Newsletter July 2020View/Download this newsletter in PDF
In this issue: 1. News & Upcoming Events 2. S.C.C. Releases Uber Decision 3. Employment Contract Termination Provisions 4. The Good Faith Performance Requirement in Contracts 5. Motion for Stay Denied in Cargo Claim 6. Importance of Maintaining Corporate Records: The Minute Book 7. Distracted Driving Update 8. Shareholders May Sue Wrongdoers for Share Value Damage 9. Reopening Ontario (A Flexible Response to COVID-19) Act, 2020
- Fernandes Hearn LLP is a member of Globalaw™, a top tier international affiliation of over 100 law firms. As a member of Globalaw™, Fernandes Hearn LLP has networking access to over 4500 attorneys in 85 countries, enhancing our transportation, trade law and business practice.
- Fernandes Hearn LLP continues its COVID-19 era series of client and industry webinar meetings with its presentation on August 21, 2020. Topics include a discussion of a new employment law decision, and contract language and considerations brought on by COVID-19. An email will be sent out a week before advising of registration details.
- Transportation: Operational and Cyber Risk Management and the Impact of COVID 19, Webinar, August 26, 2020. Kim Stoll will be speaking. Please contact Kim for registration details.
- Rui Fernandes, Gordon Hearn and Kim Stoll have once again been included in the Who’s Who in Shipping and Transport 2020-21.
- Inequality of bargaining power; and
- An improvident bargain.
Claims not subject to Hamburg Rules
46 (1) If a contract for the carriage of goods by water to which the Hamburg Rules do not apply provides for the adjudication or arbitration of claims arising under the contract in a place other than Canada, a claimant may institute judicial or arbitral proceedings in a court or arbitral tribunal in Canada that would be competent to determine the claim if the contract had referred the claim to Canada, where
(a) the actual port of loading or discharge, or the intended port of loading or discharge under the contract, is in Canada;
(b) the person against whom the claim is made resides or has a place of business, branch or agency in Canada; or
(c) the contract was made in Canada.GWF argued that the transportation of the goods was subject to a Service Contract. A term of the Service Contract referred to a Bill of Lading as follows “…[t]he Carrier’s bill of lading is incorporated into this contract and will determine the terms and conditions of shipment…” GWF claimed that the cargo on both ships was subject to unsigned non-negotiable Express Release Bills of Ladings. The terms and conditions of GWF’s standard Bill of Lading, specifically clauses 4, 22, and 23, provide for as follows:
4.CLAUSE PARAMOUNT (a)(i) During Ocean Carriage, this Bill of Lading and the Carrier’s liability and obligations while acting in any capacity whatsoever, including but not limited to a Carrier, bailee, agent or supplier of a Container, shall be governed by the United States Carriage of Goods by Sea Act, 1936 (COGSA)….
22. JURISDICTION All claims by the Carrier or causes of action against or disputes with Carrier arising out of and/or by reason of this Bill of Lading and/or relationships created thereby or in connection with the Shipment shall be brought by or against the Carrier exclusively in the United States District Court, Southern District of New York in accordance with the laws of the United States.
