Source: https://www.fernandeshearn.com/newsletter-2016-july-fernandes-hearn-toronto-law-firm/
Timestamp: 2019-04-21 18:51:35+00:00

Document:
5. Bye-Bye to the Bulk Sales Act?
Louis Amato-Gauci attended the 87th Annual Meeting of the Association of Transportation Law Professionals, in New Orleans, June 19-21, 2016.
Gordon Hearn attended the Transportation Lawyers Association Executive Committee Retreat in Chicago, Illinois on July 15-16. Gordon is a Past President of the Transportation Lawyers Association.
Kim Stoll and Jaclyne Reive attended the Toronto Transportation Club’s Ladies on the Links event at the Country Club in Woodbridge on July 21, 2016.
Rui Fernandes will be speaking on “Limitation of Liability of Shipowners” at the Canadian Transport Lawyers Association annual conference being held in Toronto September 22-25, 2016. Kim Stoll is the program chair. Louis Amato-Gauci, Jaclyne Reive and Gordon Hearn will also be attending.
In an important decision the Supreme Court of Canada recently held that non-unionized employees cannot be terminated absent just cause and that adequate severance pay is not a sufficient substitute. (*1) The Court reversed a decision of the Federal Court of Appeal and found that the “unjust dismissal” provisions of the Canada Labour Code that apply to unionized employees also apply to non-unionized employees. Otherwise, employees who are not expressly hired for a fixed term are now entitled to job security for life unless the employer can meet a very high threshold test of “just cause” for their dismissal. The decision affects half a million non-unionized employees working in banks, telecommunications, marine shipping, interprovincial trucking companies, interprovincial railways, airlines and other federal businesses.
In labour and employment law, some general principles developed at common law are: (1) unionized employees cannot be terminated absent just cause and (2) non-unionized employees may be terminated at any time without any right to reasons for termination so long as the employer gives reasonable notice of termination or reasonable compensation in lieu of notice. Provincially regulated employers have for decades enjoyed the right to dismiss employees on a without-cause basis to efficiently manage their human resource compliment, which could include terminating employees who simply proved, for one reason or another, to no longer be a good fit. The only requirement under provincial employment standards legislation is that the employer must provide the terminated employee with reasonable notice of dismissal, or pay in lieu thereof, plus severance pay under certain circumstances.
Unionized employees who are terminated have the ability to seek reinstatement with back pay or other forms of compensation before independent labour arbitrators. This right has now been given to non-unionized federally regulated employees. Federally regulated employers will now have to expend significant time, money and resources in the hopes of building a case of just cause against the employee.
1. The affected employee must have at lease twelve months of service with the employer.
2. The regime does not apply to managers; however this term is interpreted very narrowly. Supervisors, for example, may not be considered managers.
3. The regime does not apply to terminations for lack of work.
4. The regime does not apply to terminations for discontinuance of a function.
The Supreme Court of Canada decision involved the dismissal without cause of Joseph Wilson. Mr. Wilson was employed with a federally regulated employer, Atomic Energy of Canada Ltd. (AECL) for four and a half years. Mr. Wilson did not have a disciplinary record and there was no serious misconduct leading to his termination. AECL admitted that he was not terminated for cause, but it had provided Mr. Wilson with a generous dismissal package that included six months’ pay in lieu of notice. Mr. Wilson could have sued in court for wrongful dismissal. Instead, he availed himself of the Canada Labour Code regime and made a complaint to an inspector under the Code, whosemandate was to try to settle the matter within a reasonable time, failing which the employee can apply for an adjudicator. In this case a labour adjudicator was appointed. The employer sought a preliminary ruling on whether a dismissal without cause together with a sizeable severance package meant that the dismissal was a just one.
In our view, this case exposes a serious concern for the rule of law posed by presumptively deferential review of a decision-maker’s interpretation of its home statute. In the specific context of this case, correctness review is justified. To conclude otherwise would abandon rule of law values in favour of indiscriminate deference to the administrative state.
Our interpretation is supported by the wording of ss. 230 and 235 of the Code. Because ss. 230 and 235 of the Code do not apply to dismissals for just cause (ss. 230(1) and 235(1)), they must necessarily apply to dismissals without cause. Otherwise they would be substantially redundant. By prescribing minimum notice periods and severance pay that are owed to employees who are terminated (including dismissed) without cause, Parliament clearly intended to permit federally regulated employers to dismiss non-unionized employees without cause.
The decision means that Mr. Wilson can now proceed with the remedy portion of his hearing before the Adjudicator. The Adjudicator can order AECL to reinstate him, with back pay.
1. The decision has wide application in the transportation field, in trucking, aviation and rail. Trucking companies that operate outside the borders of one province are subject to the Canada Labour Code and this decision.
In the trucking area the use of independent contractors is common. In fact the Workplace Safety & Insurance Board has indicated that “Hiring subcontractors and/or owner-operators is a common practice in the transportation industry.”(*3) However, if an owner-operator is in an exclusive, or quasi-exclusive relationship with the transport company, a court may conclude that the owner-operator is a dependent contractor. Fernandes Hearn LLP has commented on the dangers of such a relationship in its November 2015 and February 2016 newsletters. Simply using the term “independent contractor” in an agreement may not be sufficient for the determination of the status of the individual.
This point was recently illustrated in the decision in the Ontario Superior Court in Keenan v. Canac Kitchens 2015 ONSC 1055, affirmed 2016 ONCA 79. In Canac Kitchens the claimants, a husband and wife, both worked for Canac for over twenty years. They began their relationship with Canac as employees. Lawrence Keenan worked for Canac from 1979 to 2009. Marilyn Keenan began working for Canac in 1983. In October 1987, both were summoned to a meeting with Canac management at which time they were told they would no longer be employees, but instead would carry out their work for Canac as independent contractors. They were also told that they should incorporate.
The Keenans were informed that, under the new arrangement, they would be responsible for paying installers. The installers would provide their own trucks and would pick up kitchens from Canac and deliver them to job sites for installation. Canac would set the rates to be paid to the installers and pay the Keenans, who, in turn, would pay the installers. The Keenans, as Delivery and Installation Leaders, would, as before, also be paid on a piecework basis for each box or unit installed; however, the amount paid would be increased to reflect the fact that the Delivery and Installation Leaders were being paid gross, without deductions for Unemployment Insurance, Canada Pension Plan, or Income Tax. Delivery and Installation Leaders would now be responsible for damage to cabinets while in transit, and were expected to obtain insurance to cover such liability.
The Keenans signed a contract with Canac, which described them as independent contractors. They never incorporated. They did register the business name “Keenan Cabinetry”. They obtained the insurance required by their agreement with Canac, and they registered with what was then known as The Workers’ Compensation Board. Although they were responsible for cutting cheques to the installers they supervised, the installers were not their employees. Keenan Cabinetry never registered as an employer with the Canada Revenue Agency for the purposes of withholding taxes and other source deductions.
