the navigator · lucas leite marques – partner, kincaid mendes vianna advogados (brazil) pipeline...

INTHISISSUEPAGE1PROPOSEDLEGISLATIONFORWRECKED,ABANDONEDORHAZARDOUSVESSELS

PAGE2FIRMANDINDUSTRYNEWS

PAGE3MESA2018

PAGE8DOINGBUSINESSINCANADA-PART5-CANADIANIMMIGRATION

PAGE11HARDBALLSTRATEGYINMODESTCASEATTRACTSHUGECOSTSAWARDPAGE16ARCTICSHIPGROUNDINGAPPEAL

PAGE18WORKPLACEHARASSMENTSTEPSTOTAKEBEFOREACOMPLAINTISMADE

PAGE20DOEMPLOYERSHAVEOBLIGATIONSTOWHISTLEBLOWERS?

PAGE23CONTEST

FERNANDES HEARN LLP NEWSLETTER FEBRUARY 2018

Derelict andabandonedvessels are a problemfromcoast to coasttocoast.Theyposesafetyandenvironmental concerns,theyarea threattonavigation,andtheyareunsightlyforlocalcommunities,whooftenwantthemremovedbutdonothavethewherewithaltoaddressthem.

Thereis currently a legislativepatchworkregardingsuchvessels. Forexample,theNavigationProtectionAct,(*1)the CanadaShippingAct,2001,(*2)andtheCanadaMarineAct(*3)all haverelevantprovisionsgenerally addressingthe vesselowner. However, theseprovisionsaremore remedial thanproactive, they are generally discretionary, andthey are often moot because the responsible owner might not beavailableorevenreadilydiscernable.

Late lastyear,inordertounifyandbolsterthis patchwork,thefederalgovernment tabled Bill C-64 to create theWrecked, Abandoned orHazardousVesselsAct. (*4)This legislationwill imposeliability ontheownersof derelict vesselsand require insuranceandother financialsecurity. Theproposedlegislationhas nowbeenreferredtostudybyaparliamentarycommittee,whichhasbeenholdinghearingsthismonth.

The proposed legislation, as it is currently conceived, contains ninemajorelements:

i) implementingtheNairobi InternationalConvention ontheRemovalofWrecks,2007,

ii) requiringvesselsof300 gross tonnageandabove, andunregistered vessels being towed, to have wreck removalinsuranceorothersecurity,

iii) generallyprohibitingvesselabandonment,

iv) prohibitingleavingdilapidatedvessels inplaceformorethan60dayswithoutauthorization,

ProposedLegislationforWrecked,AbandonedorHazardousVessels

THENAVIGATOR

FERNANDES HEARN LLP NEWSLETTER FEBRUARY 2018 PAGE 2

FIRMANDINDUSTRYNEWS• GordonHearnandLouisAmato-Gaucihave beenrecognizedinthe2018Lexpert®Guide to US/Canada Cross-border Lawyers in Canada.Gordon is notedfor hisdisputeresolutionpractice,withLouisbeingnotedforhistradelawpractice.

• MeettheBuyersForumMarineTrade,February28toMarch3,2018,Virginia.

• TulaneUniversityLawSchoolAdmiraltyLawInstitute,February 28 toMarch2,2018,NewOrleansLouisiana.

• International Warehouse Logistics Association Convention and Expo, March11-13,2018,TampaFlorida.

• CMAShippingandConferenceExpoandABATIPSAdmiralty&MaritimeLawCommittee/WISTAPanel,March12-14,2018,StamfordConnecticut.

• TransportationandLogisticsCouncil44thAnnualConference,March19-21,2018,CharlestonSouthCarolina.

• TransportationIntermediariesAssociationConference,April8-11,PalmDesertCalifornia.


INVITATIONTOMESA2018CONFERENCEFernandesHearnLLPis one ofthesponsors for theMarine&EnergySymposiumoftheAmericas2018(“MESA2018”)conferenceinTorontoApril 18-20,2018 inToronto.Thefollowingistheprogramfortheconference.

