Madorin, Snyder LLP has rebranded and is now Bennett Grant LLP. We are a full service law firm based in Kitchener and Listowel serving clients throughout Ontario.
Frank Carere was presented with Honorary Membership at the Annual General Membership Meeting of the Kitchener-Waterloo Association of REALTORS® (KWAR).
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On July 21st, 2020 the government of Ontario enacted the Reopening Ontario (A Flexible Response to COVID-19)Act, which included Regulation 364/20: Rules for Areas in Stage 3. Regulation 364/20 set out various rules which businesses must follow to prevent the spread of the COVID-19 virus. Primarily, the regulation requires businesses to limit the amount of people allowed to enter the place of business as needed to ensure those who are not within each other's social circles are socially distanced by 2 metres, and that businesses adequately clean and sanitize their facilities. There are additional rules specific to certain industries.
However, the regulation did not require businesses to ask COVID-19 screening questions to people entering the place of business, until now. On September 25th, 2020, Regulation 364/20 was amended to include Regulation 530/20. Regulation 530/20 now requires businesses to follow the recommendations of the Office of the Chief Medical Officer of Health on screening individuals entering the place of business.
An outline of screening recommendations has been released by Ontario's Ministry of Health and can be found at the following link:
Ontario's Ministry of Health recommends businesses screen workers and essential visitors (but not customers) when the workers or essential visitors first arrive at the workplace by asking series of questions. If a worker or essential visitor answers "yes" to any of the recommended questions, then they ought to leave the workplace immediately and self-isolate.
Given the amendment, businesses are advised to comply with the screening requirements outlined by the Ministry of Health.
Our firm remains committed to supporting our clients during the COVID-19 pandemic.
Madorin Snyder LLP is working, where possible, to limit the need for in person attendance at our office space, and provisions to work remotely have been put in place. We have made this decision to protect our clients, staff, and their families.
No unscheduled meetings will be accepted. As a precautionary measure, if you feel sick or unwell and have an in-office meeting scheduled please contact our office immediately to make alternate arrangements.
If you have any questions, please contact your lawyer, assistant, or clerk. Alternatively, you may contact reception@kw-law.com.
At Madorin, Snyder we take very seriously the health and safety of our lawyers, employees, clients, families and our community. In response to the widening spread of COVID 19, we have implemented a number of measures to do what we can to protect everyone’s health and safety, and we will continue to do so as the situation changes.
Our office remains open for business. If the situation requires that some of our members need to work remotely, we have the technology in place enabling that. We have adopted policies with respect to personal and business travel and attendance at events and meetings. We are encouraging client meetings be held electronically or by telephone, when possible.
We will continue to inform our employees of safety procedures outlined by Health Canada, the Ontario Health Agency and our local health officials.
We are making every effort to ensure we can provide uninterrupted service and support to our clients.
Our relationship with our clients is important to us. If you have any questions regarding this situation, please do not hesitate to contact the lawyer with whom you are dealing, or me.
The only thing most contractors know about their liability insurance is the amount of their annual premium. Few of them have good understanding of value they get in return for that premium.
Generally, a commercial general liability insurance (“CGL”) policy covers a contractor for the financial consequences of an accident that results in bodily injury or property damage to a third party. For example, if one of your employees accidentally dropped a tool off of the fourth storey that hit a pedestrian, then your CGL insurer would indemnify you for any damages payable to the pedestrian. If instead the tool damaged a building adjacent to the worksite, then your CGL insurer would indemnify you for the cost incurred by the owner of the building to perform repairs. While these simple examples are useful to illustrate the general scope of coverage, they are, thankfully, rare events. The accidents that tend to trigger coverage under a CGL policy are accidents that result in damage to the project itself.
There are number of policy exclusions that may come into play where an accident results in damage to the project, but the most important is the ‘Own Work Exclusion’. Policy language varies, but here is one example of the Own Work Exclusion:
This insurance does not apply to:
j. "Property Damage" to "your work" arising out of it or any part of it and included in the "products completed operations hazard".
This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor.