As far as the plaintiffs were concerned, the 1987 agreement notwithstanding, they continued to consider themselves as loyal employees of Canac. They enjoyed employee discounts. They wore shirts with company logos. They had Canac business cards. Mr. Keenan received a signet ring for 20 years of loyal service. To the outside world, and in particular, to Canac’s customers, the plaintiffs were Canac’s representatives.
In March 2009, the plaintiffs were called to a meeting and were told that Canac was closing its operations and their services would no longer be required. The Canac work quickly dried up.
The Keenans sued for wrongful dismissal.
Employment relationships exist on a continuum; with the employer/employee relationship, at one end of the continuum, and independent contractors at the other end. Between those two points, lies a third intermediate category of relationship, now termed dependant contractors …Like employees, dependant [sic] contractors are owed reasonable notice on termination.
1. Whether or not the agent was limited exclusively to the service of the principal.
2. Whether or not the agent is subject to the control of the principal not only as to the product sold, but also as to when, where, and how it is sold.
3. Whether or not the agent has an investment or interest in what are characterized as the tools relating to his service.
4. Whether or not the agent has undertaken any risks in the business sense, or, alternatively, has any expectation of profit associated with the delivery of his service as distinct from a fixed commission.
5. Whether or not the activity of the agent is part of the business organization of the principal for which he works. In other words, whose business is it?
Justice Mew concluded that the Keenans were entitled to 26 months of notice after they were found to be dependent, rather than independent, contractors of the employer.
If the Keenans had worked for an interprovincial trucking company, the Wilson v. AECL decision of the Supreme Court of Canada would apply and simply providing adequate notice would not be sufficient. The employer could be faced with reinstatement and back pay.
Trucking companies that operate outside the borders of one province should review and ensure that all their contracts with owner-operators establish a relationship that is truly independent. The consequences are now more severe if the contractor is found to be a dependent contractor. Trucking companies are also advised, where possible, to hire independent contractors that are corporations rather than individuals, with full authority to hire their own drivers, and the ability to haul loads for multiple carriers.
2. Federally regulated employers should conduct a performance review on each employee prior to the completion of his or her first 12 months of service, and not just after three or six months. If an employer has any concerns about the fit or regarding performance they should terminate the employee within that 12-month period. Upon completion of a full 12 months of employment, a federally-regulated employee will acquire the added protection of the Code’s unjust dismissal regime.
3. Employees can be hired on a fixed term basis, however it is important that their contract not include an automatic renewal or “evergreen” clause, as this could bring into play the added protection of the Code’s unjust dismissal regime.
What are some examples of possible just cause?
What do employers need to consider before deciding there is just cause?
Each situation must be looked at on a case by case basis. Very serious acts, such as those involving wilful misconduct or violence, might happen once and be sufficient to show just cause. This type of behaviour can damage the employment relationship to the point it cannot reasonably continue.
In short, employees should not be surprised by a termination for just cause in these types of circumstances.
Maritime liens developed as a way of protecting those providing fundamental services to ships for their fees and those victims of negligent vessels regarding their compensation. The wrongdoer is the vessel not the owner. The lien protection was necessary since vessels moved freely between jurisdictions and could more easily escape creditors.
Canpotex Shipping Services Limited v Marine Petrobulk Ltd. (“Canpotex”) (*5)is a recent case highlighting the Court’s process regarding the assertion of maritime liens under S. 139 of the Marine Liability Act.
The plaintiff, Canpotex Shipping Services Limited (“Canpotex”), entered into a contract with the defendant, O.W. Supply & Trading A/S (“OW Trading”), for the purchase of marine bunkers for vessels that Canpotex chartered. Canpotex chartered two foreign vessels (the “Vessels”) and the associated contracts provided that Canpotex would pay for all fuel and would not allow any liens against the vessels. Canpotex ordered marine bunkers from as subsidiary of OW Trading, O.W. Bunkers (U.K.) Limited (“OW UK”). The actual supplier of the bunkers was Marine Petrobulk Ltd. (“MP”), a Canadian bunkers supplier, which then invoiced OW UK for the amount owing of over $650,000 USD. OW UK in turn invoiced Canpotex.
Before payment was made, OW UK became insolvent and declared bankruptcy. ING Bank N.V. (“ING”) was specifically assigned all of OW UK’s receivables and appointed Receivers, who were also defendants.
MP then demanded payment from Canpotex, which had ordered and received the bunkers. MP claimed a maritime lien pursuant to S. 139 of the Marine Liability Act and threatened to arrest the Vessels (*6), if it was not paid.
OW UK/ING’s Receivers also demanded payment from Canpotex and also threatened to exercise all powers available to them including the arrest of the Vessels if payment was not made.
Canpotex did not pay either the ING Receivers or MP given the competing demands and brought interpleader proceedings (*7) in the Federal Court of Canada. To avoid the assertion of liens or ship arrest, Canpotex obtained an order of the Federal Court (on consent) directing it to pay the principal amount plus interest of $661,050.63 USD (the “Funds”) into its solicitors’ trust account. Canpotex then brought proceedings asking for, amongst other things, (1) a declaration regarding the entitlement of the defendants or any one of them to any or all of the Funds; (2) orders for payment out to the appropriate party; and (3) a declaration as to whether, upon such payment out or payment into trust, all liability of Canpotex and the Vessels and all liens asserted were extinguished. All of the defendants brought their own motions regarding their own particular entitlement to the Funds.
MP claimed a contractual lien pursuant to contractual terms with Canpotex as well as a maritime lien under s. 139 of the Marine Liability Act. ING opposed MP’s claim to a lien in respect of the Funds given that a lien would allow direct payment of the Funds to MP and outside of OW’ bankruptcy estate. ING also sought to preserve Canpotex’s debt should the Court find that the Funds should be paid directly to MP by attacking the use of interpleader proceedings.
Clearly, ING is seeking to preserve the debt that Canpotex owed to OW UK in the event that the Court decides that the Funds are to be paid to MP. In my view, that bridge has already been crossed. ING has already accepted that the Court should decide the allocation of the Funds issue pursuant to interpleader proceedings under Rule 108. In my view, that acceptance necessarily involves the concession that these are suitable proceedings for interpleader under Rule 108.
The Court decided which company would receive pay out of the Funds and also considered which parties had liens, if any, and whether Canpotex’s liabilities and any claims against the Vessels were extinguished by the payment into trust.
The Court went on to consider the liens.
The Court stated that these provisions made it clear that MP had a contractual lien against the Vessels for all sums owed by Canpotex, as MP’s customer; however, it was not clear that MP’s contractual lien extended beyond the Vessels to the Funds held in trust as “any asset beneficially owned” by Canpotex, as highlighted above.
 …..The Funds were put up by Canpotex so that neither MP nor OW UK would asset (sic) liens and arrest the Vessels. This doesn’t mean that they replace the res.
