Newsletter June 2020View/Download this newsletter in PDF
In this issue: 1. News & Upcoming Events 2. Coasting Trade Act Decision 3. Foodora Pulls Out of Canada 4. Covid-19 and ESA Amendment 5. Seizure of Vessel for Pollution 6. COVID 19 Litigation and Government Intervention Update 7. The On-Line Sale of Goods and Services
- Rui Fernandes has been appointed legal counsel and a director of the Canadian International Freight Forwarders Association.
- Fernandes Hearn LLP is a proud new member of Globalaw™, a top tier international affiliation of over 100 law firms. As a member of Globalaw™, Fernandes Hearn LLP will now have networking access to over 4500 attorneys in 85 countries which promises to enhance our transportation, trade law and business practice.
2(1) In this Act, … Coasting trade means … (f) the engaging, by ship, in any other marine activity of a commercial nature in Canadian waters and, with respect to waters above the continental shelf of Canada, in such other marine activities of a commercial nature that are in relation to the exploration, exploitation or transportation of the mineral or non-living natural resources of the continental shelf of Canada; … 3 (1) No foreign ship or non-duty paid ship shall, except in accordance with a licence, engage in the coasting trade. …Firstly, the Court found that the June 29, 2019 email was not simply a courtesy letter, but rather Transport Canada’s position on the issue. The email was therefore a “decision, order, act or proceeding” as it was an administrative action that had a direct negative effect on Global and was reviewable by the Court. The Court then reviewed the standard of review and had to decide on the basis of reasonableness whether Transport Canada’s interpretation of s. 2(1)(f) of the Coasting Trade Act was reasonable. The Court noted (at paragraph 99):
Here, Global Marine concedes that the standby service of the “Cable Innovator” is commercial in nature, given that an annual fee is paid under the NAZ Contract whether or not the vessel is mobilized to provide repair or maintenance services.Thus, more specifically, the question is whether Transport Canada reasonably found that the standby services fall within the scope of the phrase “in any other marine activity”.The Court applied standard rules of interpretation beginning with the ordinary meaning rule and came to the conclusion that it was not unreasonable for Transport Canada to interpret this standby work as a marine activity falling within s 2(1)(f) of the Coasting Trade Act. The Court went on to add that a contextual and purposeful analysis of the phrase “marine activity of a commercial nature” includes an examination of the purpose of the Act and the legislative history of that provision. The Court looked at the legislative history of the Act noting at paragraphs 114 and 115:
 It is undisputed that the purpose of the Act is protectionist. Section 3(1) prohibits foreign or non-duty paid vessels from engaging in the coasting trade, subject to the exceptions set out in s 3(2), unless granted a licence pursuant to ss 4 or 5.
 As to the legislative history of the Coasting Trade Act, both parties reference the Hansard debates with respect to Bill C-52 which died on the order table but which was a predecessor bill to Bill C-33, which received Royal Assent on June 23, 1992. The debate concerning Bill C-52 included this extract quoted by both parties:
“Coasting Trade” is defined in the Canada Shipping Act as including the carriage by water of good or passengers from one port or place in Canada to another port or place in Canada. This Bill will expand this definition to include all commercial activities in the territorial sea to the edge of the continental shelf or 200 miles, which ever (sic) is the greater. I gather that there was some uncertainty in the existing statute as to whether dredging and the laying of cables could be said to be moving from one place to place within Canada. This Bill has a more clear definition bringing these matters within the scope of the law.