The general purpose of the Own Work Exclusion is to protect insurers from having to indemnify a contractor for the cost of repairing the contractor’s own shoddy work. If an insurer had to indemnify a contractor for the consequences of shoddy work, then it would create a moral hazard: Contractors would have little incentive to do the work correctly in the first place if they knew their insurer would have to pick up the cost of repair.
However, there are lots of accidents that occur on site to which the Own Work Exclusion does not apply. For example, if a window leaks because it was improperly installed, the installer would still be covered for the cost of repairing damaged drywall and flooring because that is not its ‘own work’. The flooring, drywall, and the window are the ‘own work’ of the general contractor, but the Own Work Exclusion would still not bar a claim for indemnity by the GC because the work out of which the damage arose was performed by a subcontractor, the window installer.
I suspect that subcontractors in particular are leaving money on the table when they fail to recognize that backcharges made against them for damage may fall within coverage. If the amount of the backcharge is minimal, then it may be wise for the subcontractor to absorb the loss without referring the matter to their insurer. Different considerations apply where the cost of repair is substantial.
My final point is that the most valuable part of your liability policy is not the damages your insurer will pay on your behalf if you are found liable for an accident but the lawyers’ fees that it will pay on your behalf to defend you. If a claim is made against you that may fall within coverage, then your insurer has an obligation to appoint and pay for a lawyer to defend you against that claim. If a claim is made against you that may fall within coverage, then notify your insurer so it can start investigating the claim.
Ted Dreyer is a lawyer and adjudicator at Madorin, Snyder LLP in Kitchener. This article should not be relied on as legal advice.
I dread being asked by a client whether he is able to terminate his contract.
There tends to be little margin for error. If a contractor acts too conservatively and continues work in the face of a customer's claim for backcharges or set-off, then the contractor risks incurring additional costs to perform work for which he will not be paid without a prolonged legal battle, if at all. If the contractor acts too aggressively and wrongfully terminates the contract, then he will face a claim for the increased cost incurred by the customer for getting the work done by another contractor on short notice and a claim for delaying the timely completion of the work. Making the right decision is usually critical.
Yet making the right decision is easier said than done. Typically there is a preliminary question as to whether the other party has even breached the contract. The outcome of underlying issues concerning extras, delays, and/or deficiencies is often unpredictable. Even assuming that the other side has breached of contract, it does not necessarily follow that the innocent party has the right to terminate the contract.
The ability to terminate a contract at common law is more limited than is commonly believed. Most breaches of contract do not permit the innocent party to terminate the contract. The usual remedy for a breach of contract is an award of damages sufficient to compensate the innocent party for the consequences of the breach. In the absence of a termination clause, the innocent party will only have a right of termination where the breach of contract deprives the innocent party of substantially the whole benefit of the contract.
Urbacon Building Groups Corp. v. City of Guelph is a 2014 case that illustrates the principle that a breach of contract does not necessarily entitle the innocent party to terminate the contract. The contractor to build a civic administration complex for the City. Substantial performance was to be achieved by August 2008. In mid-September the contract was still only 95 percent complete. The reasons for the delay were disputed. On September 19, 2008, the City terminated the contractor for delay. The Court concluded that, even if the contractor was responsible for the delay, the City had wrongfully terminated the contract. The City was not entitled to terminate the contract simply because the City would incur costs as a result of the delay. The City's expert said that, if the contractor had not been terminated, it may have reached completion in either early or late November. Far from demonstrating that continuing the contract would be intolerable to the Owner, the Court accepted that the termination of the contractor delayed the substantial completion of the project.
I will leave you with two thoughts. First, among the many advantages of using CCDC and CCA standard form contracts is that they include default clauses that help clarify the circumstances where a party is entitled to terminate a contract. Second, a decision to suspend work or terminate a contract is not one that should be made lightly. You should call your lawyer even though he may prefer that you didn't.
Ted Dreyer is a lawyer and certified construction adjudicator at Madorin, Snyder LLP in Kitchener. This article was published in Links2Build and is republished with permission. This article should not be relied on as legal advice.
