare a Mexican Will, which deals only with your Mexican assets. The two Wills must be coordinated, to ensure that the Mexican Will does not revoke the Canadian Will, and vice versa.

Note: if you die intestate, with no Will (Canadian or Mexican), your estate will pass to your legal heirs. In Mexico, this does not include a common-law spouse, which comes as a surprise to many.

Let’s Talk Taxes and Estate Planning

In Mexico, real estate transferred on death is exempt from capital gains, but an acquisition tax applies, and is payable by your heirs. The acquisition tax ranges from 1% to 4% of the property’s value at time of death, depending on the State in which it is located.

For more information about the fideicomisos or Mexican inheritance law:

Recent ICBC Changes

ICBC has made sweeping changes to legislation that changes how they are dealing with people injured in vehicle accidents.

FOR ACCIDENTS THAT HAPPENED PRIOR TO APRIL 1, 2019:

ICBC is taking a more restrictive approach to settlement. Although you still have the right to seek full damages and go to Court if necessary, it will not be easy to obtain a good settlement without a trial. The Rules of Court have also been changed to limit the number of experts you can use to prove your injuries. Call us to discuss your options.

FOR ACCIDENTS THAT HAPPEN AFTER APRIL 1, 2019:

ICBC has made changes

that will drastically reduce the amount of compensation available to you:

The vast majority of injuries will be deemed “Minor”. Unless you have broken a bone in your accident, you will likely be lumped into the Minor Injury category and your damages for pain and suffering will be capped at $5500.

  • This applies to injuries like whiplash, soft tissue/ muscular injuries to the neck and back, torn ligaments, psychological harm like PTSD and anxiety, and concussions.
  • Only if your injuries “significantly impair” your ability to attend work, school, or do your own personal care for greater than 12 months will you escape the “minor injury” classification.
  • ICBC is in charge of this determination. This penalizes people who need to work to earn a living and who cannot afford to take time off.
  • The “Minor Injury” determination does NOT take your personal circumstances into account. For example, a competitive mountain biker with a torn rotator cuff will be treated the same as a retiree with the same injury.
  • If you do not actively seek a diagnosis and pursue treatment immediately after an injury, ICBC can deem your injuries to be “minor”, even if they are serious and significant.
  • If you believe your injuries are not minor, you must wait at least 12 months and then meet strict criteria. Again, ICBC decides if the “Minor” designation applies to you.
  • If you disagree with ICBC’s decision, you are no longer able to challenge this in Court. You must now apply to an online tribunal (the CRT).

You are still allowed to hire a lawyer under this new system. However, many lawyers may not accept claims that are destined for the CRT. If you are unsure whether hiring a lawyer is necessary, or if a lawyer will take your case, please call us. We can help.

Ending employment – Is Compliance with the Employment Standards Act good enough?

I want to fire an employee – what are my obligations?

An employer may terminate an employee’s employment at any time by providing notice or payment in lieu of notice, provided there are no discriminatory reasons for the dismissal.

The minimum notice (or payment in lieu of notice) requirements are set out in the Employment Standards Act of BC. After 3 months of consecutive employment an employee is entitled to one week of wages. This is increased to two weeks after one year of consecutive employment, and after three years of consecutive employment, an employee is entitled to one week of wages per year of service up to a maximum of eight weeks.  However, these minimum amounts can be altered by three things: the employment contract, common law (law created by the decisions of judges rather than statutes), and cause for dismissal.

Employment Contract

An employment contract is the agreement between the employer and the employee and will take precedent over both the Employment Standards Act and common law. The employment contract can limit the amount an employer owes an employee to any stated amount provided that the amount is equal to, or above, the Employment Standards minimum amount. However, any provision limiting the employee’s entitlement to the Employment Standards minimum must be explicit and clear as to the intention to limit the employee’s entitlement to the minimum amount. If these provisions are not drafted well, they can be unenforceable. As both an employer and an employee it is exceptionally important to ask a lawyer to review your employment contract.

Common Law

If there are no termination provisions in the employment contract, then common law will apply to increase any entitlement above the Employment Standards minimums.

Common law assesses an employee’s entitlement to notice or payment in lieu of notice by considering the Bardal factors. The Bardal factors include:

  1. the character of the employment;
  2. the length of service of the employee;
  3. the age of the employee; and,
  4. the availability of similar employment, having regard to the experience, training and qualifications of the employee.

A rough rule of thumb is one month per year of employment which is significantly more than the employment standard minimums. However, the amount under common law will be adjusted on a sliding scale based on the Bardal factors. For example, an employee, in an entry level job who has been employed for three years may be entitled to a notice period or payment in lieu of less than three months. But, an employee with a specialized management position who has been employed for three years is likely to be entitled to over three months of notice or payment in lieu. Each case requires an individualized assessment of each factor.