Bill C-52, “Coasting Trade and Commercial Marine Activities Act”,House of Commons Debates, 33-2, Vol 7 (16 September 1987) at 9002 [emphasis added in the judgment].) The Court found that Transport Canada’s interpretation was reasonable given the purpose of the Act, concluding “Transport Canada is owed deference in its interpretation. Further, its reasons are justified in relation to the relevant factual and legal constraints that bear upon it, and it is transparent and intelligible. The decision is reasonable.” Rui Fernandes 3. Foodora Pulls Out of Canadian Market in Wake of OLRB Decision Designating Its Couriers as Dependent Contractors On April 27, 2020, Foodora Inc. (“Foodora”), a takeout delivery app, announced its plan to cease all operations in Canada after May 11, 2020, which plan the Berlin-based company attributes to the highly competitive and saturated food delivery market in Canada. Foodora’s decision to exit the Canadian market follows almost exactly two months after the Ontario Labour Relations Board’s (“OLRB”) decision in Canadian Union of Postal Workers v. Foodora Inc., (*1) (“CUPW v. Foodora”), in which Foodora challenged a union’s application for certification to be the exclusive bargaining agent for couriers working for Foodora in Toronto and Mississauga, Ontario. CUPW v. Foodora In August of 2019, a group of Foodora couriers in Toronto and Mississauga held a vote on whether to join the Canadian Union of Postal Workers (“CUPW”); however, the results of the vote were sealed pending challenges before the OLRB over the employment status of the subject couriers: Foodora challenged CUPW’s application for certification by arguing that the couriers were independent contractors, and therefore, not permitted to unionize. CUPW argued that the couriers were dependent contractors as defined by the Labour Relations Act (the “Act“) (*2), and as such, were entitled to collective bargaining. In its contextual analysis of the relationship between Foodora and the subject couriers, the OLRB reviewed a variety of factors including the conditions and standards set out by Foodora in accordance with which the couriers were to perform the deliveries; whether the couriers could subcontract the delivery services to substitutes; the fact that the Foodora app software was the most important tool used in the couriers’ performance of the services; the risk of loss for the couriers; how payments from customers were controlled, calculated and paid out to restaurants and couriers; and, whether the couriers could improve their chances to make profit, or in other words, engage in true entrepreneurial activity. Following a detailed review of all evidence in relation to the foregoing, the OLRB reasoned that “in a very real sense, the couriers work for Foodora, and not themselves” (*3): the Board determined that couriers could not be described as independent contractors, and were in fact dependent contractors, meaning that, pursuant to the Act, the couriers were legally entitled to unionize. Implications for the Gig-Economy This is not the first case in which the OLRB has been tasked with analyzing the relationship of couriers; however, as stated by the OLRB, CUPW v. Foodora is the first decision with respect to workers in what has been described by the media and the parties as the “gig economy”. While such cases require a balancing of considerations and are heavily fact-based, the OLRB ‘s decision could have sweeping implications for the gig-economy and is seen as a victory for gig-economy workers who often find themselves in precarious working conditions plagued by a lack of job security. While Foodora has stated that its priority is to minimize the impact of its decision to shut down on its partners, employees and couriers, it has not offered details of any measures that will be implemented to alleviate the loss of work for Foodora’s couriers during these challenging times, further highlighting the uncertainty faced by workers in an increasingly gig-based economy. Janice C. Pereira Endnotes (*1) Canadian Union of Postal Workers v. Foodora Inc., 2020 OLRB Case No. 1346-19-R (*2) Labour Relations Act, 1995, S.O. 1995, c.1 at s. 1(1). (*3) CUPW v. Foodora, supra note 1 at para 171. 4. COVID-19 Leads to a Significant Amendment to the Employment Standards Act, 2000 In the days before COVID-19, employers were careful not to make changes to an employee’s terms of employment, as a fundamental change could trigger a claim by the employee for constructive dismissal. Earlier this year the pandemic arrived and in March, without warning, employers were ordered to close their businesses, or if they operated an essential service, many experienced a reduction in available work. Employers were struggling with what to do with their employees. Should they lay them off, or reduce their wages and hours? While federal and provincial employment standards legislation include provisions regarding temporary layoff, the case law provides that, unless the employee’s written employment contract includes the employer’s right to impose a temporary layoff, or it is an implied term in the contract because it is a common practice in the particular workplace, imposing a temporary layoff triggers the employee’s right to claim constructive dismissal and seek damages, which damages are the same as wrongful dismissal damages. Likewise, the case law provides that reducing an employee’s