Where?OmniKingEdwardHotel,TorontoCanadaWhen?18-20April2018

Registration:http://www.mesa2018.com

Wednesday,April18,2018

6:00-8:00pmRegistration-Mezzanine,OmniKingEdwardHotel6:30-8:00pmOpeningReception-PalmCourt,OmniKingEdwardHotel8:00pmDinneronyourown-orjoinusatapre-arrangedrestaurantThursday,April19,2018

8:00amtonoonRegistration-Mezzanine,OmniKingEdwardHotel

Time JointSession-VanityFairBallroom

8:30to8:45 Welcome-RuiFernandes,PartnerFernandesHearnLLP

8:45to9:45am ArcticExplorationandShipping/ThePolarCodeModerator:RuiFernandes,PartnerFernandesHearnLLPPeterPamel–PartnerBordenLadnerGervais,(Canada)AldoChircop–ProfessorofLaw;CanadaResearchChair(Tier1)inMaritimeLawandPolicyDalhousieUniversity(Canada)

9:45to11:15am NAFTAModernizationandImpactonEnergyandTradeModerator:LouisAmato-Gauci,Partner,FernandesHearnLLPHon.LisaRaitt,MemberofParliamentforMilton,DeputyLeaderoftheOfficialOpposition(Canada)DanielUjczo–Counsel,DickinsonWrightPLLC(USA)

11:15to11:30am CoffeeBreak

11:30amto12:30pm CatastrophesandCrisisManagementModerator:KimStoll–Partner,FernandesHearnLLPMarkNewcomb–CounselandVPClaims&Insurance,ZimIntegratedShippingServicesLtd.(USA)BruceHennes,ManagingPartner,HennesCommunications(USA)

12:15pmto1:15pmLunch-KeynoteAddress-TBA

http://www.marineenergysymposium.com

http://www.marineenergysymposium.com


MESA2018CONFERENCE

ConcurrentSessionTime SessionA-VanityFair SessionB-Kensington

1:30to2:30pm ApplicationofJurisdictionClausesinDifferentCountriesShelleyChapelski–PartnerNortonRoseFulbright(Canada)RobertReeb–ShareholderMarwedel,Minichello&Reeb(USA)FabianaSimõesMartins–Partner,Siano&Martins(Brazil)

LNGContractsandTransportationJasonHicks–Associate,BernardLLP(Canada)

2:30to3:30pm ArrestofVesselsinVariousJurisdictionsSusanDorgan–SpecialLinesRecoveryLead,GlobalRecovery,AIG(USA)Jean-FrancoisBilodeau–Partner,RobinsonSheppardSharpiro(Canada)JorgeLuisCordoba–Partner,Cordoba&Associates(Colombia)

PortSecurityandLiability

3:30to4:30pm IssuesArisingfromProjectCargoJohnEvans–SeniorVice-President,Marine,BerkshireHathaway(USA)

Blockchain&SmartContractsCraigFuller–CEO,TransRisk(USA)

6:00PMMESA2018CocktailReceptionandDinner–Hotel


Friday,April20,2018

10:00to10:45am Autonomous Ships and

EquipmentLaura Hill – Perkins Coie LLP (U.S.)Roger Adamson – Futurenautics (U.K.)