23. APPLICABLE LAW All rights, duties and/or obligations not specifically otherwise described or incorporated herein shall be determined according to the laws of the United States, or, where there is no governing federal law, according to the laws of the State of New York.GWF submitted that the Service Contract, incorporating the terms and conditions of its Bill of Lading, is not a “true” bill of lading since it does not fulfil the usual elements of a bill of lading, that is: as evidence of the contract of carriage; a receipt of the goods to be carried; and as a document of title to the goods. GLW reasoned that in the absence of a Bill of Lading, there was no “contract for carriage of goods by water,” within the scope of the Act. GWF submitted that the transportation of the cargo was governed by the Service Contract, with the result that effect should be given to the jurisdiction clause in clause 22 of the terms and conditions of the Bill of Lading. The Position of Arc Arc argued that the Bills of Lading were incorporated by reference in the Service Contract and that the Bills of Lading were sufficient to characterize transportation of the cargo as a “contract for carriage of goods by water.” Arc further argued that it would be prejudiced if the actions were stayed and it were required to continue proceedings in the United States because it was out of time to institute proceedings there. The Decision The Court found that s. 46(1) of the Act can be engaged when contractual documents refer to a jurisdiction other than Canada provided that, among other things, the defendant has a place of business or an agency in Canada. The Court found that the defendant had an agent in Canada, and thus s. 46(1)(c) of the Act was satisfied. The Court held that the Service Contract was “a contract for the carriage of goods by water”, and, in the absence of the Hamburg Rules having in force in Canada, s. 46 of the Act applied. The Court noted however that the existence of a jurisdiction clause does not automatically mean a stay will be granted, as the Court retains discretion under s. 50 of the Federal Courts Act to stay a proceeding or not. The affidavit evidence filed in the matter did not address the location of the witnesses or the application of American law, should the stay be granted. Therefore, the Court held the plaintiff had shown a “strong cause” for denial of the stay motion. Andrea Fernandes 6. Importance of Maintaining Corporate Records: The Minute Book As corporate lawyers, we act for purchasers and sellers of businesses. When a corporate lawyer represents a purchaser, particularly in share purchase transactions, the due diligence phase of the transaction usually involves reviewing the corporate records that are contained in the minute books of the target corporation. The corporate records are reviewed to determine the status of the corporation and the corporate transactions that the target corporation has historically been involved in. If a minute book is non-existent or not accurately updated, a purchaser may leverage these discrepancies to negotiate the purchase price downward. It is very important for a corporation to keep their corporate records updated. Certain corporate records are also important to financial institutions. It is common for individuals to incorporate companies themselves and forgo organizing or maintaining corporate records (despite advice from their accountants or lawyers to do so), or the minute book organization documents have been prepared by the corporation’s law firm (such as organization resolutions and by-laws), but the client delays signing such documents. On many occasions there are frantic phone calls or emails from clients who advise that their bank will not proceed to authorize a financial facility for such client’s corporation without the client first presenting them with a copy of an authorized borrowing by-law or some other constating document. The corporate records are generally held in a minute book along with the minutes and resolutions of directors and shareholders. Section 139(1) of the Business Corporation Act (Ontario) (the “Act”) provides that corporate records can be bound in a “loose leaf book or may be entered or recorded by any system of mechanical or electronic data processing or any other information storage device.” (*1) Section 140(1) of the Act provides that a corporation shall prepare and maintain at its registered office or at such other place in Ontario (such as the corporation’s law or accounting firm),
a) the corporation’s articles and the by-laws and all amendments to such articles and by-laws, and a copy of any unanimous shareholder agreement known to the corporation’s directors,
b) minutes of directors and shareholders meetings and resolutions of directors and shareholders,
c) a register of directors, and such register should set out the names and residence addresses of each director. The director’s register may include each director’s e-mail address, if one is provided. The register shall set out all persons who are or have been directors of the corporation with the several dates on which each became or ceased to be a director,