If an employee is paid the Employment Standards minimum without accounting for the common law notice period or payment in lieu, the employee may have a wrongful dismissal action against the employer to make up the difference.

Just Cause or “For Cause”

An allegation of cause for the dismissal may also change the employee’s entitlement to notice or payment in lieu. If there is cause for dismissing an employee, an employer need not provide notice or any payment to the employee. However, a “for cause” dismissal requires serious employee misconduct during an employment contract such that the employment relationship cannot continue or be repaired. This is a high standard and is often not met.

Often employers will allege reasons for the employee’s dismissal, yet still pay the employment standard minimum “in good faith”. Likely, these are cases where the employer does not have reasons for the dismissal that amount to just cause in law. If the alleged reasons for dismissal do not meet the legal threshold for just cause, the employer must provide the employee with the full amount of notice or payment in lieu pursuant to the contract of employment, or common law. A “for cause” dismissal is either established or it is not, an employer cannot use meagre reasons to reduce their obligation to the employee.

In all circumstances where you as an employer is dismissing an employee or, you as an employee has been dismissed it is beneficial to obtain independent legal advice. Each circumstance is unique!

If you need assistance navigating the grey areas in your workplace, contact Kendra Murray or a member of our Workplace Law team.

We’re here to help.

Lesser Known Considerations for Commercial Leases

Whether you are starting a new business or moving an existing business to a new location a lease is one of your most important documents. When embarking on a new lease relationship you might be tempted to get into the property quickly and skip the formalities. The details can be figured out later, right?

Spending the time upfront to ensure that all parties understand the terms of the lease is critical. The last thing you want to worry about while trying to get your business up and running is finding it a new home.

All businesses are unique and your lease should reflect this. You probably reviewed the initial term, base rent, and maybe even additional rent terms before signing, but here are some lesser known terms any business owner should pay close attention to:

Renewal Rights

Once you reach the end of the initial rental period or term, does the lease automatically renew? Many leases contain rights for a tenant to renew for additional rental terms, but require the tenant provide notice within a fixed window of time prior to the end of the initial term. Don’t miss this deadline! Your lease should also specify how rent in subsequent terms is determined. This may be an annual percentage increase, based on market valuations at the time of renewal, or fixed at a specific amount. Knowing upfront what happens to your lease once it’s time to renew will give you confidence as your move through the lease term.

Improvements to the Property

Improvements to the property can take many forms. This could be adding shelving, updating old appliances, or even the entire construction of a building. Tenants often are free to take any improvements with them at the end of the lease as long as removal of those improvements does not damage the property, or if removal does cause damage the tenant restores the property its original condition. Sometimes this is easy to fix by painting a few walls, however it can become very complicated. Consider if you build an addition onto an existing building but have a term in your lease to restore the property to its original condition prior to the end of the lease. You may be required to demolish that addition. Alternatively, some leases will provide that any improvements become the property of the landlord as soon as added to the property. Take a close look at these provisions in your lease before embarking on any improvements.

Assignment of an Existing Lease to New Owners

If you’re considering selling your business you will likely need your landlord’s consent in order for the new owners to take over the lease. This process is called an assignment of the lease. Your landlord may require information about the potential buyers and their business before they consent. Your lease may also contain language on a “change of control” for the tenant. A “change of control” is when the people controlling the business change, even if the business itself remains the same. If you have a company and bring in additional shareholders this can be considered a change of control and require the consent of the landlord. This process can take time to work through, so it’s best to be aware of what’s required under your lease before entertaining any offers from potential buyers.

These are just a few considerations to be aware of. As discussed, a bit of work upfront can save you headache and unexpected consequences later on.

If you’ve read through your lease and have questions, contact STEPHANIE LEONG or a member of our BUSINESS LAW Team.

We’re here to help.

Workplace Law

Our team has extensive experience navigating complex issues in virtually all industries and professions.

Providing advice to both employers and employees

means that we understand situations from both perspectives, and deftly guide our clients to achieve their best possible solution.

Lindsay Goldberg*

When Lindsay is not at the office managing default portfolios for some of Canada’s largest financial institutions, you’ll probably find him playing his trumpet, performing in pit bands for Vancouver’s live musical theatre scene.

Lindsay makes a lot of noise off stage too, heading up Fulton’s Vancouver team with over 30 years’ experience in retail mortgage enforcement (foreclosure) and collections legal service. By offering streamlined and simplified debt recovery administrative services, Lindsay’s reputation for reliable debtor reintegration, efficiency and business judgment makes him the right choice for financial institutions looking to reduce collection risk and expense.