 What is clear, I think, is that ING has no lien or security interest against the Vessels or any asset beneficially owned by Canpotex, including the Funds, so that once Canpotex pays MP the purchase price for the bunkers supplied to the Vessels from the Funds, ING has no claims against Canpotex or any asset Canpotex or the other Plaintiffs own or control.
Ultimately, the Court found that MP and ING’s entitlement to the Funds depended upon the contractual terms between the parties. Pursuant to the MP conditions, the plaintiff and OW UK were both customers of MP and were jointly and severally liable to pay it for the bunkers delivered. Accordingly, the plaintiff was found liable to pay to MP the full invoice price of MP for the bunkers delivered. ING, in the “shoes” or position of OW UK was entitled to an amount equal to the mark-up of OW being the difference between the OW UK invoice and the MP invoice.
Further, the Court found that MP had both a contractual and a S. 139 maritime lien in the Vessels that was not extinguished until such a time as MP received payment in full for the marine bunkers.
Canpotex highlights the Court’s process in determining whether parties can assert maritime liens under S. 139 of the Marine Liability Act. The Court interpreted S. 139 to include the provision of bunkers where the statutory requirements of that section were met; that is, MP was a Canadian company, carrying on business in Canada and it supplied goods to the foreign Vessels for their operation. OW UK did not fit into this description and had not supplied, paid for or received payment for the bunkers.
The use of interpleader, as described above, is also confirmed as appropriate where the intermediary and the actual bunkers supplier both demand payment of the charterer, who has yet to pay any party.
(*1) There are many different types of maritime liens, which are not canvassed in this article.
(*3) There are three differences between a statutory right in rem lien and a maritime lien. The former arises on the day of the arrest and subject to any existing rights. Some statutory right in rem liens are defeated by a transfer of title (unless a statute says otherwise) and there must be personal liability on the part of the owner.
(*4) In S. 139 (2.1), there are differences for stevedoring and lighterage services , which must be done at the request of the owner or person acting on behalf of the owner. Section 139(2.1) is subject to s.251 of the Canada Shipping Act, 2001 which provides that, when stevedores contract with the authorized representative or bareboat charterer of a vessel, they have the right to maintain an action in rem, but this right is only valid while the vessel remains under charter.
(*6) Where parties have a dispute involving a maritime claim (as identified in the Federal Court Act S. 22(2) which includes under subsection (m): goods, materials or services supplied to a ship for the operation or maintenance of a the ship), it is possible to arrest the ship involved. Claims involving in rem jurisdiction may use ship arrest to advantage as bail or security is posted for the arrested ship’s release allowing for immediate satisfaction of any judgment. See also (*8) below. Please see the author’s article “Ship Arrest: Warrant Confirmed and Sale Pendente Lite Denied” in the Fernandes Hearn LLP Newsletter, June 2016.
(*7) Interpleader proceedings are brought under the Rules of the Federal Court, S 108. Such proceedings are brought where two or more parties make conflicting claims regarding property as against another person who (1) is in possession of that property; and (2) has no interest in the property; and (3) is willing to deposit that property or dispose of it pursuant to court directions. The court then makes directions as to the claim and its handling.
(*8) This decision also includes review and consideration of contractual issues as between the parties that are not canvassed in this article.
(*9) This is in contrast to a ship arrest where posting of the bail or security releases the vessel and the monies are left in court until adjudication or settlement. In this situation, the maritime lien would attach to the Funds.
Important changes are being made to Ontario’s Repair and Storage Liens Act (*1) (the “RSLA”) as pertain to the repair and storage of motor vehicles. These changes are being heralded by different interests. Motor vehicle insurers and owners can embrace tightened rules in whether – or for how much – a lien may be claimed by a towing company following the removal of a tractor from a roadside accident. Secured creditors such as motor vehicle lenders will benefit by the increased regulation of what might be claimed by way of a ‘preferential’ lien by a towing company or a storage facility – and the rest of us who for what ever reason will have a car towed will benefit from related changes being made to the Ontario Consumer Protection Act, 2002. (*2) (the “CPA”).
These changes are being introduced in two discrete phases.
The RSLA is the statutory means whereby repairers and storers of goods in Ontario are granted lien rights for unpaid services. The legislation provides certain conditions precedent for the assertion of a repairer’s lien – a “repairer” being one who makes a repair on the understanding that he or she will be paid for the repair.
The legislation also provides conditions precedent for a storer’s assertion of a lien, a “storer” in similar fashion being defined as a person who receives an article for storage or repair on the understanding that he or she would be paid for the storage or the storage and repair as the case may be.
The legislation includes in the definition of “repair” for these purposes a) the transportation of the article for the purpose of making a repair, b) the towing of an article, and c) the salvage of an article.
On July 1st the RSLA was amended in various respects. One amendment was to reduce the maximum time period during which a storer could provide the necessary notice of a lien over a motor vehicle bearing a permit issued under Ontario’s Highway Traffic Act. (*3) This time period used to be 60 days. It is now 15 days. Accordingly, if notice is not provided within 15 days, a storer’s lien is then limited to the unpaid amount owing for that period. The 60 day notice period remains unchanged for out of province vehicles.
Under the RSLA a storer of vehicles has priority over other secured creditors who have registered security interests in the article being stored. Under the former 60 day regime, a storer was allowed to accumulate storage costs for up to 60 days without notifying the owner of motor vehicle when the vehicle was brought into storage by a person other than the owner or a person having the authority of the owner. As mentioned above, with the new change to 15 days, a failure to give the vehicle owner notice within that time will have the effect of capping the storage charges that can be claimed to 15 days of storage fees.
On the same date the RSLA also saw another key amendment, intended to provide guidance on what should be included in calculating the “fair value” of the repair or storage of an article (which can include a tractor or something much smaller…).
(b) where no such amount had been agreed upon, the fair value of the storage or storage and repair, including all lawful claims for money advanced, interest on money advanced, insurance, transportation, labour, weighing, packing and other expenses incurred in relation to the storage or storage and repair of the article.
(a) The amount agreed upon for the storage or storage and repair of the article.
(b) Where no such amount has been agreed upon, the fair value of the storage or storage and repair, determined in accordance with any applicable regulations.
1. The repairer’s fixed costs, variable costs, direct costs and indirect costs.
3. Any other relevant factors.
These amendments should be of assistance in establishing objective – and legally relevant – criteria for a court (or, for that matter, parties trying to negotiate a resolution of a dispute) to take into consideration to assess the “fair value” of a service.
On this date amendments to the CPA and new Ontario Regulation 426/15 come into force, adding new part VI.1 to the CPA dealing with towing and storage services provided to “consumers” as defined by the CPA (*4). This new regime provides mandatory content to be provided to consumers by a towing company and/or storage company similar in spirit and effect to Part VI of the CPA dealing with repairs done for a consumer.
disclose certain information, in writing, such as the provider’s business name, contact information and address to where the vehicle will be towed.