d) a securities register, and
e) a register of ownership interests in land. (*2)The requirement for an Ontario Corporation to maintain a register for the ownership interest in land was introduced by the Forfeited Corporate Property Act (Ontario), which came into force on December 10, 2016. The register of ownership interest in land shall identify each property owned by the corporation and include the date that the corporation acquired such property. If applicable, the register shall also provide the date that the corporation disposed of such property. (*3) Further, this register should also include a copy of all deeds, transfers or any other similar documents that contain the municipal address of each corporate property, the registry or land titles division for any such property, the property identifier number, each property’s legal description and the assessment roll number, if any. (*4) The requirement for an Ontario Corporation to maintain a register for the ownership interest in land was introduced by the Forfeited Corporate Property Act (Ontario), which came into force on December 10, 2016. The register of ownership interest in land shall identify each property owned by the corporation and include the date that the corporation acquired such property. If applicable, the register shall also provide the date that the corporation disposed of such property. (*3) Further, this register should also include a copy of all deeds, transfers or any other similar documents that contain the municipal address of each corporate property, the registry or land titles division for any such property, the property identifier number, each property’s legal description and the assessment roll number, if any. (*4) It is very important for a corporation to maintain a register of securities in its minute books. A security is a share of any class or series of shares or a debt obligation of a body corporate, and a security certificate (e.g. share certificate) is a certificate evidencing a security. (*5) The corporation’s securities register shall record the securities issued by it in registered form, and with respect to each class or series of securities, it shall provide the names of persons who, (i) are or have been within six years registered as shareholders of the corporation, the address including the street and number, if any, and an e-mail address if one is provided, of every such person while they are a holder of shares in the corporation, and the number and class of shares registered in the name of such shareholder, (ii) are or have been within six years registered as holders of debt obligations of the corporation, the address including the street and number, if any, and an e-mail address if one is provided, of every such person while a holder of such debt obligations, and the class or series and principal amount of the debt obligations registered in the name of such holder, or (iii) are or have been within six years registered as holders of warrants of the corporation, other than warrants exercisable within one year from the date that such warrant is issued, the address including the street and number, if any, and an e-mail address if one is provided, of every such person while a registered holder of warrants, and the class or series and number of warrants registered in the name of such holder. (*6) The security register shall also provide the date and particulars for each security or warrant that was issued. (*7) A warrant is a certificate or any document that is issued by a corporation, which evidences conversion privileges or options or rights to acquire securities of the corporation. (*8) The minute book should also keep a record of any transfer of securities by the corporation or amongst its shareholders, which register of transfer should include the date of each transfer and other particulars of such transfer, such as the name of the recipient of such transfer (if not the corporation) or the party transferring such securities (if not the corporation). (*9) The minute book shall also include the original, or if any shareholder requires an original share certificate, at least a copy of the share certificate that has been transferred to any such shareholder. Similar to the requirements of the directors register, the minute book should also include a register of the corporation’s officers, which sets out the names, residence and email address of each officer of the corporation, and the officer’s register shall list all persons who are or have been officers of the corporation along with their designated officer titles and the dates that any such person became or ceased to be an officer of the corporation. The corporate records should also include the corporation’s updated accounting records, and all records that contain minutes of meetings and resolutions of directors, shareholders or committee members of the corporation. (*10) Generally, the directors of a corporation are required to call an annual meeting of shareholders no later than 18 months after the corporation comes into existence and subsequently not later than 15 months after holding the last preceding annual