Musical theatre not your bag? No problem. But if you’re looking for some harmony in your BC or Yukon lending portfolio, put Lindsay to work at his day job.

Heather Lloyd

Heather Lloyd, Associate

Perceptive and determined to change the world for the better, she is naturally compassionate but with the thick skin required to be a reliable, steadying force during her clients’ most challenging circumstances.

As a family lawyer, Heather’s background as a Child Protection Social Worker gives her unique insight into the most difficult relational situations, where she works to efficiently resolve her clients’ issues. If a fierce advocate is called for, however, Heather is known for successfully overcoming obstacles.

Around our office, Heather is known for her pleasant personality and her strong grit and determination. Always up for a challenge, Heather enjoys creative pursuits in art, music, and learning. Outside of the office, you’ll likely find Heather on the field refereeing or playing soccer, or exploring Kamloops and area with her dog.

SCC Decision: Deloitte & Touche v. Livent Inc. Auditor Liability for Negligence

A: Introduction

In Deloitte & Touche v. Livent Inc. (Receiver of), 2017 SCC 63 (“Deloitte”), the Supreme Court of Canada released reasons on December 20, 2017 clarifying an auditor’s duty of care to shareholders to uncover fraud. The case is a very real reminder of the financial consequences an auditor can face if it fails to uncover or report fraud, as the Courts awarded $40 million in damages against Deloitte.

B: Factual Background

The action was brought by the shareholders of Livent Inc., a public corporation that owned theatre properties and ran live entertainment performances throughout Canada. As the business grew, the executives began to cook their books by: (1) pocketing kickbacks by falsifying or inflating invoices, (2) shifting expenses between accounting periods, doctoring their accounting software to conceal the changes, (3) extending or avoiding amortization to inflate their bottom line, and (4) recording imaginary revenue by entering into loan or financing agreements camouflaged as asset sales. The long-standing fraud was publicly uncovered in 1998, leading to the conviction of executives, the liquidation of the company, and a multitude of lawsuits.

In 1997, prior to the fraud coming to light, Deloitte had identified irregularities in the accounting and reporting by Livent in connection with a particular transaction. Deloitte disagreed with Livent on how those irregularities ought to be reported. Deloitte faced two options: to resign as Livent’s longstanding auditor (and report the irregularities to regulatory authorities and the next auditor) or to remain as auditor and capitulate to Livent’s views on reporting. They chose the latter, and issued a Press Release/Comfort Letter in 1997 that helped enable the transaction, which the court found to be a negligent course of action.

Shortly thereafter, also in 1997, Deloitte prepared and delivered a Clean Audit opinion despite the irregularities identified, and despite an admittedly high degree of skepticism on the part of Deloitte auditors at the time in regards to Livent’s explanation of its contractual dealings.

C: Decision

At trial, it was found that the auditors had been motivated by maintaining a profitable and ongoing relationship with Livent.

The Courts found that Deloitte fell below the standard of care they owed to shareholders in two specific ways: (1) in their approval of a Press Release and provision of a Comfort Letter in 1997, and (2) their preparation and approval of a 1997 Clean Audit opinion. The shareholders argued successfully that they relied upon the opinions of Deloitte such that it took longer for the fraud to be uncovered which artificially extended Livent’s lifespan, leading to higher losses in the form of a higher ultimate liquidation deficit.

At the SCC, the majority judgment found that:

  • It was reasonable for Livent’s shareholders to rely upon the 1997 Clean Audit opinion to aid in overseeing management. In particular, the harm was foreseeable to Deloitte because the purpose of the Audit was (1) to protect the company from the consequences of undetected errors and wrongdoing and (2) to provide shareholders with reliable intelligence enabling oversight. By undertaking the 1997 Clean Audit, Deloitte undertook to assist Livent’s shareholders in scrutinizing management conduct. They were negligent as they failed to competently provide this assistance.
  • However, it was not reasonable for Livent’s shareholders to rely upon the Comfort Letter/Press Release for the purpose of overseeing management because Deloitte never undertook to provide the Comfort Letter/Press Release to aid in overseeing management. As such, it was not reasonably foreseeable by Deloitte that reliance on the Comfort Letter/Press Release would lead to an increase in Livent’s ultimate liquidation deficit. It would only be reasonable to rely on the Comfort Letter/Press Release for their intended purposes, which was to help Livent solicit investment funds in relation to a particular transaction.