Cyberterrorism in Transportation and Energy ProjectsCaroline Leprince – Canadian Cyber Incident Response Centre – Public Safety Canada

10:45to11:00am Coffee Coffee

11:00to11:45am Offshore Exploration and Exploitation: Liability and Compensation IssuesLawrence Malizzi – Senior Manager – O’Brien & GereLucas Leite Marques – Partner, Kincaid Mendes Vianna Advogados (Brazil)

Pipeline Technologies, Development Issues and Litigation Joshua Jantzi, Partner, Dentons Canada LLPKori Patrick, Technical Manager, Research & Development, Enbridge, Edmonton Alberta

11:55amto12:45pm Emerging Issues in Insurance in Marine and EnergySimon Swallow – Chief Executive Shipowner’s ClubBrian Murphy – Vice President, Berkley Offshore

Wind Turbine LitigationSarah Powell – Partner – Davies Ward Phillips & Vineberg LLP

12:45pmto2:00pmLunch–EthicsPresentation

v) authorizingTransportCanada andthe Ministry of Fisheries and Oceans toorder theremoval ofvesselsfrom federalproperty,

vi) authorizing the Ministry ofFisheries and Oceans to address hazardsposedbyvesselsorwrecks,

vii) authorizing Transport Canada totakemeasureswithrespect toabandonedand dilapidated vessels, and to hold theownersliable,

viii) implement ing a regulatoryscheme, inc lud ing admin i s t ra t i vemonetary penalties (AMPs) and otherpenalties,and

ix) authorizing the government tomake regu lat ions concern ing thefo rego ing , fo r example to g rantexemptions, to set fees, and to establishrequirementsforsalvageoperations.

The legislation would apply to all vessels,regardless of “flag” or size, in all Canadianwaters,except for vessels thatareless than5.5meters long and designed to be primarilyhuman-powered or wind-powered. It wouldcover both commercial vessels and pleasurecraft.

The various provisions would mostly beadministered by Transport Canada and theMinistry of FisheriesandOceans. The formerwoulddevelopregulations andpolicies, addressinsurance obligations, supervise provisionsconcerningsalvageandwreckreceivers,enforceprohibited acts, and make removal orders ongovernment property. The latter would takeactions concerning small craft harbours andmakeremovalordersongovernmentproperty.

Enforcement officers would have broadinspectionpowers. Penaltieswouldrange from$5,000 per day for certain offences, up to$6,000,000 for other offences (subject toreductionbasedonevidenceofhardship); and,

in some cases, the penalty may also includeimpr isonment for up to three years .Nonetheless, the penalties are explicitlydesignedtoencourage compliance rather thantopunish.

In addition to the foregoing, thecourts wouldhave wide discretion tomake orders to avoidthecontinuationorrepetitionofanyoffence,ortoavoidfuture offences; todirect arespondenttopay thegovernment’s costs for any remedialor preventative actions;or toprohibit apersonfrom operating a vessel or providing servicesrelatedtotheoperationofavessel.

The court’s powers would also include astatutoryinjunctionprovisionallowingittoissueanorderwithoutweighingtheprejudice ofthatordertoanyrespondent,whichwouldotherwiseberequiredunderthe commonlaw.Rather,thecourt would only need tobe satisfied that anoffencewasabouttobecommittedor likely tobecommitted.

It is noteworthy that directors, officers,employeesoranyonewho“directed,authorized,assentedto,acquiescedinorparticipatedin”anoffencecouldbeheldvicariously liablefor anyviolationof the legislation. Infact, thoseheldvicariously liable may be charged even if acorporation itself is not identified. However –exceptfor knowinglycausingavessel tosinkorbecome stranded – such persons would beentitled to make a “due diligence” defence.Similarly, in this regard, no charge would lieagainstavessel inremforaviolationofthe Act,if thepersonin chargeof that vessel did “duediligence” to try toprevent the commissionoftheoffence. Moreover, thelegislationcontainsa provision for a level of whistleblowerprotection, which might serve to encourageearlyreportingofapotentialviolation.

Inadditiontotheaforementionedpenalties,thefederal government would be enabled torecoverdebts,forexample,byseizingandsellingvessels. With respect to the non-payment offees, the government may even apply for anorderpermittingtheseizureandsale ofa “sister


ship”; that is, another vessel under the sameownershipastheoffendingvessel.

Wewill bemonitoringthis proposedlegislationasitmovesforward.