There will be some exemptions for certain towing companies and storage services providers, for example where services are provided under a prepaid agreement or membership in an association such as the Canadian Automobile Association (CAA) where the consumer is not be charged for the specific service being provided. These exemptions will also apply when the tow and any storage is being provided in the context of a vehicle purchase and the consumer is not charged for the specific service being provided.
When a vehicle is towed and stored for law enforcement purposes, or detained or impounded under other statutes or regulations or municipal by-laws, or a result of a lawful power of seizure a limited number of the above new rules will apply inasmuch as the consumer generally remains responsible for these types of charges. The consumer will not be protected by requiring the provider to make publicly available a statement of rates and other information.
Further, by way of an important development, a lien for towing and storage will be capped at the maximum amount permitted under the CPA. As of January 1, 2017 the RSLA will provide as follows: “in cases where Part VI.1 of the CPA applies, the amount of a repairer’s lien … with respect to tow and storage services shall be determined in accordance with the prescribed requirements, if any”.
a tow and storage provider cannot charge a greater amount simply because the cost is to be paid by an insurer or another third party, or being impounded or detained for law enforcement purposes.
if an authorization includes an estimate, the amount charged may not exceed it by more than 10 per cent. However, the consumer or a person acting on their behalf can agree to change the estimate if they require additional or different services.
Certainty and predictability are always good for commerce, and the above amendments will help objectify how lien amounts will be calculated while at the same time providing further protections for consumers who were unlucky in the first place having to have a vehicle towed.
(*2) S.O. 2002, c. 30 Sch A.
(*4) A “consumer” is defined as “an individual acting for personal, family or household purposes and does not include a person who is acting for business purposes”.
The prospect of the BSA’s imminent repeal should be of particular interest to carriers and freight intermediaries that are seeking to expand their operations through strategic acquisitions here in Ontario. Within the transportation industry, buyers have a greater incentive to structure their acquisitions by way of asset purchase transactions rather than by way of mergers or share purchases, so as to avoid the risk of inheriting the target company’s negative safety performance record. A buyer who has successfully negotiated for the transaction to proceed by way of an asset purchase must then immediately determine whether the BSA applies, and if so, whether and how to comply with its requirements.
1. The buyer must obtain a closing affidavit from the seller, listing all its secured and unsecured trade creditors, showing the names and addresses of the creditors, the secured collateral (if any), and the amount of each debt that is outstanding at the time of closing.
2. If the seller’s statement shows that the claims of the unsecured and secured trade creditors exceed $2,500, the buyer must then ensure all trade creditors that have been listed are paid, unless alternate arrangements are made. This could involve a direct payment of the claims out of the purchase price on closing; or the assumption by the buyer of some or all of the claims at the time of closing; or payment of all or part of the purchase price to a trustee, with the consent of the trade creditors. Alternatively, the buyer may rely upon written waivers issued in a prescribed form by each of the seller’s creditors.
4. In the alternative, the buyer may apply for an exemption from the Superior Court of Justice; however, an exemption cannot be granted unless there is unequivocal evidence that the transaction will be advantageous to the seller and that it will not impede the seller’s ability to settle its debts with any of its trade creditors.
Compliance can be costly and cumbersome, while failure to comply can trigger significant consequences. And yet, more often than not buyers and sellers of businesses voluntarily waive compliance with the BSA altogether, with the buyer choosing instead to rely on the seller’s representations, warranties and indemnities concerning outstanding liabilities at the time of closing, and perhaps setting aside a holdback amount from the purchase price, that can be accessed by the buyer in the event of a third-party claim arising post-closing.
Effectively, a buyer who has not taken steps to comply with the BSA may find that it has to pay twice for the purchased assets. Contractual indemnities will only go so far to mitigate the added cost, particularly if the purchase transaction has left behind a seller that is nothing more than a shell company without any operating assets.
1. To make it more difficult for business owners to sell their stock in bulk and abscond with the proceeds without paying their creditors.
2. To require the bulk purchaser to take certain steps prior to closing the transaction, or lose its title to the assets as against the seller’s unpaid creditors.
3. To require the bulk purchaser to either satisfy themselves that the seller’s debts had all been paid, or take steps to ensure that the proceeds from a sale are distributed among the seller’s creditors, rather than being paid directly to the seller without deduction.
It is worth noting that this third requirement goes far beyond the obligations imposed on a buyer under similar legislation in the United States. Under the American model, a buyer is only required to ensure that the seller’s creditors have received notice of the pending transaction.
Upon introducing Bill 218 for First Reading, the Minister for Economic Development and Growth, Brad Duguid, informed the Legislature that: “[t]he amendments are intended to reduce regulatory burdens to save businesses time and money.” Indeed, compliance with the BSA can add significant costs and delays to asset purchase transactions. However, the burdens imposed by the BSA go far beyond timing and costs. The threat of voidability undermines transaction finality and contributes to an inefficient use of scarce judicial resources.
– The Ontario Personal Property Security Act (the “PPSA”) provides for the creation and perfection by registration of security interests in the assets of both commercial entities and consumers. The PPSA also permits the creation of purchase-money security interest, which gives the creditor the added benefit of a super-priority lien over all the equipment, vehicles and inventory it has supplied to the debtor.
– The Fraudulent Conveyances Act (Ontario) permits a creditor to recover property that the debtor has conveyed or transferred to others with the intent to defeat, delay or defraud the rights of creditors or others.
– The Assignment and Preferences Act (Ontario) gives creditors an effective remedy in the event that a debtor transfers assets to one or more of its other creditors in preference to the others.
– The Absconding Debtors Act (Ontario) provides for the seizure of real or personal property in Ontario if a resident of Ontario leaves the province with the intent to defraud creditors.
– The Ontario Business Corporations Act and the Canada Business Corporations Act both provide creditors with recourse to the oppression remedy and derivative actions.
– The Canada Bankruptcy and Insolvency Act (the “BIA”) provides that a court can either void a transfer that takes place at undervalue, or order a party to the transfer to pay to the trustee in bankruptcy the difference between the fair market value of the property or services sold or disposed of by the debtor and the actual consideration given or received by the debtor. The BIA also permits the supplier or distributor of goods to repossess goods that it has delivered to a customer who later becomes bankrupt or placed into receivership.
The continued existence of the BSA here in Ontario is now totally inconsistent with mainstream commercial practices observed elsewhere in Canada. Arguably, the continued existence of the BSA places the prospective seller of a business based in Ontario at a competitive disadvantage against the prospective seller of a business based elsewhere in Canada. Simply put, as a result of the BSA, the acquisition of an Ontario business by means of an asset purchase has inherently higher risks than the acquisition of any other Canadian business.
Potential creditors can now get effective security on inventory. It is easy for a creditor to obtain a credit history of any established business from a credit reporting agency.
Sometime after the Legislative Assembly reconvenes from its current summer recess, Bill 218 will be placed on the agenda for second reading and a full debate. It will then be referred to a committee of the legislature for further review prior to being voted on in third reading. Those of us who work in the M&A field will no doubt be waiting with bated breath until Bill 218 passes into law.