Ultimately, damages were assessed based on the increase in Livent’s liquidation deficit which followed after Deloitte signed off on the 1997 Clean Audit opinion in early April 1998. The amount was quantified to be $40 million dollars.

The majority judgment notes that the liability of auditors for negligently prepared audits is not unlimited because audits are conducted annually; therefore, liability will only arise in the year following the audit. This is a significant finding that helps to limit the potential risks faced by auditors in preparing annual, statutory audits. Further, in these types of cases, the amount of damages is ascertainable and limited by the worth of the corporation in question (which could well be significant depending on the size of the corporation).

D: Implications

Obviously, auditors must take care at all times in the expression of their opinions, especially in the face of business conflicts with their clients. Even absent specifically uncovering evidence of fraud, skepticism and wilful blindness to questionable practices will be indicators of negligence on the part of auditors. Failure of an auditor to discharge their duties with independence from long-standing clients can result in significant loss and exposure to damages.

Does My Business Need Employment Contracts?

Among other things, an employment contract is an effective means to prevent the unexpected financial strain on your operating budget, that often accompanies a departing employee. But, when assessing the cost of an employee dismissal, many employers mistakenly rely on the obligations set out in the Employment Standards Act (the “ESA”) and employers relying on the ESA alone may be caught footing an unexpectedly larger bill than they anticipated.

Unless termination pay is expressly limited in an employment contract, the employer obligations set out in the ESA are treated by the courts as the ‘bare minimums’. And where an employment contract doesn’t expressly limit the termination pay, or if there is no written contract at all, the employer is often liable for months of wages, even for short-term employees.

A written contract sets reliable limits for an employee’s termination pay, helping your business effectively plan for the future. Periodic review of existing employment contracts ensures they are tailored to your industry’s individual requirements and that they are current with BC law, further avoiding any surprises that negatively affect your bottom line.

If you have Questions about protecting your business with employment contracts, contact Ayla Salyn or our Workplace Law team.

We’re here to help.

Case Update: Freedom of Expression

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In The Redeemed Christian Church of God v. New Westminster (City) 2021 BCSC 1401, the court declared that the City of New Westminster infringed a religious group’s Charter-protected right to freedom of expression, when it cancelled the group’s event on grounds that the event would be discriminatory and would promote hatred against the LGBTQ community.   Although the court acknowledged that protecting LGBTQ rights was laudable, the court found that the City failed to hear from the group prior to canceling the event, and failed to adequately balance the group’s freedom of expression on one hand, and the City’s goals of promoting inclusivity and protecting minority rights on the other.

The takeaway for local governments is this: Before making a decision that may infringe an individual’s or group’s right to freedom of expression, seek out and consider information from both sides, attempt to balance the competing interests at stake, and ensure that any infringement of the freedom of expression resulting from the decision is kept to a minimum.

This decision also serves as a reminder that nearly all actions of a local government must comply with the Charter ­­– even a decision made in the context of a local government’s contractual relationship with a society.

Background Facts

A Christian-based religious society obtained a licence to host a youth conference in a ballroom within a City-owned event centre.

The City’s booking policy for the event centre states, among other things, that the City may prohibit groups if they promote hate or other unethical pursuits, or intend to conduct activities that are incongruent with the mission and vision of the centre and of the City.  The City’s council evidently endorses a vision of inclusivity and social equity, generally.

The theme of the event was “Let God Be True”, and the posters advertising the event used the acronym “LGBT” surrounded by rainbow colouring.

One month prior to the event, the City received a complaint from a member of the public that the event was anti-LGBTQ and would spread misinformation.  The complainant flagged one of the facilitators of the event as a prominent anti-LGBTQ speaker.  The City conducted its own research and determined that the facilitator had expressed anti-LGBTQ views on social media.  The director of the event centre, in consultation with others including the City’s CAO, canceled the society’s licence for the event, on the basis that the event would be contrary to the booking policy.  The director explained to the society that the facilitator “vocally represents views and a perspective that run counter to
 the booking policy.”

A representative of the society requested to meet with the City to explain the event and the society’s intentions in holding the event.  The representative explained that the event would not promote hate, or violence.  Although the director of the event centre indicated a willingness to meet, they explained that the decision to cancel the event was final.  Counsel for the society later explained to the City that the focus of the event was to “consider Biblical views regarding sexuality and identity issues”.

Decision

The City did not dispute that the event was a form of expression protected under s.2(b) of the Charter, or that canceling the event infringed the society’s freedom of expression.  The court’s decision centered on whether the infringement was reasonably justified pursuant to s.1 of the Charter.  In determining this issue, the court considered whether the City’s decision was proportionately balanced having regard to the society’s rights and the City’s objectives, and was minimally impairing of the society’s rights – in the result, the court found in favour of the society.