AlanS.Cofman

Endnotes(*1)R.S.C.1985,c.N-22(*2)S.C.2001,c.26(*3)S.C.1998,c.10(*4) available online: << http://www.parl.ca/DocumentViewer/en/42-1/bil l/C-64/first-reading>>

INVESTOR NEWSLETTER ISSUE N°3 FALL 2008FERNANDES HEARN LLP NEWSLETTER FEBRUARY 2018 PAGE 7

http://www.parl.ca/DocumentViewer/en/42-1/bill/C-64/first-reading






2. DoingBusinessinCanada–Part5(*1)-CanadianImmigration

Generally, all persons who are not Canadiancitizens or permanent residents require aworkpermittoworkinCanada.

ObtainingPermanentResidency

Immigration in Canada is the responsibility ofthe federal government; however, someprovinces have entered into agreements withthe federal government called ProvincialNominee Programs. Each program has its own“stream” (immigration programs that targetcertain groups) and criteria. There are also anumberofprogramsavailable forimmigrationtoCanada.Someoftheseinclude:

1. Family Sponsorship–Canadianresidentsliving in Canada may sponsor closely relatedfamily relatives such as spouse, partner,children,parents,grandparentsandothers.

2. Immigrant Investors - Internationalinvestors withtheskills andabilitiesneededtocontributetotheCanadianeconomyandable tointegrate intoCanadiansociety,may beeligibleto apply for permanent residence under theImmigrant Investor VentureCapital (IIVC) PilotProgram.

3. ExpressEntry – Skilledworkers that fall withincertaineconomicprograms includingtheFederal SkilledWorker Program, FederalSkilledTrades Program,CanadianExperienceClass anda portion of the Provincial Nominee Program.Express Entry was designed with three mainobjectives inmind: 1)flexibility inselectionandapplicationmanagement, 2) responsiveness tolabourmarketandregional needs,and3)speedinapplicationprocessing.

4. Start-upVisa Program-Canada's Start-upVisa Program targets immigrant entrepreneurswiththeskillsandpotential tobuildbusinessesinCanada that:(a)areinnovative,(b)cancreatejobs for Canadians, and (c) can compete on aglobalscale.

5. Self-Employed Program - The Self-Employed Program seeks to bring people whowill becomeself-employedinCanada.Theymusthave either: a) relevant experience in culturalactivities orathletics,andintendandbe abletomakea significantcontributiontothecultural orathletic life of Canada, or (b) experience inmanaginga farm,andintendandbeabletobuyandmanageafarminCanada.

6. Caregivers – Options for PermanentResidence – Caregivers working with atemporary permit may apply for permanentresidence based on Canadianwork experienceas a caregiver. Theprogramsavailable requiretwo years of work experience in Canada as acaregiver.

7. Provincial Nominee Programs - Mostprovinces and territories in Canada cannominate immigrants through the ProvincialNominee Program (PNP). These immigrantsmust have the skills, education and workexperience tocontribute tothe economyofthatprovince or territory, and must want to livethere. Quebec does not haveaPNP. It has itsownprogram.

8. Quebec-Selected Skilled Workers -Quebec has a special agreement with theGovernment of Canada on immigration. Theprovince has its own rules for choosingimmigrantswhowilladaptwelltolivingthere.

9. Refugees – Technically refugeesare notimmigrants. An immigrant is a person whochooses to settle permanently in anothercountry. Refugees are forced to flee theircountries because of a well-founded fear ofprosecution. They arenotabletoreturnhome.The Canadian refugee system has two mainparts: (a) the Refugee and HumanitarianResettlement Program, for people who needprotectionfromoutsideCanada, and(b)theIn-Canada Asylum Program for people makingrefugeeprotectionclaimsfromwithinCanada.