(*1) Bulk sales legislation was repealed in all the other Canadian provinces and territories between 1985 and 2008: British Columbia: Sales of Goods in Bulk, R.S.B.C. 1979, c. 371 – repealed as of May 17, 1985; Northwest Territories: Bulk Sales Act, R.S.N.W.T. 1988, c. B-2 – repealed as of April 18, 1991; Manitoba: Bulk Sales Act, R.S.M. 1987, c. B100 – repealed as of June 24, 1992; Alberta: Bulk Sales Act, R.S.A. 1980, c. B-13 – repealed as of July 8, 1992; Saskatchewan: Bulk Sales Act, R.S.S. 1978, c. B-9 – repealed as of August 24, 1992; Yukon Territory: Bulk Sales Act, R.S.Y. 1986, c. 14 – repealed as of December 17, 1992; Nova Scotia: Bulk Sales Act, R.S.N.S. 1989, c. 48 – repealed as of November 3, 1997; Prince Edward Island: Bulk Sales Act, R.S.P.E.I. 1988, c. B-6 – repealed as of April 27, 1998; Québec: Articles 1767 to 1778 of the Civil Code – repealed as of June 13, 2002; New Brunswick: Bulk Sales Act, R.S.N.B. 1973, c. B-9 – repealed as of August 1, 2004; and Newfoundland & Labrador: Bulk Sales Act, R.S.N.L. 1990, c. B-11 – repealed as of June 4, 2008. Nunavut never enacted bulk sales legislation.
(*3) Excelsior Brands Ltd. v. Italfina Inc., 24 O.R. (3d) 801;  O.J. No. 4889.
(*5) Alberta Law Reform Institute, Report No. 56 – The Bulk Sales Act (January 1990) at 1-2.
(*6) National Trust Co. v. H & R Block Canada Inc.,  3 SCR 160, 68 OR (3d) 800; 232 DLR (4th) 193; 38 BLR (3d) 1; 312 NR 91; 44 CBR (4th) 249.
(*7) Supra, note 4, at 2-3.
Eighteen months is about one-third the length of World War I, about twice the gestation period for a human baby, and about eight times the length of Columbus’ voyage to the New World. Now, according to the Supreme Court of Canada, it is also the maximum amount of time for the Crown to prosecute a regulatory offence in most instances.
Provincial regulatory statutes cover the gambit of commercial activity. They range from the sale of tobacco products to occupational health and safety matters to the Highway Traffic Act and the transportation of dangerous goods. Most are prosecuted pursuant to the Provincial Offences Act in the Ontario Court of Justice as pseudo-criminal matters and in similar courts in other provinces.
One of the more common defences in these cases is a defence of “unreasonable delay” as all accused persons are constitutionally entitled to a speedy trial in Canada. Delays often occur, for example, where the Crown fails to make prompt disclosure of its materials, or where it has difficulty scheduling its officers to attend as witnesses.
That right – the right to a speedy trial – extends to a corporate accused, not just a natural-born human.
Time begins ticking for the purpose of assessing reasonableness under the Charter at the moment the charge is laid (which must be within six months of the offence date, at least in Ontario) (*2). Deductions are made for delay that is attributable to the accused or for matters where the accused waived its rights (e.g. where an accused has consented to an adjournment for a more convenient trial date).
For the past many years, it has been unclear exactly how much delay is enough delay to have a charge “stayed” (i.e. to have it discarded by the Court). As a rule-of-thumb, it generally took at least a year-and-a-half. Sometimes, it could take closer to two full years.
Until recently, the Court would rely upon the 1992 criminal case of R. v. Morin (“Morin”), where the Supreme Court of Canada had provided a “contextual” approach (*3). Under the old Morin scheme, the Court could consider factors such as the seriousness or gravity of the offence, or the absence of prejudice to the accused, in determining reasonableness. Critics charged that the system fostered a culture of delay, or, at the least, that it lacked sufficient incentives to encourage the parties to take proactive steps.
Earlier this month, in another criminal case, called R. v. Jordan,the Supreme Court of Canada reconsidered the “delay” issue. The majority began with the principle that “[t]imely justice is one of the hallmarks of a free and democratic society”, followed by a recognition of the above-noted criticisms (*4).
In a narrow 5-4 split, the Court found that there was a presumptive 18-month ceiling for matters in provincial courts and a 30-month ceiling for criminal cases in superior courts (where more procedure is involved), counting from the time the charge is laid to the end of trial (*5).
Theoretically, there has been no shifting of any evidentiary burden. In other words, the accused continues to have an onus to prove any allegation of unreasonable delay; however, that delay will be presumed to be unreasonable if it exceeds 18 months in the case of provincial courts or 30 months in the case of superior courts (*6). Delays attributable to the accused, or waived by the accused, will continue to be deducted. In other words, they will not count towards the presumptive ceiling. However, institutional delay – even if it is not the fault of the prosecution – will now be counted (in contrast to the old Morin framework). The Crown will have an onus to confront such delays.
The presumptive ceiling can only be augmented (lengthened) in exceptional, complex circumstances, or where there were unforeseeable events. However, the majority in R. v. Jordan went so far as to say that even a typical murder case would not be sufficiently complex (*7). Moreover, a lack of prejudice to the accused can no longer justify delays. Rather prejudice is presumed if the ceiling is surpassed, and it is not rebuttable (*8). Thus, any leniency towards the prosecution will be curtailed and the presumptive ceilings will be applied in almost every case. The Court itself said that exceptions will be “rare, and limited to clear cases”(*9).
Despite the foregoing, it remains open to an accused to establish that a shorter period of delay was unreasonable in the circumstances. However, below the presumptive ceiling, the accused will have to demonstrate diligence on its own part and fault on the part of the Crown. According to the Court, a stay will only be ordered where the time taken “markedly exceeds the reasonable time requirements of the case” (*10).
In Mr. Jordan’s case, it took 49.5 months to try five drug-related offences. Both the majority and the minority would have stayed the charges. In a companion case, called R. v. Williamson, the majority also found that a 34-month delay to prosecute sexual offences against a minor was unreasonable (*11).
The new law will apply to matters that are already in the system, subject to two qualifications, referred to by the majority as “transitional exceptional circumstances”.
First, for cases beyond the presumed ceiling, the Crown will be entitled to justify its delay on proof of reliance on the old law. In this regard, it will not have to show that it took any special initiative to expedite matters in the face of institutional delay problems, as the Morin framework did not require any special Crown initiative.
Secondly, for cases below the presumed ceiling, the Court may consider defence initiative contextually. Evidence of defence initiative to push matters forward will be helpful in assessing the reasonableness of delay. However, any lack of defence effort will not be automatically taken as waiver of the desire for a timely trial.
The presumptive 18-month ceiling for regulatory offences will effectively be a hard cap going forward. Whether for good or ill, the new system should provide a much better level of certainty.