In reaching this conclusion, the court criticized the City for making the decision to cancel the event based on information from one side only.  The court remarked that, while the City had researched the concerns raised about the facilitator, it did not take similar steps to inform itself of the content of the event, and declined to consider submissions from the society itself before making the decision.   Further, the court noted that the City did not consider how any infringement of the society’s rights of expression might be minimized.  The court described the City’s decision as “quick and precipitous”, and uninformed.

Takeaways

There are a number of other legal issues that were addressed in this case, including (with the court’s ruling in brackets): whether the society can use the judicial review procedure for a decision that is not a statutory decision (it cannot); whether the society has standing to assert the right to freedom of religion under the Charter (it does); whether the society’s freedom of association was infringed (it was not).

The primary importance of this decision to local governments stems from the court’s comments and review of the City’s decision, and decision-making process, to cancel an event and thereby infringe the organizer’s right to freedom of expression.

Questions? Contact Devin Buchanan or our Local Government Law Team.

Supreme Court Restricts Policy Defence

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Yesterday, the Supreme Court of Canada released its decision in the City of Nelson snow clearing case (Nelson (City) v. Marchi, 2021 SCC 41) in which it confirmed and clarified the principle of policy immunity that can shield government bodies from claims in negligence.

On the facts of the case, the Court unanimously rejected the City’s policy defence, and ordered a new trial on standard of care and causation.

Background Facts

During a heavy snowfall, the City’s crews began plowing the streets in accordance with its written snow clearing policies and its unwritten practices. Crews cleared snow in angled parking stalls on a street in the City’s downtown core. Crews pushed the snow to the top of the parking spaces, creating a continuous snowbank along the curb between the parking stalls and the sidewalk. They did not clear an access route through the snowbank to access the sidewalk from the street. The plaintiff parked in one of the angled parking stalls and decided to cross the snowbank, seriously injuring her leg in the process. She sued the City for negligence.

Lower Court Decisions

The City argued that it was immune from liability because its decision not to clear the snowbanks right away was a core policy decision based on budgetary constraints – in essence, the City argued that it chose to deploy its staff to other tasks rather than to provide access through the snowbanks, in accordance with its policies and long-standing practice.  As such, it should not be required to pay damages to the plaintiff.

The trial judge agreed with the City.

The plaintiff appealed, and the BC Court of Appeal found in her favour. The City then appealed to the Supreme Court of Canada.

Supreme Court of Canada Decision

The Court unanimously held that the City’s decision to clear the snow from the parking stalls by creating snowbanks along the sidewalks without ensuring direct access to sidewalks was not a core policy decision. In explaining its decision, the Court confirmed that the following criteria are relevant to determining whether a particular decision is a core policy decision:

  1. The level and responsibility of the decision-maker;
  2. The process by which the decision was made;
  3. The nature and extent of budgetary considerations; and,
  4. The extent to which the decision was based on objective criteria.

The Court noted that none of these factors are determinative on their own, and courts must assess all the circumstances. The Court also noted that the fact that a local government calls something a “policy decision” is not determinative.

On application of these criteria, the Court found that the City’s decision bore none of the hallmarks of a core policy decision, because:

  • The public works supervisor testified that she did not have the authority to make a different decision with respect to the clearing of parking stalls.
  • There was no suggestion that the method of plowing the parking stalls resulted from a deliberate decision involving any balancing of competing objectives and policy goals by the supervisor or her superiors.
  • There was no evidence suggesting an assessment was ever made about the feasibility of clearing pathways in the snowbanks.
  • Although it was clear that budgetary considerations were involved, these were not high‑level budgetary considerations but rather the day‑to‑day budgetary considerations of individual employees.
  • The City’s chosen method of plowing the parking stalls can easily be assessed based on objective criteria (e.g. a review of other local governments’ practices).

Accordingly, the City’s policy defence failed, and the Court ruled that the City owed the plaintiff a duty of care.

To be clear, the Court did not rule on whether the City was in fact negligent, or whether the City’s actions caused the injury – those will be the issues at a new trial.

Takeaways

The main takeaway from this decision is that the policy defence has been narrowed somewhat and local governments cannot expect to be able to rely on anything other than a comprehensive written policy adopted by elected officials or, at least, senior management. Unwritten departmental “policies” based on staff choices about how to prioritize scarce resources, or on long-standing practice, are very unlikely to form the basis of a successful defence.

We recommend that local governments review and update all of their policies for winter snow and ice clearing activities, as well as for other areas with high liability potential where the policy defence is commonly invoked. These include road/sidewalk maintenance and infrastructure repair/replacement.