AUTONOMOUS VEHICLES
THE FUTURE OF MUNICIPAL ROAD LIABILITY
Driverless Vehicle Symposium – September 13, 2019
James H. Bennett
Partner, Municipal Defence Lawyer
1. Autonmous Vehicles (AVs) are Coming...and Soon
The changes will be significant and the equivalent when our roads were adapted from the horse and buggy to automobiles;
The reality of AVs will be here before necessary changes to legislation, the Ontario Traffic Manual (OTM), and public education have been put into place; and
There is a need now for the municipalities and the Ontario Good Roads Association to be proactive and lobby the Provincial government to ensure proper legislation (MMS), licensing, and insurance requirements are put into place.
The technology of vehicles are here now, but the road infrastructure and Municipal policies and legislation are not in place.
2. Not All Risk: The Benefits for Road Authorities
Lower energy demand and other environmental benefits;
Better use of infrastructure (ie. reduced congestion, more efficient travel, etc.);
Fewer and less severe accidents (over 90% of accidents are caused by human error);
Better use of 'driver' time (instead of driving, people could work);
Mobility for all, including those who are unable to drive; and
Automatic reporting of road problems (ie. a pothole detected by a vehicle sensor is automatically sent to the road authority, notifying the agency of the need for repair);
Huge savings long term, but in the short term I predict a lot of litigation given the publics inability to accept change,
3. The Risks and Challenges for Road Authorities
Without a driver, responsibility for safe operation must rest with an operator competent to discharge that responsibility. Liability becomes complicated:
Prototype AVs: liability for owner and operator is the manufacturer (easy);
Semi-autonomy: As long as a driver with some ability to assume or resume control of the vehicle is present, there would seem to be a continuing basis for driver negligence and liability as they presently exist. This still depends on driver control and how you regulate situations where you have both AVs and driver operated motor vehicles on the road at the same time;
Future Reality: AVs are leased or sold, either to companies, such as delivery contractors or taxi firms, or to individuals (companies or individuals then become the operators of the vehicles). Without a driver, responsibility for safe operation must rest with an operator competent to discharge that responsibility;
Road authority will face potential threats for road design, maintenance, etc.; and
What is still unclear are ethical questions arising from software or what is really artificial intelligence making decisions in urgent situations involving pedestrians, passengers or other vehicles. It will also be difficult to understand how separate vehicles are going to communicate with each other. Merging AVs with human drivers and regulating human drivers will still be a major challenge.
The biggest problem will be that there will never be a situation where all vehicles are autonomous – AVs will always have to be interoperable with other manually-controlled vehicles and non-motorised road users, such as pedestrians, cyclists, and animals;
People do not trust technology, and Judges are people.
Although some ‘tech-friendly’ road authorities may introduce changes to road layouts, signage, and other infrastructure to accommodate AVs, it is unrealistic to expect all road authorities to lower tier class roads to bring their infrastructure up to that standard before AVs are widespread.;
There is now a move to create designated roadways for AVs, but how can you restrict their use to solely AVs, i.e. the 401 etc.
During winter, road markings may be obscured, creating problems for AVs, as can the cameras and sensors on the AV itself. Canada is not Arizona;
Unexpected road closures or emergency repairs could confuse AVs;
Risk of hacking or terrorist/criminal attacks; and
Guaranteed that municipalities will be targets and named as Defendants in MVA litigation on the same basis as current road liability cases and based on joint and several liability principles. You can still drive in this Province with minimum insurance limits of $200,000.00, even with $1,000,000.00 policy limits, if people are seriously injured the Plaintiffs will look to Municipalities as deep pocket targets and will pursue claims for issues involving AVs on municipal roads.
4. Current Sources of Liability for Road Authorities
Municipal Act, 2001, S.O. 2001, c. 25, section 44:
44 (1) The municipality that has jurisdiction over a highway or bridge shall keep it in a state of repair that is reasonable in the circumstances, including the character and location of the highway or bridge;
Four Part Test for Liability as established in Court of Appeal cases following Fordham ats Dutton/Dunwich.
The Legislation, MMS and Case law is going to have to adapt to include standards and recognize duties of care that will involve design and maintenance of Roadways for AVs.