meeting. (*11) The matters that are typically addressed at each annual meeting of shareholders include the election of directors, the consideration or approval of the corporation’s annual financial statements and the appointment of an auditor, unless the corporation is exempt from appointing an auditor. Each Ontario corporation is required to file an initial return within 60 days after the date of incorporation, amalgamation or continuation of the corporation. (*12) The initial return must include, (i) the name of the corporation, (ii) the Ontario corporation number of the corporation, (iii) the date of its incorporation or amalgamation, whichever is the most recent, (iv) the names and addresses for service of the corporation’s directors, including municipality, street and number, if any, and postal code, (v) the date on which each director became a director and, where applicable, the date on which a director ceased to be a director, (vi) if the corporation is a corporation with share capital, a statement as to whether each director is or is not a resident Canadian, (vii) the names and addresses for service, including municipality, street and number, if any, and postal code, of the corporation’s five most senior officers, (viii) The date on which each of the five most senior officers became a senior officer, and where applicable, the date on which a person ceased to be a senior officer, (ix) the address of the corporation’s head or registered office, including municipality, street and number, if any, and postal code, (x) whether the language of preference for communication with the corporation is English or French. (*13) Record book maintenance includes subsequent filings that result from any changes to the information that was filed with the initial return. The corporation must file a notice of change for every change in such information within 15 days after the change takes place. (*14) However, it is not necessary to file a notice of change in respect of a director’s retirement and subsequent re-election for the next term of office. (*15) Further, a corporation incorporated under the laws of Ontario that only changes its name does not need to file a notice of change. (*16) A corporate name change would be processed and filed by articles of amendment with the Ministry. A corporation’s record keeping habits could be deemed by third parties as a reflection of the business acumen of its principals. A corporation once retained me to review and update their minute book after an accredited investor had reviewed it. The accredited investor was interested in subscribing for shares in this corporation’s company. We discovered many discrepancies throughout the corporation’s minute book. All the necessary filings were not completed, shares were not issued, there were no shareholder ledgers or share certificates, the original directors and officers had resigned and such resignations and new appointment of officers and election of directors were not recorded in the minute book, which meant that the directors and officers that were no longer involved with the corporation were still listed as the current directors and officers, and accounting records were not readily available. The principals of the corporation were unprepared for the accredited investor’s subscription offer. Seemingly, the accredited investor’s review of the corporation’s minute book gave him the perception that the principals of the corporation were disorganized and inexperienced (although the business operations were relatively solid). As a result, the investor (unsuccessfully) attempted to take advantage of the corporation’s principals and offered to purchase the shares of the corporation below market value. Record book maintenance is indeed an arduous but a very necessary task that could ease the corporation’s activities in various business engagements such as mergers and acquisition transactions, financing or capital raises. Up to date corporate records should set out a clear picture of the corporation’s current and historical corporate dealings. When the corporate records are incomplete, non-existent or if they carry many discrepancies, a transaction can be delayed or set aside due to the time and expenditures that are required to update the corporate records, or due to the time required to locate pertinent information that the parties require for a transaction. Further, unkempt corporate records may indicate to a third party that the corporation is disorganized, carries risks and that its principals are inexperienced, which could weaken the principal’s bargaining position in a purchase and sale transaction or limit the corporation’s access to capital. If you require any assistance with your corporate records, please do not hesitate to contact our office for assistance. Wayne O. Lewis Endnotes (*1 )Business Corporations Act, R.S.O. 1990, c. B.16 at section 139(1). (*2) ibid. at section 140(1). (*3) ibid. at section 140.1(2). (*4) ibid. at section 140.1(3). (*5) ibid. at section 1(1). (*6) ibid. at section 141 (1)(a). (*7) ibid. at section 141 (1)(b). (*8) ibid. at section 1(1). (*9) ibid. at section 141 (2). (*10) ibid. at section 140(2). (*11) ibid. at section 94.