wages, especially if the reduction is greater than 10% to 15%, can also result in constructive dismissal. With the arrival of the lockdown, employers had to make quick decisions, weighing the risks of imposing a layoff or reducing wages and triggering a constructive dismissal claim, or terminating employees and providing severance packages, all while it was unclear how long their businesses would be closed, or workloads reduced. For the employers who imposed temporary layoffs, they had to be prepared to bring the employees back within the fixed time periods set out in the applicable employment standards legislation, failing which, the layoff would become a termination, and the employee would be entitled to termination pay. Quietly, on May 29, 2020, the Ontario Government passed Ontario Regulation 228/20 Infectious Disease Emergency Leave under the Employment Standards Act, 2000 (“ESA”), which impacted both temporary layoffs and the reduction in employee hours/wages. For non-unionized employees who were laid off because of COVID-19 any time between March 1, 2020 and the date that is 6 weeks after the day that the state of emergency order is terminated (the “COVID-19 period”), these employees are deemed to be on an Infectious Disease Emergency Leave (“IDEL”) under the ESA. This means that the recall timelines for a temporary layoff (13 weeks) no longer apply, and the employee remains on leave until recalled or until the end of the COVID-19 period. This also means that the employee is now on a job-protected leave and is entitled to be returned to his or her position – if it still exists – at the end of the IDEL, and if it does not, to a comparable position. If no comparable position exists, the employer will have to provide the employee with the appropriate termination pay. While an employer is required to continue benefits for employees on an ESA job-protected leave, if the employer had not continued benefits during the temporary layoff, they are not required to do so now for the IDEL. The new Regulation also provides that, if an employee’s hours of work are temporarily reduced or eliminated, or their wages are temporarily reduced, for reasons related to COVID-19 during the COVID-19 period, the employee has not been constructively dismissed. If before May 29, 2020 an employee resigned and filed a complaint with the Ministry of Labour that the layoff or reduction in hours or wages amounts to a termination, those complaints can proceed. Effective May 29, 2020 no new complaint can be brought to the Ministry of Labour for any layoff or reduction in hours/wages due to COVID-19 which occurs during the COVID-19 period. The new Regulation does not oust the common law, so we may still see some employees try to assert this right in the courts. Whether an employer can successfully defend such claims on the basis that the ESA deems the employee to be on an IDEL, and therefore he or she was not constructively dismissed, remains to be seen. With the courts currently closed, any such judicial determination may not occur for some time. The new Regulation does not prevent an employer from terminating an employee – presumably, if the lack of work is not temporary, but permanent, the reason for the IDEL is not present as it includes the concept of work that is temporarily reduced or eliminated. However, an employer would be wise to carefully consider the new Regulation when dealing with its employees, both in terms of the employee’s status while off work and his or her rights at the end of the IDEL. Carole McAfee Wallace 5. Seizure of Vessel for Pollution: Beasse v. Canada 2019 FC 68 The plaintiff was an owner of a wooden tugboat originally built in 1902 called the Elf. On January 14, 2014, the Elf sank in the Squamish harbour in British Columbia. Oil began upwelling from the sunken Elf. The Coast Guard raised the Elf and determined that the Elf had to be towed to a salvage yard for further inspection due to the environmentally sensitive area. The Canadian Coast Guard hired a tug to take the Elf to a shipyard, but the Elf sank again on January 17, 2014 in deep water. The Elf was not registered as a commercial vessel or licensed as a pleasure craft, nor was it insured. The plaintiff sued the Canadian Coast Guard for the loss of the Elf. The plaintiff brought a motion for summary judgment. The Federal Court held that the Canadian Coast Guard was acting under its statutory authority to tow the Elf for further inspection after it was raised form the first sinking. Section 180 of the Canada Shipping Act, 2001 (the “Act“) provides statutory authority to remove a vessel if there are reasonable grounds to believe that it will discharge a pollutant (*1). The concept of bailment is not applicable in such circumstances. Unlike in bailment, under s. 180 of the Act, there is no guarantee that the chattels must be returned to the owner. In any event, even if the Canadian Coast Guard was a bailee, and obligated to take such due and proper care as a prudent owner might reasonably be expected to take in similar circumstances, the Canadian Coast Guard was found to have taken such reasonable care during the tow operation. The Court reaffirmed that the tug has a duty to ensure that the tow is more or less ready to be towed, but this does not extend to the seaworthiness of the tow. As long as the tug has exercised competent skill and diligence to ensure that there is no neglect, misconduct