5. Liability Concerns and Future Realities for Autonomous Vehicles
Design and Construction:
Major changes to existing infrastructure will be required and future infrastructure will need to be designed with AV and conventional vehicles in mind;
Inspection and Maintenance
Who will be responsible for ensuring road signs are understood by AVs?;
Road markings are used by many AVs and their obstruction can cause significant problems;
Other Practical Concerns
Who is responsible for accurate mapping and what happens when roads are re-aligned?;
If there is a driver, s/he will be primarily responsible for the vehicle (and maintenance);
Product Liability Claims (and Crossclaims)
The Highway Traffic Act makes Owners liable for the negligence of drivers (significant for test-driving manufacturers);
Manufacturers of vehicles can be found liable for manufacturing and design defects, misrepresentation, and failing to warn consumers of the risks associated with the reasonably foreseeable use of their products;
The Sale of Goods Act implies warranties and conditions with respect to the merchantability and fitness of products, including vehicles, into all contracts of sale. Vehicle purchasers can sue (Crossclaim) retailers of motor vehicles in contract and in tort; and
Potential for recovery from providers of software, maps, GPS, etc.
6. Risk-Management: What can the Road Authority do?
Designated AV routes and establish enforcement procedures;
Require better Black Boxes (Vehicle Data Recorders) to enforce rules when AVs can be used;
Liability for changes to MMS and OTM to provide consistent standards;
Consistent planning and implementation between road authorities and OGRA; and
Require specialized licensing, insurance, and Indemnity Agreements. There should be special training, higher minimum limits for insurance and potentially indemnity agreements between users of designated roadways, although this will be difficult to implement.
7. Liability Scenarios
A collision is caused by an AV departing from a marked lane during a winter storms and leaving the travelled surface of the highway. The AV navigates by reading road markings and the markings were obscured by a recent snow event. The road authority was monitoring the snow event and appropriately deployed its resources in accordance with the MMS;
An AV enters into a signal-controlled intersection and causes an angle collision. The AV uses cameras to read traffic control signals. At the time of the accident, the traffic control signals were not operating properly. The road authority had been inspecting per the MMS;
Query: There may be a different standard that the reasonable ordinary driver standard, potentially if the roadway is a designated route for AVs.
An AV enters into an intersection controlled by Stop Signs causing an angle collision. The AV uses cameras to read road signs. At the time of the collision, the Stop Sign was obscured by snow from a recent snow event. The road authority had been inspecting road signs as required under the MMS. Is the road authority liable?
Query: Whether more maintenance will now be required for municipalities particularly in winter months to ensure that AVs pick up visual information from road signs. Alternately, will there be significant costs for electronic sensors to be installed in all signs so that visual recognition for AVs does not become that important.
8. Conclusion
AVs are here to say and we must adapt as Municipalities having jurisdiction over our streets, roads and highways. The major benefit in cost savings will definitely occur in the long run, but there will be short term problems resulting in an increase in litigation that will have to be managed.
James Bennett is a civil litigator partner at Madorin, Snyder LLP whose practice includes the defence of municipal liability claims. Madorin, Snyder LLP is a full service law firm servicing Kitchener, Waterloo, Cambridge, Guelph and the surrounding area.
The information contained in this article is provided for general information purposes only and does not constitute legal or other professional advice. Readers are advised to seek specific legal advice in relation to any decision or course of action contemplated.
The construction industry is littered with the bodies of the dead: Comstock and Kappeler Masonry are but two of the construction companies that have ended up in bankruptcy protection. Bankruptcy law affects the construction industry more than most. That is why the construction industry needs to know about subtle changes in bankruptcy law that have put the industry at a disadvantage relative to other creditors, most notably banks.
Bankruptcy in a Nutshell
When a company is assigned or petitioned into bankruptcy, the trustee in bankruptcy liquidates the bankrupt company's assets and collects its debts, insofar as it is economically feasible to do so. The resulting pot of money, called the "estate" of the bankrupt, is divided up among the company's creditors according to the priority rules of the federal Bankruptcy and Insolvency Act. Secured creditors of the bankrupt company (i.e. banks) typically get paid first. If there is anything left over for the unsecured creditors they get paid the same number of cents on the dollar.
Importantly, money held by the bankrupt company in trust for someone else does not form part of the estate of the bankrupt company. That is where Ontario's Construction Act comes into play.