(1)(a). (*12) Corporations Information Act, R.S.O. 1990, c. C.39 at section 2(2). (*13) R.R.O. 1990, Regulation 182: General under Corporations Information Act, R.S.O. 1990, c. C.39 at Section 1.1(1). (*14) Corporations Information Act, R.S.O. 1990, c. C.39 at section 4(1). (*15) ibid. at section 4 (3). (*16) ibid. at section 4 (4). 7. Distracted Driving Update Distracted driving is now under more scrutiny than ever. A recent decision of the British Columbia Court of Appeal has confirmed that holding a cellphone while driving is an offence even when it is disabled or turned off. n R. v. Tannhauser (2020 BCCA 155), Mr. Tannhauser received a ticket because he was holding his cellphone at the top of his steering wheel while driving on the TransCanada Highway. He testified that he was not “using” the cellphone but rather relocating it from the passenger seat to access papers. Mr. Tannhauser’s cellphone was also disabled by an app that engaged while he was driving. At most, he was only holding a cellphone that wasn’t working. At the first hearing, the Judicial Justice sided with Mr. Tannhauser. The Crown then appealed to the British Columbia Supreme Court, where the presiding Judge also agreed that a disabled phone was really no different than a brick or a cup of coffee or any other object in the vehicle. Because it could not be used, the judge stated that a disabled cellphone was not an electronic device under S. 214.1(a) of BC’s Motor Vehicle Act, which prohibits “holding the device in a position in which it may be used.” An “electronic device” is defined as including a “hand-held cell telephone or another hand-held electronic device capable of transmitting or receiving electronic mail or other text-based messages.” The Crown then applied for leave to appeal to the BC Court of Appeal. This rare request for a further review was granted because it was important that drivers know (1) whether a disabled phone (or one turned off for that matter) was considered an “electronic device”; and (2) whether they were committing an offence by “using” their cellphone merely by holding it while driving. The BC Court of Appeal decided that a disabled cell phone is only temporarily disabled (whether by an app or because it is turned off) and that such cellphones are still “electronic devices”. A turned off lamp is still a lamp. Only if it no longer had any capacity to make calls or send electronic data would a disabled cellphone no longer be an electronic device. This being the case, holding such an electronic device while driving, was an offence. The Appeal Court reasoned that if the BC legislature had wanted to create an exception for non-functioning devices, the law would have specifically said so, since other exceptions are contained with the Motor Vehicle Act. It is clear that distracted driving is a very serious offence and that permitted use of cellphones while driving is very restricted and that the law will be interpreted strictly. What does this mean for Ontario? The Highway Traffic Act has a similar wording that does not have an exception for non-functioning devices. The Act says in s 78.1 that “No person shall drive a motor vehicle on a highway while holding or using a hand-held wireless communication device… that is capable of receiving or transmitting telephone communications, electronic data, mail or text messages.” (emphasis added) While it may be clear that “holding” the phone is an offence in Ontario, it is also clear that a non-functioning phone will also be enough to constitute an offence. Multi-tasking is a real no-no and getting caught is expensive. Remember that for classes A-G and M licences, there is: (a) a fine of $615 for a first-time offence (increases to $1000, if you fight the ticket and lose) plus 3 demerit points and 3-day licence suspension; (b) a fine of $615 for the second offence (increases to $2,000 if you fight the ticket and lose) plus 6 demerit points and licence suspension for 7 days. (c) a fine of $615 for a third offence (increases to $3,000 if you fight the ticket and lose) plus 6 demerit points and suspension for 30 days. Novice drivers face longer suspensions though no demerit points: (1) 30 days on first conviction; (2) 90 days on second conviction; and (3) cancellation and removal from the Graduated Licensing System for the third conviction. If you endanger other people because of distracted driving of any kind (includes hands free devices), you could be charged with careless driving and, if convicted, penalties include 6 demerit points, fines up to $2000 and/or a jail term of 6 months/licence suspension up to 2 years. If charged with the criminal offence of dangerous driving, penalties include a jail term up to 10 years for causing bodily harm or up to 14 years for causing death. A further reminder for truckers and others driving commercial vehicles, the CVOR Holder can also be charged for offences committed by drivers operating those vehicles exposing them to points accumulation. Points are assigned depending upon the charge and conviction under various legislation. Moving violations generally have 5-point penalties. Too many CVOR points may trigger audits and possibly more charges under various headings putting the CVOR Certificate at risk. Kim E. Stoll Follow Kim on LinkedIn and at url: linkedin.com/in/kim-stoll-transportationlaw 8. Ontario Court of Appeal Says That Shareholders Can Sometimes Sue Wrongdoers Directly for Damages Caused to the Value of their Shares Our law is replete with archaic references. One of those is known as “the rule from Foss v. Harbottle”, a case decided by the House of Lords in London in 1843.