Non-ImmigrantorTemporaryEntryWorkPermits

Therearetwotypesofworkpermits:openworkpermitsandemployer-specificworkpermits.Therearemanycategoriesunderwhichaworkpermitcanbeobtained.Someoftheseinclude:

a)Intra-CompanyTransferee -Theseare personsin senior executive or managerial positions orpositions requiring specialized knowledgeregarding the employer’s products, services orprocesses and procedures, who have beenemployeesofa branch, subsidiary or parentofthe company located outside of Canada for atleastoneyear,andwhoseektoenterCanada toworkatseniorexecutiveormanagerial levelsorinapositionrequiringspecializedknowledge fora temporary period in a related Canadiancompany.

b) Trade Agreements - Certain internationaltrade agreements to which Canada is a party,such as the North American Free TradeAgreement (“NAFTA”), the General AgreementonTrade inServices(“GATS”) and the Canada-ChileFreeTrade Agreement(“CCFTA”),facilitatethe temporary entry of certain categories ofworkers whoare nationals ofoneof the other

member states. Three categories of workpermits are generally granted under theseagreements: (a) traders and investors; (b)p ro fess iona l s ; and ( c ) i n t ra - companytransferees. For these persons no ServiceCanada Labour Market Impact Assessment isneeded.

c)JobOffer–ACanadianindividual orcompanymayoffertemporaryworktoaforeignnational.In most cases a Labour Market ImpactAssessment is required from Service Canada.ServiceCanadamust besatisfiedthat qualifiedCanadians or permanent residents are notavailableinCanadatoperformtheworkatissue(because the requisite specific recruiting/advertising in Canada has been done) or, putanotherway,thatthehiringofa foreignworkerwill nothave a negativeimpactontheCanadianlabourmarket.

d) Spousal Work Permit Program – A workpermit permits a spouse and children toaccompany a person authorized to work inCanada.Insomecases,itmaybe possibleforthespouse to obtain a work permit under theSpousal WorkPermitProgram.Generally, ajoboffer is required and a Labour Market ImpactAssessmentmayalsoberequired.


Visitors

Visitors to Canada may or may not require atravel visa for entry. The list of visa-exemptcountries is long;however,forentryintoCanadaby air,evenexempt individuals may require anElectronic Travel Authorization (“ETA”).Americancitizens andpermit orvisaholders donot require an ETA. Travelers donot need anETA if entering by land or sea – for instancedrivingfromtheU.S.orcomingbybus, train,orboat,includingcruiseship.

BusinessVisitors

Abusiness visitormayenterCanadawithouttheneed for a work permit. A business visitor issomeonewhocomes toCanadaforinternationalbusiness activitieswithout directly enteringtheCanadian labour market. Examples of thisinclude someonewhocomes toCanada: (a) tomeet people from companies doing businesswiththeircountry, (b)toobserve sitevisits,and(c) because a Canadian company invited themfor training in product use or sales or otherbusiness transaction functions. They do notneedaworkpermittocometoCanada.Businessvisitors must prove that their main source ofincome and their main place of business areoutsideCanada.Ifthe personisdoingworkforaCanadiancompany,thepersonis notconsidereda business visitor, andmay needtoget aworkpermit. For example, an employee sent by aforeign company to fulfill a contract with aCanadiancompanyisnotabusinessvisitor.

CitizenshipCriteria

Canada offers Canadian citizenship throughnaturalization.Apermanentresident(“PR”)mayapply forcitizenshipifthatpersonhasPRstatusinCanada andhas nounfilledconditions relatingtothePRstatus. Theresidentmustnot: (a)beunder reviewfor immigrationor fraudreasons,and (b) be under a removal order (to leaveCanada). The PR must have been physicallypresent inCanada for at least 1095 days duringthe five years before signing the citizenship

application.ThePRmusthavemetthepersonalincometax filing obligations inthree tax yearsthat are fully or partially within the fiveyearsrightbeforethedateofapplication.ThePRmustshowthatheorshecanspeakandlistenin oneoftwoofficial languages(EnglishorFrench).ThePR must take a test to meet the knowledgerequirement for citizenship. The PR needs toanswerquestionsaboutCanada’s:a)valuesb)historyc)symbolsd)institutionse) rights, responsibilities and privileges ofcitizenship, such as voting in elections andobeyingthelaw.If thePRhascommitted acrime in or outsideCanada,thePRmaynotbeeligibletobecomeaCanadiancitizenforaperiodoftime.Marrying aCanadiandoes not give citizenship.The same steps as everyone else must befollowed. There isn’t a special process forspousesofCanadiancitizens.