Section 8 of Ontario’s Construction Act
Section 8 of Ontario’s Construction Act (formerly known as the Construction Lien Act) imposes a statutory trust upon any money paid to a general contractor for labour and materials. The beneficiaries of the statutory trust are the subcontractors and suppliers who supplied labour and materials to the project.
In the good old days, the statutory trust created by the Construction Act gave subcontractors and suppliers a limited priority over other creditors of a bankrupt general contractor. Any money paid by an owner to the trustee in bankruptcy were kept separate from the estate of the bankrupt general contractor because they were trust funds. The trustee in bankruptcy would pay the trust funds to the subcontractors and suppliers on the project instead of paying the money to secured and unsecured creditors.
Atlas Block Changed the Law
In the 2014 decision of the Ontario Superior Court of Justice in Royal Bank of Canada v. Atlas Block the Court ruled that only funds subject to a common law trust were to be kept separate from the estate of the bankrupt. I won't bore you with the distinction between statutory and common law trusts. The point is that funds impressed with a statutory trust of the type created by the Construction Act now form part of the estate of the bankrupt in spite of the trust. In other words, as a result of Atlas Block, subcontractors and suppliers lost their limited priority over trust funds.
A Local Example of Atlas Block In Action
The Kappeler Masonry bankruptcy illustrates how the Atlas Block case puts subcontractors and suppliers at a disadvantage relative to banks. The trustee in bankruptcy collected $147,119 from the owner of a project Kappeler had worked on. The trustee in bankruptcy asked the Court to approve payment of the $147,119 to Kappeler's bank, BMO. Hargest Concrete Ltd. of Cambridge was a supplier of Kappeler Masonry on the project that had generated the $147,119 payment. Hargest Concrete Ltd. objected to the proposed payment to BMO. In the good old days, the $147,119 would have been paid to Hargest Concrete Ltd. As a result of the Atlas Block precedent, the Court ordered the trustee in bankruptcy to pay the $147,119 to BMO.
We Need a Legislative Amendment
The Federal government should reverse the effect of the Atlas Block decision. It should amend the Bankruptcy and Insolvency Act to exclude funds impressed with a statutory trust pursuant to the Construction Act from the estate of a bankrupt general contractor.
Giving banks priority over subcontractors and suppliers is bad public policy. First, subcontractors and suppliers should have priority over funds arising from their labour and materials. Second, Atlas Block gives banks an incentive to push general contractors into bankruptcy so they can jump to the front of the line. Third, the law is now being applied differently in different provinces because judges in Alberta wisely declined to follow the Atlas Block precedent. A legislative amendment is needed to bring uniformity to the application of federal law.
In order to convince the Feds to amend the Bankruptcy and Insolvency Act we need as many voices as possible calling for change. I encourage you to raise the issue with your national trade associations and your local MP.
Ted Dreyer is a construction and insurance lawyer at Madorin, Snyder LLP in Kitchener. It was previously published in the Grand Valley Construction Association Journal and is republished with permission. This article should not be relied on as legal advice.
Cannabis will be decriminalized on October 17, 2018, and on the eve of legalization the rules about where cannabis may be consumed are poised to change. The proposed changes highlight interesting policy choices made by the PC and Liberal governments of Ontario.
As I write this, the applicable rules are those passed by the previous Liberal government as they appear in the Cannabis Act 2017 and Smoke Free Ontario Act, 2017. Liberal policy as reflected in those Acts was to treat the public consumption of recreational cannabis like the consumption of alcohol, only with even more restrictions: The consumption of recreational cannabis in any form is prohibited in any workplace, public place, or in any vehicle.
The PC government has introduced Bill 36 - Cannabis Statute Law Amendment Act, 2018 to amend the Cannabis Act 2017 and Smoke Free Ontario Act, 2017. PC government policy as reflected in Bill 36 generally treats the consumption of recreational cannabis like tobacco: The smoking of recreational cannabis is generally permitted anywhere you could smoke a cigarette, except in motor vehicles.
Should Cannabis Be Regulated Like Alcohol or Tobacco?