or the creation of unnecessary risk, there is no warranty that the tug shall be able to accomplish the task in all circumstances and hazards. If there is any duty owed, it is that of the vessel owner to provide a seaworthy tow. The Canadian Coast Guard was within its mandate to take the Elf and do what it considered necessary to prevent further pollution damage. In respect of the duty of care, once the Canadian Coast Guard had taken reasonable steps to determine that the Elf was ready to be towed, it had no further duty to ensure that the Elf was seaworthy. In any event, the Court found that the Canadian Coast Guard acted reasonably with due diligence. There was no evidence that the towing company failed to exercise due diligence in furnishing a seaworthy tug to conduct the tow, or that the loss of the Elf was caused by the lack of seaworthiness of the tug conducting the tow. The plaintiff’s motion for summary trial was dismissed. Andrea Fernandes Endnotes (*1) S.C. 2001, c. 26 6. COVID 19 Litigation and Government Intervention Update Last month in the May 2020 edition of The Navigator, we reported on the variety of cases that have been commenced so far in Canada surrounding the fallout from the COVID 19 pandemic. Such actions include various types of claims: against insurers for denial of business interruption coverage; by public interest organizations against municipalities for deplorable conditions in the shelter/respite systems; concerning price gouging; by ticket holders against airlines/hotels/travel agencies for failure to refund ticket price; by prisoners against prisons for living and work conditions; by employees concerning dismissal; by cruise line passengers against cruise lines and by students against universities/colleges for failure to provide the promised experience and curriculum. The major class action lawsuits, however, arise out of the claims against long term care facilities and retirement homes. These include a $50-million class action lawsuit in Ontario and a $25-million class-action lawsuit in Alberta on behalf of victims’ families against retirement homes and long term care facilities alleging that those entities were negligent, did not follow proper protocols to prevent an outbreak of COVID-19 and/or failed to isolate those confirmed to have the virus and/or failed to take victims to hospital. In early June 2020, a class action against Altamont Care Community was filed for $20-million in respect of the 50 residents who died and those still resident in the facility. Some of these actions will be affected by possible new legislation that may be on the horizon in Ontario and other provinces. Government Intervention updated On June 16, 2020, the Premier of Ontario confirmed that the provincial government is considering passing legislation that would provide a measure of immunity to legal actions arising out of COVID 19 claims. The beneficiaries of such immunity would include long term care homes and health care providers but would not shield them from liability for negligence or a failure to act in good faith. The intention would be to protect those people and businesses who, despite all efforts, were, through no fault of their own, unable to prevent the spread of COVID 19, which may have caused harm to others. The need for such imposed immunity stems from the required re-stabilization of the long-term care industry and will allow the providers to continue to operate. Without such immunity, there is fear that insurers may exit the market and there will be no coverage available even for those facilities who acted in good faith and were not negligent. Civil immunity, it appears, would not be a blanket provision. There would still be liability where the named actor was negligent or grossly negligent, reckless or irresponsible. In an email to CBC news, Donna Duncan CEO of the Ontario Long-Term Care Association stated, “(Civil liability protection) in no way absolves responsibility when it comes to issues of gross negligence. There remains zero tolerance for the abuse and neglect of our seniors and any reckless or irresponsible operator should still be held accountable.” (*1) Of course, what the standards will be is, as yet, unclear, but any proposed legislation would be expected to also affect lawsuits already commenced. There is precedent in British Columbia where Ministerial Order M094 in respect of the Emergency Program Act was passed as the “Protection Against Liability (COVID-19) Order” in light of the public interest to “protect persons who operate or provide essential services from liability for damages relating, directly or indirectly, to COVID-19, if those persons operate or provide those services, or reasonably believe that they are operating or providing those services, in accordance with, all applicable emergency and public health guidance.” The Order states:
3.(1) A person is not liable for damages resulting, directly or indirectly, from an individual being or likely being infected with or exposed to SARS-CoV-2 as a result of the person’s operating or providing an essential service if, at the relevant time, the person
(a) was operating or providing the essential service in accordance with all applicable emergency and public health guidance, or
(b) reasonably believed that the person was operating or providing the essential service in accordance with all applicable emergency and public health guidance.