(*1) It holds that, where damage is alleged to have been done to a company, then the proper claimant is the company itself and not its shareholders or proprietors. In other words, courts are required to respect the separate legal personality of corporations, as distinct from their shareholders. The rule from Foss v. Harbottle has been affirmed many times in Canadian law, including by the Supreme Court of Caanda in Hercules Management v. Ernst & Young.(*2) By implication of the rule, if companies can sue to protect their own rights, then shareholders must be barred from suing for a diminution in the value of their shares, which might have resulted from some sort of damage inflicted upon the corporation. Rather, the company is expected to make suit against the guilty party and to recover the loss, such that the value of its shares will be returned to their original strength. Over time, some exceptions to the rule have been recognized. For example, where corporate directors fail to take action to protect a corporation, minority shareholders are entitled to seek “leave” (i.e. judicial permission from a court) to make a “derivative claim” to right the wrong. Often, the folks in control are the alleged wrongdoers. Another exception arises from another “rule” pronounced by the House of Lords, known as “the second proposition in Johnson”. In Johnson v. Gore Wood & Co.(*2), the Court found that a shareholder can claim for diminution in share value where the wrong was done to the shareholder and the shareholder owns a cause of action in its own right (as opposed to the corporation).(*3) In Sang Thi Tran et al. v. Bloorston Farms Ltd., the Ontario Court of Appeal has recently clarified the boundaries of the rule. A panel of three appeals judges unanimously affirmed the applicability of the second rule from Johnson as good law in Ontario.(*4) The complainant, Sang Thi Tran, was the sole shareholder of 1835068 Ontario Ltd., through which she ran a restaurant, located in a commercial property owned by Bloorston Farms. Although the numbered company-restaurant operated out of the leased space, Tran was the named tenant on the lease. There was never technically any assignment or sublease from Sang to the corporation. Bloorston was not Sang’s original landlord. Rather, it had purchased the property mid-way through the tenancy. Shortly after taking title, it e-mailed an architect’s certificate to Sang, alleging that the premises were actually somewhat larger than what was described in their lease agreement; and it demanded that she pay additional consideration in respect of it. Sang refused to comply and Bloorston locked her out. At first instance, a judge on a “summary judgment” motion (made by Bloorston) had found that the termination was wrong, and that it had destroyed the restaurant business and caused Sang’s share value to become worthless.(*5) Consequently, the Court awarded damages against Bloorston, which appealed to the Ontario Court of Appeal. The Court of Appeal recognized the importance of the rule from Foss v. Harbottle, identifying that the separate legal personality of a corporation is a two-way street (insofar as corporations enjoy both the benefits and the burdens of legal liability); and that the rule prevents a multiplicity of proceedings. Despite the foregoing, the Court found that the rule had its limitations, including where shareholders have separate, free-standing causes of action against the wrongdoer in their own right; and where a shareholder – rather than the corporation – is the only one with a legal entitlement to sue in the first place. The Court found that, in this case, the numbered company had no privity of contract with the landlord. In other words, the company had no right to sue because it was not a party to the lease. Only Sang did; and, so, the rule in Foss v. Harbottle was not engaged. Although the second proposition from Johnson is a somewhat narrow exception to the rule from Foss v. Harbottle, its affirmative inclusion in Ontario law is welcome to ensure that losses are recoverable. However, it cannot be taken as a “given” that shareholders will have the right to sue simply because the corporation is neutered by the circumstances. As much as anything else, the Sang case is a reminder that the facts always matter. Alan S. Cofman Endnotes (*1) (1843), 67 E.R. 189 (H.L.), online: < http://www.worldlii.org/uk/cases/EngR/1843/478.pdf >. (*2)  2 S.C.R. 165, online: < https://www.canlii.org/en/ca/scc/doc/1997/1997canlii345/1997canlii345.html >. (*2) 2000 UKHL 65, online: < https://www.bailii.org/uk/cases/UKHL/2000/65.html >. (*3) The first proposition is that, where a company suffers a loss caused by a breach of duty owed to it, only the company may sue in respect of the loss, and not the shareholder. The third proposition is that, where duties are owed separately to both a company and its shareholder, they may each sue in respect of the breached duty owed to it, but they may not recover for the breach committed against the other. See Sang, infra note 4 at para. 45, paraphrasing Johnson. (*4) 2020 ONCA 440, online: < https://www.ontariocourts.ca/decisions/2020/2020ONCA0440.pdf >. (*5) 2019 ONSC 4639, online: < https://www.canlii.org/en/ca/scc/doc/1997/1997canlii345/1997canlii345.html >. 