*1. Part I of The Constitution Act, 1982, being Schedule B to the Canada Act (U.K.), 1982, c. 11, Part I.
*2. Provincial Offences Act, R.S.O. 1990, c. P.33, section 76(1).
*3. R. v. Morin,  1 S.C.R. 771.
*4. R. v. Jordan, 2016 SCC 27.
*5. 12. The majority reasons for judgement were actually penned by three justices (Moldaver, Karakatsanis and Brown JJ.), with two others concurring (Abella and Cote JJ.). Another justice delivered separate reasons that arrived at the same result (McLachlin C.J.). Three justices outright dissented (per Cromwell J., with Wagner and Gascon JJ. concurring).
*6. The 30-month presumption also applies to provincial court criminal matters that begin with a preliminary inquiry.
*7. R. v. Jordan, supra, at para. 78.
*9. Ibid. at para. 48.
*11. R. v. Williamson, 2016 SCC 28.
The International Group of Liquified Natural Gas has indicated that the purpose of the new charterparty is to address an emerging “spot market” or charters of shorter distances and time periods. Previously, time charters were used most often. The new charterparty is meant to provide necessary flexibility to charterers and shipowners (*1).
Clause 2 of the new charterparty indicates that the vessel will not only be compatible with the listed terminals but will also be “accepted” by the terminals. The acceptability requirements create difficulties for shipowners because that element is essentially outside of their control – terminals have different standards and requirements. (*2) However, the degree to which shipowners must ensure acceptability is simply to the point that they must exercise due diligence.
Clause 5 deals with the condition of the vessel’s tanks at the loading port. It recognizes the practical reality that the vessel may arrive with cargo tanks in one of the following conditions: cold and ready to load; warm and under natural gas vapours; or warm and inerted. The clause addresses who will be responsible for the conditions of the tanks depending on how they arrive. For example, if it was agreed that they would arrive cold and ready to load, but do not do so, then the charterer must provide LNG to cool the tank before loading and the cost associated with doing so rests with the shipowners. However, the clause allows shipowners to tender a Notice of Readiness (“NOR”) even if the vessel is not actually ready for loading, transferring the risk onto the charterer for any delay and associated charges for the time that passes between the tender of the NOR and loading.
This is problematic because it conflicts with other sections of the charterparty. It is confusing when read with clause 9, which states that the NOR shall be tendered when the vessel has moored and is ready for loading. Similarly with clause 17, which indicates that charges for lay time or demurrage, where a shipowner has tendered an NOR but the vessel is not in fact ready for loading, shall be borne by the shipowner.
Clause 8 deals with ship to ship transfers and discusses the allocation of risk in those situations. The clause states that the risk and expense rests with the charterer and same shall indemnify the shipowner for all liabilities, losses or costs, and additional insurance arising out of the transfer.
Clause 23 addresses the risk associated with the boil off of cargo. As part of the charterparty, the charterer and shipowner agree to a boil off cap, whereby the shipowner can use natural boil off as propulsion for the vessel up to the agreed upon cap. Any boil off used in excess of the cap must be paid for by the shipowner at the rate for LNG specific in the charterparty. The charterparty provides for certain excepts where boil off will not be counter towards the cap. For example, where the boil off results from the actions of the charterer or any delays arising from blocked or restricted channels, seizure or detention of the vessel by piracy or war risks, blockages, strikes or lockouts.
Clause 27 provides that the charterers shall indemnify the shipowners against all liabilities that may arise from signing bills of lading where the terms and conditions of same impose more onerous liabilities on the shipowner than the conditions contained in the charterparty.
The limitation of liability set out in clause 32 indicates that the shipowners shall have the benefit of all limitation of liability accorded to owners or chartered owners of vessels by any statute or rule of law for the time being in force.
Lastly, clause 37(a) states that English law applies to the charterparty and any dispute shall be resolved by arbitration in London. This is the default provision, however, the charterparty allows the parties to choose an alternative jurisdiction to govern the charterparty. If the Parties which for Canadian law and jurisdiction to apply, they should amend the standard form LNGVOY to reflect this, considering that pursuant to T. Co Metals LLC v Fednav International Ltd. et. al., 2011 FC 1067, charterparties (unless a bill of lading has been issued pursuant to same) are not considered “contracts for carriage of goods by water” for the purposes of s46(1) of the Marine Liability Act. This means that even where the actual port of loading or discharge is in Canada, or the defendant has a place of business in Canada, or the contract was concluded in Canada, Canadian jurisdiction applies despite what is listed in the contract for the carriage of goods by water.
It will be interesting to see if parties will begin using the new LNGVOY standard form charterparty, considering that it is a voyage charter party rather than a time charter party, the latter being the most popular type of charterparty used for spot market transportation of LNG, currently.
The use of the voyage charterparty will change certain circumstances that parties are used to working under. For example, the cost to the charterer will be calculated based on the quantity/type of cargo loaded rather than the length of the voyage. Furthermore, the voyage charterparty will address the seaworthiness and carrying capacity of the ship, the date of arrival and time permitted for and places of loading and discharge, payment of freight, limitations of liability and choice of law.
Shipowers will also be required to provide a realistic estimate of the expected date of arrival since the new LNGVOY allows for a delivery time to be prescribed in the charterparty.
The Canadian Government recently issued a set of proposed regulations under the Marine Liability Act (*1). The new regulations, entitled the Marine Liability and Information Regulations (the “MLI Regulations”), are expected to enter into force on January 1, 2017. They are intended to replace the existing Marine Liability Regulations (*2), which are currently in force. The MLI Regulations will require persons in Canada each year to report receipt by sea of what are known as “hazardous and noxious substances” (“HNS”) over a certain amount. The first reporting deadline will be February 28, 2018. Failure to report can result in a $1,000 fine for each day of non-compliance.
Canada is already a party to various international treaties dealing with maritime pollution damage. For example, Canada is party to an international liability and compensation regime related to persistent oil spills (such as crude oil, fuel oil, lubricating oils), and bunker oil from oil tankers (*3). Canada is also party to the Bunkers Convention (*4), which covers bunker oil spills from ships other than oil tankers. As well, the Ship-source Oil Pollution Fund provides additional compensation for oil pollution damage in Canada by any type of ship and from any type of oil.
Currently, however, there is no comprehensive Canadian or international liability and compensation regime for ship-sourced incidents involving HNS.
All of this will soon be changing. The MLI Regulations are designed to facilitate Canada’s ratification of a new international treaty known as the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 2010 (the “HNS Convention”). Briefly stated, the HNS Convention is an international instrument designed to provide for, and regulate, compensation for damage caused by the carriage by sea of HNS. HNS, for purposes of the HNS Convention, is essentially a list of some 6,500 substances including oils, noxious and/or dangerous liquid substances, liquefied gases, solid bulk materials possessing chemical hazards, etc. HNS include both bulk cargoes and packaged goods.