(2) Subsection (1) does not apply to a person referred to in that subsection if, in operating or providing the essential service, the person was grossly negligent.Also, in the United States, there has been similar movement. In Illinois, for example, there has been issuance of Executive Orders that provide avenues of immunity from civil liability for certain defined providers (like healthcare professionals, health care facilities and health care volunteers) during COVID -19. Such orders grant immunity from civil liability to those listed providers for any death or injury alleged to have been caused by any act or omission that causes death or injury during the associated time. There is immunity only when the provider was rendering healthcare services or assistance in support of the state’s response to the COVID-19 outbreak. Immunity from responsibility is not provided where any death or injury is caused by the provider’s “wilful misconduct” or by “gross negligence”. Kim E. Stoll Follow Kim on LinkedIn and at url: linkedin.com/in/kim-stoll-transportationlaw Endnotes (* 1) Crawley, Mike, CBC News, June 17, 2020 https://www.cbc.ca/news/canada/toronto/ontario-covid-19-lawsuits-civil-immunity-1.5614365 7. The On-Line Sale of Goods and Services: The Internet Agreement The economic environment that has resulted from the spread of COVID-19 has influenced many companies to sell or consider selling goods or services over the internet. Many of these companies have not sold goods or services over the Internet before. Therefore, they may not be aware of some of the legislative requirements that govern business transactions that are conducted over the Internet. If an Ontario business sells goods or services over the internet, it may need to use an Internet agreement if the consumer is located in Ontario when the transaction occurs. (*1) According to section 20(1) of the Consumer Protection Act (Ontario) (the “Act“), an internet agreement is a consumer agreement formed by text-based internet communications. Further, section 1 of the Act provides that a consumer agreement is an agreement between a company and a consumer in which the company agrees to supply goods or services for payment, or if the company provides rewards points to the consumer on the company’s own behalf or on behalf of another company when the consumer purchases goods or services, or otherwise acts in a manner specified in the consumer agreement. (*2) A consumer transaction is any act or instance of conducting business or other dealings with a consumer, which includes acts or instances that are consummated by consumer agreements. (*3) A business must abide by the provisions of the Act if the consumer’s total potential payment obligation under the internet agreement, excluding the cost of borrowing, exceeds a prescribed amount. (*4) According to its terms the prescribed amount to trigger the application of the Act is $50.00 (O. Reg. 17/05: General). Therefore, if the Internet agreement requires a consumer to pay any amount that exceeds $50.00 for goods or services, the terms of the Act will be applicable. According to section 38(1) of the Act, before a consumer enters an Internet agreement with a company, the company shall disclose the following list of information (“Disclosure List”) to the consumer:(*5) (1) The name of the company and, if different, the name under which the company carries on business. (2) The telephone number of the company, the address of the premises from which the company conducts business, and information respecting other ways, if any, in which the company can be contacted by the consumer, such as the fax number and e-mail address of the company. (3) A fair and accurate description of the goods and services proposed to be supplied to the consumer, including the technical requirements, if any, related to the use of the goods or services. (4) An itemized list of the prices at which the goods and services are proposed to be supplied to the consumer, including taxes and shipping charges. (5) A description of each additional charge that applies or may apply, such as customs duties or brokerage fees, and the amount of the charge if the company can reasonably determine it. (6) The total amount that the company knows would be payable by the consumer under the agreement, including amounts that are required to be disclosed under subsection five above, or, if the goods and services are proposed to be supplied during an indefinite period, the amount and frequency of periodic payments. (7) The terms and methods of payment. (8) As applicable, the date or dates on which delivery, commencement of performance, ongoing performance and completion of performance would occur. (9) For goods and services that would be delivered, (a) the place to which they would be delivered, and (b) if the company holds out a specific manner of delivery and intends to charge the consumer for delivery, the manner in which the goods and services would be delivered, including the name of the carrier, if any, and including the method of transportation that would be used. (10) For services that would be performed, the place where they would be performed, the person for whom they would be performed, the company’s method of performing them and, if the company holds out that a specific person other than the company would perform any of the services on