9. Reopening Ontario (A Flexible Response to COVID-19) Act, 2020 A Summary On July 21, 2020, Bill 195, known as the Reopening Ontario (A Flexible Response to COVID-19) Act, 2020 received Royal Assent. The new Act will take effect on a day to be proclaimed of the Lieutenant Governor of Ontario. Its purpose is essentially to rescind the province-wide state of emergency that was declared on March 17, 2020 in response to the COVID-19 pandemic, while at the same time continuing many of the emergency orders made during the state of emergency. The new Act also gives the government the power to amend (and expand) such continued orders by cabinet order. These powers can be extended for successive periods of 30 days, also by cabinet order. The new Act is supposed to end one year from the date it takes effect, but it can also be extended for successive periods of up to one year. The new Act has proven to be quite controversial and has been opposed by several civil liberties and other groups, such as labour groups in the health sector. It is expected that the constitutionality of the new Act will be challenged on several grounds. The main challenge will be to the power given by the new Act to the government to continue to exercise extraordinary powers normally only justifiable during a declared state of emergency in circumstances where that state of emergency is rescinded and hence no longer exists. Normally, when a state of emergency is rescinded, the orders made under that state of emergency will cease to apply. However, the new Act explicitly maintains many such orders. The obvious question is that if continued emergency orders appear to be required, why then has the state of emergency been revoked at all? Or, if the state of emergency no longer exists, why do any emergency orders need to be continued at all? One might argue that by rescinding the state of emergency yet at the same time extending many of the emergency orders (and giving the provincial cabinet the power to amend those orders almost without limitation), the current government has empowered itself to impose potentially sweeping limitations on Ontarians’ personal and collective rights without the justification of a state of emergency. On the other hand, the continuing uncertainty with respect to the COVID-19 pandemic may also be seen as justification for the government’s need to act quickly and decisively. Time will tell whether the new Act is in fact challenged; it will be interesting to chronicle any such challenges and their outcomes. Until then, at the very least a basic understanding of the new Act is useful. What follows is a brief summary of the new Act’s provisions. Termination of State of Emergency The new Act provides that the state of emergency declared on March 17, 2020 in response to the COVID-19 pandemic is revoked. (*1) Continuance of Orders Made under Emergency Management and Civil Protection Act Despite the termination of the state of emergency, the new Act declares that many of the orders made by the government during the state of emergency under the authority of the Emergency Management and Civil Protection Act (the “EMCPA”), are nonetheless continued as valid and effective orders, even though they cease to be valid and effective orders under the EMCPA. (*2) Such orders will continue to be valid and in force for 30 days; however, the Lieutenant Governor in Council (i.e. the cabinet) may extend the orders for additional periods of 30 days, at its discretion. (*3) Importantly, although cabinet cannot make wholly new orders under the new Act, cabinet has broad authority amend any of the newly-continued orders.(*4) Any such amendments are valid as long as they either:
(a) relate to one or more of the subject matters listed below; or
(b) require people to comply with any advice, recommendation or instruction of a public health official. (*5)Valid subject matters that can result in amended existing orders are:
(a) closing or regulating any place, whether public or private, including any business, office, school, hospital or other establishment or institution
(b) providing for rules or practices that relate to workplaces or the management of workplaces, or authorizing the person responsible for a workplace to identify staffing priorities or to develop, modify and implement redeployment plans or rules or practices that relate to the workplace or the management of the workplace, including credentialing processes in a health care facility.