The consumption of alcohol in public is generally prohibited in Canada and the United States. The traditional rationale for prohibiting drinking in public is that it is needed to help maintain public order. The prohibition is thought to discourage the overconsumption of alcohol in the first place, and it tends to reduce the anti-social behavior that can accompany public intoxication.
The modern restrictions on the smoking of tobacco are driven by the health concerns of non-smokers. It is generally accepted that second-hand smoke is a carcinogen, and the objective of the Smoke Free Ontario Act is to prevent non-smokers from being exposed to tobacco smoke.
To me, cannabis is unlike alcohol in the sense that it does not pose a particular threat to public order. Smoking a joint does not put you on the pathway to public mayhem the same way as submerging yourself in a bathtub full of purple jesus, or so my acquaintances tell me. From that perspective, the PC policy of treating cannabis like tobacco makes sense.
An Employer's Perspective
In the context of the workplace, however, cannabis is just like alcohol because they raise similar issues concerning impairment, safety, job performance, drug testing, and human rights. These issues will come up regardless of rules regarding consumption. But one virtue of the Liberal policy is that it would tend to minimize the consumption of recreational cannabis to the extent that was possible through restrictions on where you could smoke, vape, or eat cannabis. If the overall levels of consumption of cannabis are reduced, then it is stands to reason that workplace issues concerning cannabis would be reduced somewhat too. If the PC policy of liberalizing the rules concerning consumption of recreational cannabis tend to increase the consumption of cannabis overall, employers may find themselves feeling hungover.
Frank Carere is a labour and employment lawyer at Madorin, Snyder LLP in Kitchener. It was previously published in the Grand Valley Construction Association Journal and is republished with permission. This article should not be relied on as legal advice
The word on the street is that steel producers did not wait for Donald Trump to apply the steel tariffs to Canada before they increased the price of steel. Contractors and subcontractors are worried about committing to fixed prices without knowing where steel prices are headed.
A material price escalator clause is a potential solution to the problem. However, such clauses are like pet rocks and polyester pants: They have been out of fashion for so long that it is a challenge to find the genuine article. I have combed through the archives and found three examples.
The first is from Bethlehem Steel Co. v. Turner Constr. Co., 2 N.Y.2d 456:
"The price or prices herein stated are based on prices for component materials, labor rates applicable to the fabrication and erection thereof and freight rates, in effect as of the date of this proposal. If, at any time prior to completion of performance of the work to be performed hereunder, any of said material prices, labor rates and/or freight rates shall be increased or decreased, then in respect of any of said work performed thereafter there shall be a corresponding increase or decrease in the prices herein stated."
The second is from Einhorn v. Ceran Corp., 177 N.J. Super. 442 involving a contract for the sale of a residential condominium:
"This agreement is conditioned upon the ability of Seller to complete the unit at present prices for materials and labor. If Seller is at any time or for any reason, unable to complete the unit at the present prices for materials and labor, Seller shall have the option to cancel this contract upon written notice to Buyer, in which event the full deposit shall be returned to Buyer without interest and this agreement cancelled. However, the Buyer shall have the option of paying any increased costs of labor and material, and if Buyer, within ten (10) calendar days after notice of any increase in cost, agrees in writing to pay such increased costs at closing, this agreement shall continue in full force and effect."
And finally, an example from a Canadian case, H.T. Drywall Ltd. v. Carriage Holdings Ltd., 1979 CarswellAlta 452:
"These prices to take effect as of now, May 13, 1976, and will remain until Sept. 30, 1976, or as such time as further increase in cost of materials. At such time, the price increase shall be passed on to the General Contractor, immediately (sic)."
In my view you should consider these clauses as a good starting point rather than the finished product that you can put directly into a contract. Of course, the hard part is likely to be convincing your client to accept an escalator clause in the first place.
Ted Dreyer is a construction and insurance lawyer at Madorin, Snyder LLP. Madorin, Snyder LLP is a full service law firm serving Kitchener, Waterloo, Cambridge, Guelph and the surrounding area. Please visit our construction law page.
The information contained in this article is provided for general information purposes only and does not constitute legal or other professional advice. Readers are advised to seek specific legal advice in relation to any decision or course of action contemplated.