Canada and several other countries signed the HNS Convention in October 2011; however, none of the signatories (including Canada) has yet ratified the treaty. The HNS Convention must be ratified by at least twelve member states of the International Maritime Organization, who together have received at least 40 million tonnes of HNS in the preceding calendar year (excluding oils, liquefied natural gas and liquefied petroleum gas). Four of the ratifications must also come from states whose ships have a total capacity of at least 2 million units of gross tonnage.
Essentially, the HNS Convention establishes a strict liability regime for owners of ships who are involved in incidents causing damage arising out of the international or domestic carriage of HNS by sea. It covers any damage caused by HNS in the territory of territorial sea of a State Party. It also covers pollution damage in the exclusive economic zone, or equivalent area, of a State Party and damage (other than pollution damage) caused by HNS carried on board ships registered in, or entitled to fly the flag of, a State Party outside the territorial sea or territory of any State.
“Damage” under the HNS Convention includes loss of life or personal injury or board or outside the ship carrying HNS, loss of or damage to property outside the ship, loss or damage caused by contamination of the environment, loss of income in fishing and tourism, and the costs of preventive measures and further loss or damage caused by such measures.
The HNS Convention does not cover pollution damage caused by persistent oil, since such damage may already be covered under other existing treaties. However, non-pollution damage caused by persistent oil, e.g. damage caused by fire or explosion, is covered.
The HNS Convention provides for a “two-tier” model of compensation. First, the registered owner of a ship will (subject to a few exceptions) be strictly liable to pay compensation following an incident involving HNS. This means that the shipowner is liable, even in the absence of fault on its part. The fact that there is damage is enough to trigger liability, provided there is a causal link between the HNS and the damage.
However, the shipowner is then entitled to limit its liability under the HNS Convention in respect of any one incident, to a total amount calculated on the basis of the units of gross tonnage of the ship. For example, for ships not exceeding 2,000 gross tonnes, the limit of liability with respect to incidents involving bulk HNS is 10 million Special Drawing Rights (“SDRs”) – an amount equal to roughly CAD$18.3 million at current exchange rates. The limit increases by 1,500 SDRs for each unit of gross tonnage between 2,001 and 50,000 gross tonnes. For each unit of tonnage in excess of 50,000 gross tonnes, the limit is increased by a further 360 SDRs. Notwithstanding this formula, for incidents involving bulk HNS, there is an overall maximum liability exposure of 100 million SDRs.
Similar limits apply to incidents where the damage is caused by packaged HNS, or both packaged and bulk HNS, or where it is impossible to differentiate between the two. In this case, the maximum liability exposure is 115 million SDRs.
Furthermore, the shipowner is required to take out insurance, or maintain other acceptable financial security, to cover its liability under the HNS Convention. Claims for compensation may be made directly against the insurer or person providing financial security.
The “second tier” constitutes an international fund of money (the “HNS Fund”), which is made up of contributions from various industry players (not governments) based on the amount of HNS they receive each year (above a certain threshold) through trade. The HNS Fund will be self-governed pursuant to the terms of the HNS Convention, with a director, secretariat and an assembly consisting of representatives from the various States Parties.
The HNS Fund will provide additional “top-up” compensation when the total amount of a claim exceeds the available amount under the “first tier”, or when the shipowner is exonerated from liability or is otherwise financially incapable of meeting its obligations. The maximum amount payable by the HNS Fund in respect of any single incident is 250 million SDRs.
Canada has taken steps to prepare for ratification of the HNS Convention. It has already drafted and received royal assent on legislation amending the Marine Liability Act to incorporate the operative provisions of the HNS Convention into law upon ratification.
However, before Canada can ratify the HNS Convention, it must collect enough data (in the preceding calendar year) on HNS traffic in Canada so that it can report on which entities in Canada have received what amounts of HNS. This is so that the HNS Fund can be properly constituted by contributions from the appropriate entities in the proper amounts.
Accordingly, for purposes of the HNS Convention, the MLI Regulations have been proposed in order to set up a system by which receivers of contributing cargo (i.e. HNS) must report the quantities of bulk HNS above certain thresholds received in a calendar year.
Essentially, the MLI Regulations retain the same requirements that currently exist under the Marine Liability Regulations, albeit organized slightly differently. For example, they do not change the existing reporting requirements in connection with the International Oil Pollution Compensation Funds, which provides similar coverage in the oil pollution context.
Instead, the “new” reporting requirements relate to HNS. Once the MLI Regulations come into force, they will require persons in Canada to report, on a yearly basis (by February 28 of each year), the quantities of bulk HNS they receive if, in a given calendar year, they receive at least 17,000 tonnes of non-persistent oils, liquefied petroleum gas, or any other type of HNS. Any quantity of liquefied natural gas received must also be reported (*5).
In addition, the MLI Regulations also provide that each such report must include other information, including the name and contact information of the receiver, the type and total quantity of contributing cargo received, whether or not the receiver has received contributing cargo on behalf of a principal, and if so, its name and the type and quantity of HNS received, etc.
The first reporting deadline is to be February 28 of the calendar year following the year that the contributing cargo is received. Thus, if the regulations take effect on January 1, 2017, the first reporting deadline will be February 28, 2018. Any person who fails to file a necessary report is liable to pay a fine of $1,000.00 per day that the report remains unfiled.
It is estimated that only about 50 entities in Canada will surpass the reporting threshold in a given year. Reports will be made through a dedicated Government of Canada electronic reporting system.
The MLI Regulations will soon have the force of law in Canada. Interested players in the shipping industry should definitely review these new regulations and take the necessary steps to ensure that they are prepared to report their receipts of contributing cargo in 2017 by February 28, 2018.
(*1) Marine Liability Act (S.C. 2001, c. 6).
(*3) See e.g. the International Convention on Civil Liability for Oil Pollution Damage, 1992, as Amended by the Resolution of 2000, the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992, as Amended by the Resolution of 2000, and the Protocol of 2003 to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992, all of which have force of law in Canada pursuant to the Marine Liability Act.
(*5) Note that under the HNS Convention, the reporting requirements in fact carry a threshold of 20,000 metric tonnes received. However, the Government of Canada chose to reduce the threshold to 17,000 metric tonnes in order to create a buffer to ensure that reporting fluctuations and inconsistencies in national reporting do not lead Canada into a state of non-compliance under the HNS Convention.
The Quebec Superior Court recently considered an application brought by the surviving husband/father of three victims of flight AH5017 which crashed in Mali in 2014 for certification of a class action for compensation for the survivors of all 108 passengers who perished in the accident. The court denied certification of the class action, finding that the Quebec courts only had jurisdiction in respect of claims concerning twelve of the victims pursuant to Article 33 of the Montreal Convention, and this did not suffice to justify a class action under Article 575 of the Quebec Code of Civil Procedure.