(c) prohibiting or regulating gatherings or organized public events.(*6)The new Act contains a list of fourteen orders that may not be amended.(*7) However, the new Act clarifies that any amendments to the existing orders that can be amended may:
(a) impose more onerous or different requirements, including in different parts of the province; and
(b) extend the application of the order being amended, including the geographic scope of the order and the people it applies to.(*8)Further, amendments to existing orders may be given retroactive effect, as far back as the date on which the new Act itself came into force.(*9) Cabinet may also revoke an order continued under the new Act.(*10) New Act to Expire in One Year but Can be Renewed by Resolution of Legislature The new Act provides that the powers to (1) extend orders for additional 30-day periods and (2) amend existing orders as described above expires one year after the new Act takes effect. (*11) However, the legislature by resolution may extend this time limit for additional periods of up to a year at a time.(*12) Enforcement The new Act provides that any person who contravenes an order continued under the new Act may – upon application without notice by the Crown – be “restrained” by order of a judge of the Superior Court, and such order may be enforced in the same manner as any other order of a judge of the Superior Court.(*13) The new Act also provides that any person who fails to comply with a continued order or who interferes with or obstructs the exercise of a power or the performance of a duty conferred by such an order is subject to a fine of up to $100,000 and/or imprisonment for up to one year. If the person is a director or officer of a corporation, the maximum fine increases to $500,000. If a corporation is found to have violated a continued order, the corporation is subject to a fine of up to $10 million.(*14) The new Act also provides that a person is guilty of a separate offence on each day that that person violates a continued order.(*15) Further still, any fine imposed under the new Act may be increased beyond its maximum limit by the amount equal to the financial benefit that the offending person acquired as a result of the commission of the offence.(*16) Reporting Requirements of the Government The new Act requires the Premier or a delegated Minister to appear before a standing committee appointed by the Legislature, at least once every 30 days, and report to the committee concerning (a) orders that were amended under the new Act; (b) orders that were extended under the new Act; (c) the rationales for those amendments and extensions.(*17) There are also additional similar reporting requirements in the event the new Act is extended beyond one year.(*18) Further Provisions The new Act also incorporates section 11 of the EMCPA, which provides that no action or other proceeding may be commenced against a government official or public servant acting pursuant to the new Act. Further, it incorporates section 13.1 of the EMCPA, which provides that no actions taken under the new Act will constitute expropriation and there will be no compensation payable by the government in the event of a loss, including the taking, of any personal or real property.(*19) James Manson (*1) Section 17. (*2) Section 2. (*3) Section 3. (*4) Section 4(1)(a). (*5) Section 4(2). (*6) Section 4(3). (*7) Section 4(5). (*8) Section 4(6). (*9) Section 4(7). (*10) Section 5. (*11) Section 8. (*12) Section 8. (*13) Section 9. (*14) Section 10(1). (*15) Section 10(2). (*16) Section 10(3). (*17) Sections 11 and 12. (*18) Section 13. (*19) Sections 14 and 15.
This newsletter is published to keep our clients and friends informed of new and important legal developments. It is intended for information purposes only and does not constitute legal advice. You should not act or fail to act on anything based on any of the material contained herein without first consulting with a lawyer. The reading, sending or receiving of information from or via the newsletter does not create a lawyer-client relationship. Unless otherwise noted, all content on this newsletter (the “Content”) including images, illustrations, designs, icons, photographs, and written and other materials are copyrights, trade-marks and/or other intellectual properties owned, controlled or licensed by Fernandes Hearn LLP. The Content may not be otherwise used, reproduced, broadcast, published,or retransmitted without the prior written permission of Fernandes Hearn LLP.
Fernandes Hearn LLP
155 University Avenue, Suite 700, Toronto, Ontario, Canada M5H 3B7
Telephone: 416-203-9500 | Fax: 416-203-9444 | E-mail:
A proud Canadian law firm specializing in Transportation, Insurance, Trade, Technology and Commercial Law.