RuiM.FernandesFo l low Ru i M. Fe rnandes on Twi t te r@RuiMFernandesandonLinkedin. Seealsohisblogathttp://transportlaw.blogspot.ca

Endnotes(*1)Thisarticleispart5of17partsdedicatedtoareviewofdoingbusinessinCanada.SubsequentarticleswillincludeEmploymentLaws,DirectorsandOfficers,InternationalTrade,Competition,SaleofGoods,IntellectualProperty,Privacy,RealProperty,EnvironmentalLaws,Taxation,Insolvency,LitigationandADR.


http://transportlaw.blogspot.ca

http://transportlaw.blogspot.ca

3. HardBallStrategyinModestCaseAttractsHugeCostsAwardAgainstDefendants

PersampierivHobbs2018ONSC368

The significant aspect of this casemay have awide-rangingeffect andrelatestothe Offers toSettle and the resulting Costs Endorsementrenderedafteratwo-weekjurytrial.

OfferstoSettlebyparties inanactionhavecostsconsequences. Suchformal offers are meant toencourage the receiving party to seriouslyconsidertheotherparty’s offerbecausecosts ofthe action might be awarded against itdependingontheirtreatmentofsuchoffer. Toattract costs consequences, the offer must beopenfor acceptanceup tothecommencementoftrial.Acourtdoes havediscretiontovarytheamount of coststhatmight beawardedtotheotherside.Thestandardlevels ofcostsawardedunder Rule 49 of the Rules of Civil Procedureallowforrecoveryofapproximately60%ofcostsexpended on a “partial indemnity” basis andapproximately 80%-90% at the higher“ sub s t an t i a l i ndemn i t y ” co s t s l e ve l .Disbursementsmustbereasonablyincurredandaregenerallyrecoverableona 100%basis bythepartytowhomcostsareawarded.

Forthedefendant,shouldtheplaintifffail to dobetter at trial than the defendant’s offer (butstill besuccessful onliability at a minimum), itwould recover its partial indemnity costs fromtheplaintifffromthedateoftheoffer forwardto trial. The plaintiff would recover partialindemnity costs to thedateof thedefendant’sformalofferinthatscenario.

For plaintiffs’ offers, where the plaintiff doesbetterattrial thantheofferitserveditself,costsareawardedagainsttheunsuccessfuldefendantonapartial indemnity basis tothedate oftheplaintiff’s offer and then on a substantialindemnity basis from thedate of the offer totrial.(*1)

Facts

In Persampieri v Hobbs, 2018 ONSC 368,(“Persampieri”), an 84 year old plaintiff hadbeenapassengerina motorvehicleonFebruary11, 2009, when it was rear-ended by thedefendants’ motor vehicle. She, and otheroccupants of the plaintiffs’ vehicle brought anactionforcompensationforpersonalinjuries.

Counsel for the defendants and their insurer,Aviva Canada (the “Insurer”), advised shortlyafter the serviceof their statementof defencethat there would be no payment of tortdamages whatsoeverandthat, infact,noOffersto Settle would be made to the plaintiff.Further, the defendants’ counsel advised thattheInsurer’s internalsystemofassessingmotorvehicleaccident claims hadconcludedthat noteven $1.00 would be offered to her and thatnothingcouldbedonetoalterthisdecision.Thedefence never wavered from thisposition andlaunched a vigorous defence or, colloquially,“played hardball” regarding what it consideredto be a spurious claim. The various defencecounsel handling the matter all made it clearthat, unless the plaintiff agreed to a dismissalwithoutcosts,thematterwouldproceedtotrial.The defendants’ case alleged that theplaintiffwould not meet the statutory threshold testunderSection267.5(5)oftheInsuranceActandtookissuewithherdamagesandcredibility.