Le 18 mai 2016, la cour supérieure du Québec a considéré une demande de certification d’un recours collectif visant la compagnie aérienne Air Algérie (*1). Le recours concerne l’écrasement du vol AH5017, exploité par un sous-contractant espagnol, qui a eu lieu au Mali le 24 juillet 2014. Le vol était en provenance de Ouagadougou, Burkina Faso, et se dirigeait vers Alger, la capitale algérienne.
La Convention de Varsovie (1929) et la Convention de Montréal (1999) représentent le droit international régissant l’indemnisation des passagers lors d’un accident aérien (*2). Selon l’article 1 (2) de chacune des Conventions, leur application est subordonnée à la condition que le point de départ ainsi que le point de destination du transport se trouvent dans une Haute Partie Contractante. Par conséquent, pour déterminer la convention applicable, il convient de considérer l’itinéraire individuel de chacun des passagers et non pas, simplement, la route du vol fatal AH5017. Selon la cour supérieure, la Convention de Montréal s’appliquait à tous les passagers à bord sauf trois d’entre eux qui faisaient un aller-retour Alger-Ouagadougou et qui relevaient en conséquence de la Convention de Varsovie applicable en l’espèce, l’Algérie n’étant pas une partie à la Convention de Montréal.
L’épouse et les deux filles du demandeur, tous des citoyens burkinabés, ont péri dans le vol. Le demandeur était un résident permanent du Canada qui avait parrainé sa famille afin qu’elle le rejoigne au Canada en leur achetant des billets d’avion avec le transporteur algérien qui dessert l’aéroport de Montréal. Ces trois victimes étaient parmi les douze personnes à bord du vol AH5017 qui avaient un droit d’action devant les juridictions canadiennes selon l’article 33 de la Convention de Montréal. Cet article prévoit cinq rattachements pour déterminer les juridictions compétentes pour entendre tout litige régi par la Convention. Bien que ni le domicile ni le siège d’Air Algérie (ni du transporteur de fait, Swiftair S.A., société espagnole qui exploitait cette route pour Air Algérie) ne soient au Canada, ces douze passagers pouvaient poursuive une action juridique au Canada en vertu des trois autres critères alternatifs de l’article 33, notamment en vertu du lieu ou leur contrat de transport a été conclu, la destination finale du passager, ou la résidence principale et permanente du passager.
Au lieu de poursuivre une action individuelle contre le transporteur au Québec, les avocats du demandeur ont intenté un recours collectif pour les ayants droit de tous les passagers à bord du vol AH5017.
La compagnie aérienne a présenté un moyen préliminaire à l’encontre de l’action collective visant le rejet de la demande de certification au motif que le demandeur ne pouvait pas représenter devant les tribunaux canadiens des personnes ne répondant pas aux critères de l’article 33 de la Convention de Montréal (ou 28 de la Convention de Varsovie).
Hamilton J.C.S. de la cour supérieure a rejeté la demande en exception déclinatoire de la défenderesse considérant que bien que l’article 584 du nouveau Code de Procédure Civile (« Cpc ») (*3) reconnaisse la possibilité d’un moyen préliminaire à l’encontre d’une action collective, cet article, énoncé dans le chapitre relatif au déroulement de l’action collective, exclut la présentation du moyen préalablement à la certification de l’action.
Le juge a commencé son analyse de la demande de certification par application du premier critère de l’article 575, considérant qu’il y avait des questions de droit ou de fait identiques, similaires ou connexes parmi les victimes. Air Algérie ne disputait pas que le deuxième critère, soit que les faits allégués paraissent justifier les conclusions recherchées, et que le quatrième critère, soit que le demandeur pouvait représenter adéquatement tous les membres de la classe, étaient en espèce rencontrés.
La problématique soulevée par Air Algérie et concernant la représentation par le requérant des personnes n’ayant pas autrement accès aux tribunaux canadiens figurait en revanche dans l’analyse, par le juge, du troisième critère pour la certification. Selon l’article 575 (c) du Cpc, il faut que la composition du groupe rende difficile ou peu pratique l’application des règles sur le mandat d’ester en justice pour le compte d’autrui ou sur la jonction d’instance.
Pour décider de la satisfaction de ce critère, le juge a pris en compte le nombre de membres de la classe alléguée.
Le juge a tout d’abord statué que bien que l’article 33(4) de la Convention de Montréal dispose que la procédure sera régie selon le droit du tribunal saisi de l’affaire, les dispositions du Cpc, notamment sur les action collectives, ne pouvaient pas modifier les règles de compétence prévues dans la Convention de Montréal. Par conséquent, a priori, les ayants droit des 96 victimes sans rattachement à la juridiction canadienne selon l’article 33 de la Convention ne pouvaient pas être représentés devant la cour supérieure par le demandeur dans le cadre du recours collectif.
Le juge a ensuite considéré si, exceptionnellement, les autres victimes pouvaient poursuivre leurs recours devant les tribunaux québécois en vertu de l’article 3136 du Code Civil, lequel prévoit deux conditions cumulatives pour son application: que l’action à l’étranger se révèle impossible ou que l’on ne puisse exiger qu’elle y soit introduite, et que le litige présente un lien suffisant avec le Québec.
Le demandeur a argué que toutes les autres juridictions disponibles aux 96 victimes étaient soit corrompues, soit n’offraient pas la possibilité d’un recours collectif. Le juge a déterminé que toutes les actions pouvaient être poursuivies en Espagne, lieu du siège de Swiftair S.A., un forum garantissant l’indépendance des juges. Le juge a précisé que le seul fait de ne pas pouvoir poursuivre un recours collectif devant un tribunal étranger ne suffisait pas à satisfaire la première condition de l’article 3136 exigeant que l’action à l’étranger soit impossible.
Bien que la première condition ne soit pas établie, Hamilton J.C.S. a aussi considéré le deuxième critère exigeant un lien suffisant entre le litige et le Québec. Cette condition n’était pas davantage remplie étant donné que le seul lien avec le Québec qui était invoqué pour justifier la juridiction des tribunaux québécois pour entendre des réclamations des ayants droit des 96 victimes sans rattachement avec le Québec selon la Convention résidant dans le fait que d’autres victimes de l’accident avaient des droits d’action susceptibles d’être exercés au Québec. Ceci ne suffisait pas pour satisfaire la deuxième condition imposée par l’article 3136. En résumé, seuls les ayants droit des douze passagers soumis à la juridiction des tribunaux québécois en vertu de l’article 33 pouvaient faire partie du recours collectif.
Étant donné que les douze victimes éligibles à poursuivre une action au Canada appartenaient à seulement quatre familles, le juge a déterminé qu’un recours collectif n’était pas indiqué selon le critère de l’article 575(c) du Cpc dans la mesure où d’autres moyens procéduraux pouvaient être employés pour joindre les actions.
Le 15 juin 2016, la Cour d’appel du Québec a acceuilli une requete de al compagnie aerinne pour rejeter l’appel interjeté par le demandeur à l’encontre de cette decision de premiere instance (*4).

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