the company’s behalf, the name of that person. (11) The rights, if any, that the company agrees the consumer will have in addition to the rights under the Act and the obligations, if any, by which the company agrees to be bound in addition to the obligations under the Act, in relation to cancellations, returns, exchanges and refunds. (12) If the internet agreement is to include a trade-in arrangement, a description of the trade-in arrangement and the amount of the trade-in allowance. According to section one of the Act, trade-in arrangement means an arrangement under which a consumer agrees to sell his or her own goods or services to the company and the company accepts the goods or services as all or part of the consideration for supplying goods or services, and trade-in allowance means the greater of, (a) the price or value of the consumer’s goods or services as set out in a trade-in arrangement, and (b) the market value of the consumer’s goods or services when taken in trade under a trade-in arrangement. (13) The currency in which amounts are expressed, if it is not Canadian currency. (14) Any other restrictions, limitations and conditions that would be imposed by the company. (*6) The items of disclosure that are mentioned above must be easily accessible and available to the consumer in a manner that ensures that the consumer has access to the information, and the Disclosure List must be presented in a form that the consumer is able to save and print. (*7). For instance, since the Internet agreement will likely be accessible to the consumer on the company’s website, during the checkout process the company should make the Disclosure List available to the consumer on its website before the consumer clicks on an icon to accept the terms and conditions of the Internet agreement. The company’s website should also enable the consumer to print the Disclosure List. The company shall provide the consumer with an express opportunity to accept or decline the internet agreement, and the consumer must be provided the opportunity to correct errors in the internet agreement prior to entering it. (*8) A copy of the Internet agreement must be delivered to the consumer within 15 days after the consumer enters the agreement. The copy of the Internet agreement must include the Disclosure List, the name of the consumer and the date that the Internet agreement was entered by the consumer. (*9) A copy of the Internet agreement shall be delivered to the consumer by transmitting it in a manner that ensures that the consumer is able to retain, print and access it for future reference, such as by sending it by e-mail to an e-mail address that the consumer has given the company for providing information related to the agreement, transmitting it by fax to the fax number that the consumer has given the company for providing information related to the agreement, mailing or delivering it to an address that the consumer has given the company for providing information related to the agreement, or providing it to the consumer in any other manner that allows the company to prove that the consumer has received it. (*10) A consumer may cancel an Internet agreement at any time from the date that the agreement is entered into until seven days after the consumer receives a copy of the agreement if the company failed to furnish the information that is described in the Disclosure List to the consumer, or the company did not provide the consumer with an express opportunity to accept or decline the agreement or to correct errors in the agreement immediately before entering the Internet agreement. (*11) Further, a consumer may cancel an Internet agreement within 30 days after the date that the Internet agreement is entered if the company fails to provide the consumer with a copy of the Internet agreement within 15 days after the consumer enters the Internet agreement. (*12) Throughout the lifespan of a company, drastic changes to its environment can affect any such company’s ability to continue operations and cash flow. Some companies may need to strategically adapt their business operations’ model in order to thrive and to manage challenges to supply, demand and customer services. For many companies this means the implementation of an online platform to facilitate the sale of goods and services in accordance with the terms and conditions of an internet agreement. If you wish to introduce or have already introduced an online platform to facilitate the sale of goods and services, please do not hesitate to contact us to ensure that you require an internet agreement and to ensure that, among other things, your company meets the disclosure, delivery and content requirements prescribed by the Act. Wayne O. Lewis Endnotes: (*1) “Ministry of Government and Consumer Services” Contracts: best practices and types. https://www.ontario.ca/page/contracts-best-practices-and-types. (*2) Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A. at section 1, 20(1). (*3) ibid. at section 1. (*4) ibid. at section 37. (*5) O. Reg. 17/05 at section 32. (*6) ibid (*7) ibid. at section (3). (*8) ibid. at section (2). (*9) ibid. at section 33 (2). (*10) ibid. at section 33 (3). (*11) Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A. at 40 (1) at section 40 (1). (*12) ibid. at section (2).
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