Local governments should incorporate all important aspects of these activities into a written policy, leaving nothing important in the realm of “unwritten practice”. The resulting draft policy should be debated and adopted at a high level – preferably, by the council or board – with consideration given to overarching economic, social and political concerns, as well as objective standards.

Questions? Contact Devin Buchanan or our Local Government Law Team.

Case Update: Municipal Hazard Liability

The British Columbia Court of Appeal recently upheld a trial decision in which the City of Salmon Arm was found liable in negligence for failing to follow its policy with respect to the inspection and repair of its sidewalks and signs.

As described in more detail below, both the trial decision and the appeal decision hold local governments to a relatively high standard in investigating hazards. The specific message for local governments based on the facts in this case, is to follow-up with inspections as soon as the snow clears, if it is suspected that there is a tripping hazard present. As well, local governments may consider putting their policy in writing, and specifying a lower standard with respect to responding to a suspected hazard.

The Facts

During the winter a resident advised the City that an advanced crosswalk sign was lying in their yard. The sign had apparently been sheared-off at or near its base. A City technician inspected the general area, but due to the presence of snow was unable to determine where the sign originated. The technician went so far as to shovel certain areas to identify the sign’s original location, to no avail. The technician then stored the sign with the intent of replacing it in the spring once the snow cleared.

Sometime after the snow was clear from the sidewalks, the plaintiff tripped on a piece of metal that protruded from the sidewalk. This piece of metal was determined to be the base of the missing sign.

Municipal Liability

The City has an unwritten “complaints-based” policy for inspecting and maintaining sidewalks and signs. When a complaint comes in regarding a sign that poses less of a safety concern than crosswalk signs and stop signs for example, the City uses “best efforts” to reinstall or fix damaged signage as soon as possible. In this case, the unwritten policy was held to represent the applicable standard of care that the City had undertaken to meet.

At trial the judge found that the City should have known that the base of the sign posed a tripping hazard within the sidewalk, by looking at the sheared end of the sign. Furthermore, the trial judge found that although the technician used “best efforts” to locate the tripping hazard initially, he ought to have continued to look for the hazard once the snow melted. Instead, it appears no steps were taken to identify the sign’s location once the snow melted.

The Court of Appeal remarked that “the issue is whether the City ought to have recognized the base could have been in a location that created a risk, thus triggering the standard practice of taking best efforts immediately to locate and remediate the hazard.” The Court did not interfere with the trial judge’s conclusion that the City had notice of the risk when it retrieved the sign, and did not use best efforts to remediate the suspected hazard.

Local governments should heed the message this decision sends, which is to diligently investigate suspected tripping hazards, in particular, immediately once the snow has cleared. Further, local governments may consider setting a lower bar with respect to their response to suspected hazards, by adopting a written policy.

Seminar – Minimizing Dispute Risk

Considerations for Estate Planning

Our Wills & Estate Team is hosting a free event as set out below (Law Society CPD | Society of Notaries Public CPD – Credit Approved):

March 5, 2020  | 9-11 am
Sandman Centre Lounge | 300 Lorne St
RSVP to tjones@fultonco.com

This course is intended primarily for notaries and lawyers for whom drafting wills is an important part of their practice, but other professionals are encouraged to attend if interested. The goal is to bring attendees up to date on important developments in wills, estates and succession law over the last several years, including significant new cases on assets held in joint tenancy, rights to life insurance policies (and other designated beneficiary assets), and the trend of blended families driving estate disputes. The discussion will focus, in each section, on some practical advice for avoiding or minimizing the risk of these sorts of disputes in the estate planning.

Feel free to pass this along to other at your office/in your network that we may have missed, and RSVP early, as space is limited.

Should I Gift Assets to my Children?

When considering their estate planning, parents often want to support their children financially but are not sure of the best way to do so. One option of sharing wealth is to provide a gift. A gift is defined as a voluntary transfer of property to another without consideration (i.e. receiving anything in return). The essential elements of a gift are:

  1. Capacity of a donor to make the gift;
  2. Intention of the donor to make a gift;
  3. Completed delivery of the subject matter of the gift to or for the recipient; and
  4. Acceptance of the gift by the recipient.

For our purposes, there are two main types of gifts: the first is an “inter vivos” gift, which is given during your lifetime. The second is a “testamentary” gift, which is given upon death in a person’s Will. Regardless of the type of gift chosen, parents need to carefully consider the potential tax and family law implications that are associated with making a gift. There are a number of planning tools that, if properly utilized, can be used avoid future problems.

