Insights

The practice of law is changing every day, and the effect of changing legislation on businesses is significant. We write about recent developments in the world of tax & business law, keeping a watchful eye on the changing landscape for our clients. See what we’re thinking about, and what your business should be looking out for.

Litigation

Invoice Interest: The Alberta Court of Appeal provides a warning to suppliers

Suppliers who incorporate interest provisions into their invoices should take heed of the Alberta Court of Appeal’s decision in H2S Solutions Ltd. v Tourmaline Oil Corp., 2019 ABCA 373. In H2S, the appellants had provided certain services to the respondents, and occasionally issued invoices. On the bottom of each invoice, the appellants included the following language: TERMS: 2% PER MONTH (24% PER ANNUM) CHARGED ON ALL OVERDUE ACCOUNTS The respondent argued that despite the wording on the invoices, there was no express or implied agreement between the parties to pay the invoice interest. The Court agreed with the respondent, noting...

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Litigation

Creditors and the Oppression Remedy

We have written a series of articles about the oppression remedy and its application to the shareholders of a corporation. See “Business Judgment and the Fair Treatment of Shareholders” (July 2016), “A Brief Overview of the Oppression Remedy” (April 2017), “Director Liability in Oppression Actions” (August 2017), “Liquidation and Dissolution of a Corporation as a Remedy for an Aggrieved Shareholder” (February 2018). This article discusses the application of the oppression remedy to the creditors of a corporation. Introduction Historically, the oppression remedy was limited to shareholders. However, both the federal Canada Business Corporations Act and the provincial Business Corporations Acts...

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Litigation

A Primer on Regulatory Offences

Criminal law is premised on the notion that “an act does not make a person guilty unless the mind is also guilty”. The two components that make up a true Criminal Code offence, therefore, are the actus reus (the guilty act) and the mens rea (the guilty mind). However, a “regulatory offence” is quasi-criminal in nature. Many provincial statutes contain regulatory offences, of which there are two types: absolute liability offences and strict liability offences. The standard for proving culpability of an accused person is lowered through the partial or total removal of the mens rea requirement. To be found...

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Business Law

Licensors Be Wary – Are you Actually Franchising?

Franchising and licensing are often appealing models for businesses looking to expand. With either model, a franchisor or licensor can broaden the reach of their business without having to rely solely on their own capital. However, it is important that the two models be contrasted as against the legal framework within which they each operate. In provinces that have franchise legislation, a franchisor is required to follow a certain set of requirements including delivering a disclosure document to a prospective franchisee. The disclosure obligations are relatively onerous and require that a franchisor disclose all material facts relating to the franchise...

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Business Law

On Your Marks! A Reminder to Register Your Trademarks

Click here to view in PDF. On June 17, 2019, a number of significant amendments were made to the Trademarks Act (Federal) (the Act). As an example, amendments were made to permit: the registration of a trademark in respect of not only words, designs and other distinguishing guises but also new categories which include scent, tastes, textures, holograms, colour (by itself) and moving images; and the filing of one international application for the registration of a trademark which can cover up to 121 countries throughout the world rather than undertaking separate applications in each of those jurisdictions. The applicant would...

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Business Law

Good Faith Disclosure: Some Relief for Franchisors

Click here to view in PDF. The decision of the Ontario Superior Court of Justice in 2101516 Ontario Inc. et al. v. Radisson Hotels Canada Inc.(2019 ONSC 3302) is likely to be welcomed by franchisors across the country. In this decision, the Court ruled that a franchisee cannot claim for misrepresentation under section 7 of the Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, C.3 (the Act) if the misrepresentation is contained in a disclosure document that the franchisor was not obligated to deliver to the franchisee pursuant to the Act. 2101516 Ontario Inc. along with certain other guarantors (collectively,...

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Tax & Estate Planning

STEP Canada / Canada Revenue Agency Roundtable (2019)

This year, two of our associates – Katherine Ratcliffe and Jocelyn Arnason – attended the 21stannual Society of Trust and Estate Practitioners (STEP) Canada National Conference in Toronto, Ontario on June 6th and 7th, 2019. As usual, the STEP Canada/Canada Revenue Agency (CRA) Roundtable was one of the highlights of the conference. During the Roundtable, the CRA provided detailed answers to 18 pre-selected questions posed by trust and estate practitioners across Canada on a variety of topics, including 6 questions requesting clarification on the relatively new "tax on split income" (TOSI) rules. In advance of the release of the CRA's...

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Business Law

Be Aware of the Competition Act When Making Acquisitions

Executive Summary The Competition Bureau can review any merger or acquisition transaction, whether or not it is a “notifiable transaction” and whether or not the transaction has already closed. The general rule of thumb is that they will object to any transaction where they determine that the resulting company will be able to increase prices in any definable market by more than 5% and maintain those prices for one (1) year. The Competition Bureau must generally be given advance notice of proposed transactions when: Transaction-Size Threshold - the assets in Canada or revenues of the target firm generated in or...

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Business Law

Using the “Material Adverse Change” Condition to Terminate

Click here to view in PDF. According to a recent decision of the Delaware Court of Chancery, a buyer may rely on the material adverse change condition (also known as a “material adverse effect”, “MAC” or “MAE” condition) to terminate an acquisition agreement if the change in the target company "substantially threatens the overall earnings potential of the target in a durationally-significant manner" … "measured in years rather than months." Almost every merger or acquisition agreement contains a closing condition in favour of the buyer that the target company not suffer a MAC prior to closing but courts have historically...

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Business Law

Another Case of the Accidental Franchisor

Click here to view in PDF. The decision of the Ontario Superior Court of Justice in Fyfe v. Stephens (2018 ONCSC 5066) (Fyfe) exemplifies the importance of substance over form as it relates to contractual relationships that may or may not be characterized as "franchising arrangements". In Fyfe, the parties entered into a business agreement regarding “Dial a Bottle” and executed a document entitled “Exclusivity Agreement” (the Agreement). Unfortunately, the plaintiffs' business undertaking in connection with the Agreement was not successful and the plaintiffs sought to rescind the Agreement through the Arthur Wishart Act (Franchise Disclosure) (Ontario). The plaintiffs claimed...

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