Tax Implications

Inter vivos Gifts

For income tax purposes, an inter vivos gift of capital property with no consideration is treated as a disposition of the property at fair market value, and thus any accrued capital gain or loss on the property will be payable by the transferor (the parent) when they make a gift. The cost base of the recipient of the gift (the child) will also be the fair market value of the property, and thus any future gains will be taxable in the recipient’s hands.

For example, if a parent wishes to gift an investment portfolio that has a fair market value of $500,000 and an adjusted cost base to the parent of $250,000, then the parent transferor will have to report a capital gain of $250,000 in the tax year in which the gift was made and pay tax on 50% of such gain. The child transferee’s adjusted cost base of the investment portfolio going forward would be $500,000.

Extra precaution should be taken when asking a child to pay partial consideration for capital property. For example, if the child above paid the parent $250,000 for the investment portfolio, the parent will still be treated as though he or she sold the portfolio for its fair market value ($500,000). The difference is, that instead of the child having an adjusted cost base of $500,000, his or her adjusted cost base would be $250,000 (the amount paid to the parent).

Testamentary Gifts

A testamentary gift is given upon death through a Will. Immediately upon death you are deemed to have sold all of your capital property for its fair market value. Assuming your spouse is not a beneficiary of your estate, there would be a similar calculation of capital gains and the tax would have to be paid by your estate before any assets are distributed to your beneficiaries (i.e your children). Your children would receive the gift “tax-free” because tax will have already been paid by your estate.

Generally speaking, the tax triggered on death is not only the last tax bill of the deceased, but is often the biggest. This is because all of the deceased’s accrued gains are triggered at once and may be taxed at higher marginal rates than in years past. If an individual has sufficient savings and income, he or she may wish to trigger capital gains in later years at a time when they are paying tax at a low marginal rate, either by selling capital property with accrued gains or by gifting to children. Anecdotally, this latter option has the added benefit of watching your children enjoy their inheritance.

Family Law Implications

When property is gifted to an adult child, the gift can become exposed to marital claims in the event of a marriage breakdown or a claim against the estate of a deceased spouse. The principal amount of an inter vivos/testamentary gift and inheritance to a spouse would be considered excluded property under subsection 85(1) of the Family Law Act. However, any increase in the value of the excluded assets would become family property. Further, if the gift becomes comingled with family property it may lose its protection as excluded property. For example, if the owner spouse transfers the property to the other spouse or into the joint names of the spouses.

Planning Tools

There are a number of steps you can take to protect yourself and ensure your intentions are preserved when providing a gift to your child.

  • You can encourage your child to have a marriage or cohabitation agreement that specifically states how gifts and inheritances will be treated upon separation.
  • You can properly document your intentions when giving amounts to your children. If your intention is to loan an amount to your children then you should have your child sign a promissory note or a loan agreement. If you loaned money to assist your child and their spouse to purchase a property, then consider putting a mortgage on the property. Alternatively, and depending on the nature of the property, a Deed of Gift can be used if you intend to make a gift of funds.
  • You can also consider setting up an inter vivos or testamentary trust. An inter vivos trust is created during your lifetime whereas a testamentary trust is created in your will and takes effect upon your death. An inter vivos trust can serve as long-term income and protection for minor children, be used in tax planning by providing a reduction of probate taxes and protect trust assets from marital claims. A testamentary trust can similarly be used to control the timing and distribution of assets to beneficiaries and provide for minor children and protection against creditors. Gifting to children by way of a trust allows the children to have benefits from the property while also allowing you to maintain some control of the property.

Gifting to children may seem like a simple process, but as explained above, it can have unintended legal consequences. This is why is it important to seek legal advice and discuss appropriate planning tools with a professional advisor before gifting property to your children.

Councils/Boards Owe Individual Members a Duty of Procedural Fairness

In Michetti v. Pouce Coupe (Village) 2022 BCSC 472, the BC Supreme Court confirmed that a municipal Council owes a duty of procedural fairness to individual Council members (including the Mayor) whenever Council’s decisions affect the rights, privileges or interests of the individual member, even if there are misconduct allegations. The court confirmed that the content of the duty of fairness depends on the circumstances; however, the underlying notion of procedural fairness is to ensure that Council decisions affecting one member are made using a fair and open procedure, with an opportunity for those affected by the decision to put forward their views and evidence fully and have them considered by the Council.

This decision stands as a reminder of the care that a municipal Council must exercise in making decisions that affect an individual’s interests, as well as the importance of thorough and timely training for Council members.

The underlying dispute in this case stemmed from a controversial Facebook post made by the Village’s Mayor in February 2021, which drew criticism from Village Council members and the public. In response to this Facebook post, the Village Council initially resolved, at a special meeting, to suspend the Mayor from all public duties and requested that the Mayor resign. Two Council members also resigned, which triggered the need for a by-election.

In May 2021, the Mayor applied to court for a judicial review of Council’s resolution to suspend the Mayor. Th e Village ultimately accepted that the resolution was invalid on the basis that Council had not involved the Mayor in calling the special meeting and had not provided sufficient notice.

Two new Council members were elected in a by-election in September 2021.

Approximately 2.5 weeks after the by-election, the Village Council resolved to remove the Mayor from various portfolios at a regular Council meeting. Th e portfolios related to several entities including the Peace River Regional District, RCMP and South Peace Health. The Council member assigned to a particular portfolio serves as a liaison between the Council and the particular entity.

One of the new Council members made the motion when the agenda item relating to assigning the portfolios was called, and the motion did not specifically appear on the meeting agenda. The Mayor alleged she felt “ambushed” by the motion.

Although the Village argued in court that the Council’s decision to remove the Mayor from the portfolios was not a form of censure or based on misconduct, the court concluded otherwise in finding that the decision was made to effectively censure and sanction the Mayor in relation to the Facebook post. Furthermore, the court found that the resolution prevented the Mayor from participating in the decision-making process for assigning portfolios; therefore, the duty of procedural fairness was triggered. In other words, the Mayor’s rights or interests were impacted. As for the content of the duty, the court remarked that the Mayor “should have been notified of her alleged misconduct in a timely manner, the evidentiary basis and the rationale for the allegation, whether based in the Code of Conduct or otherwise, and provided a meaningful opportunity to address the alleged misconduct.”

Ultimately, the court concluded that the Council had breached the duty of procedural fairness that it owed the Mayor and quashed Council’s motion.

A local government’s Council or Board decision can impact an individual’s rights, and in those circumstances the Council/Board must afford adequate notice to the individual, as  well as the opportunity to be heard, before making its decision. Sanctioning an individual Council/Board member for misconduct is particularly fraught with risk in terms of the  basis and procedure for doing so. Orientation for elected officials is valuable, but it’s equally important to ensure that legal and procedural information is covered. For example,  consider including the following topics in Council/Board orientation:

  • Procedural requirements for calling meetings, preparing agenda and proposing and passing resolutions;
  • The duty of procedural fairness (when is it triggered and what does it entail?); and
  • Does the Council/Board have a code of conduct, and if so what does it say?

Content originally drafted by Devin Buchanan for the LGMA and published in the quarterly LGMA EXCHANGE Summer 2022.

Seminar – Current Issues Driving Estate Disputes

CPD Approved In-person Seminar

You are invited to join our Wills & Estate team for a free CPD-approved seminar, with a hot breakfast to be provided.

Monday, June 27, 2022  | 7:00-8:30 am
Sandman Hotel – Cordillera Room | 225 Lorne Street, Kamloops
Presenter: Tyson McNeil-Hay
RSVP to law@fultonco.com

CPD INFORMATION

1) Law Society of British Columbia
Course: Current Issues Driving Estate Disputes – 2022
Course Provider: Fulton & Company LLP

2) Society of Notaries Public
1 credit – submit for posting after event

This course is intended for anyone who regularly deals with estate and succession planning – including notaries, lawyers, financial advisors, and accountants. The goal of the course is to help planners steer estate plans away from future litigation. The specific topics to be covered include beneficiary designations, wills variation, and more developments in the law of joint tenancy/ownership.

Feel free to pass this invitation along to others at your office/in your network that we may have missed, and RSVP early to confirm your spot. 

Virtual Seminar – Minimizing Dispute Risk

Considerations for Estate Planning

You are invited to join our Wills & Estate team for a free CPD-approved seminar:

Wednesday, September 22, 2021  | 11:30-1:00 pm
Virtual – Microsoft Teams
Presenter: Tyson McNeil-Hay
RSVP to tjones@fultonco.com

CPD INFORMATION
1) Law Society of British Columbia
Course: Minimizing Estate Planning Risks – 2021
Course Provider: Fulton & Company LLP
2) Society of Notaries Public
1 credit – submit for posting after event

This course is intended for anyone who regularly deals with estate and succession planning – including notaries, lawyers, financial advisors, and accountants. The goal of the course is to help planners steer estate plans away from future litigation. The specific topics to be covered include beneficiary designations, wills variation, and more developments in the law of joint tenancy/ownership.

Feel free to pass this along to other at your office/in your network that we may have missed, and RSVP early to confirm your spot.Â