Thematterproceededtomandatorymediationin January of 2013. The defendants admittedliabilityatmediationandtheplaintiff,inreturn,agreedto limit her claim against them for thepolicy limits remaining after the settlement ofotherpassengers’claims.InSeptemberof2013,thedefendants offeredtoagreetoadismissaloftheactionandtonotpursuecosts against theplaintiff. The plaintiff did not accept thisinformaloffer.

InNovember2016, the defendants thenserveda formal OffertoSettle underRule49toattractcosts consequences ifitwasnotacceptedbeforetrial thereby putting pressure on the plaintiffgiventheriskofacostsawardagainst her.Thedefendants’ offer stated that that they wouldconsent to an order dismissing the action


without costs and this offer was open foracceptance to the commencement of trial. Thisgave little room for the plaintiff to seriouslyconsidersettlingbeforetrial.

The pretrial took place inFebruary of 2017. InMarchof2017, theplaintiffalsomadeaRule49offer that shewouldaccept$20,000 plus partialindemnity costs and disbursements but waivingprejudgment interest. Thetrial was scheduledforMay29,2017beforeajury.To attract costs consequences, Offers to Settlemust be servedmore than7 days before trial.Twoweeks beforethe trial,theplaintiffrevokedherMarch2017offerandreplaceditwithamoremodestformal OffertoSettleunderRule49.Theplaintiff’s newofferwasfor$10,000fordamagesnet of thestatutory deductible, plus costs on apartial indemnity basis and was open foracceptance to the commencement of trial.Neitherpartyacceptedthe other’s Rule49OffertoSettleandthematter proceeded toa 14-daytrial.

SandersonJ.statedatparagraph23,

Duringthetrialofthesubstantiveissues,counselforthePlaintiffpredictably,andinmyviewreasonably,calledextensivelay,medicalandfuturecostofcareevidence.

The jury awarded the Plaintiff: $40,000 forgeneral damages, $25,000forhousekeepingandhomemaintenance, $2,000 for attendant care,and $500 for medical and rehabilitationexpenses.

After application of statutory deductibles anddeductions for accident benefits, the net Juryawardwas $20,414.83, calculatedas follows: (a)$2,614.83 for general damages (net of thedeductible); (b) $15,800 for housekeeping andhome ma i n t enan ce d amage s ( n e t o fhousekeeping benefits received); (c) $0 forcaregiving; (d) $2,000 for attendant caredamages;(e)$0foroutofpocketexpenses;(f)$0

for medical and rehabilitation benefits (net ofmedicalrehabilitationbenefits.)

TheCostsEndorsement

This was clearly a modest case and the Courtthenhadtoconsider the issueofthecosts tobeawardedtothe plaintiff,giventheultimateresultthat thenet juryawardobtainedbytheplaintiffwas more favourable to the plaintiff than herown offer made two weeks before trial of$10,000 plus partial indemnity costs. Theplaintiff had “beaten” or done better than heroffer. The defendants, then, should haveaccepted her offer and, because they did not,theyfacedcostsconsequences.

T he Cou r t , i n c on s i d e r i n g t h e c o s t sconsequences,istoexerciseits discretion(*2)inlight ofthespecific facts andcircumstances,andthat, in so doing, the quantum of the costsawarded should be fair and reasonable. Thepartiesmadesubmissionsinthisregard.

The plaintiff pointed to the fact that thedefendants understood the risks and possibleconsequencesofproceedingtotrial.The plaintiffhad been reasonable and had offered modestsums inbothofherOfferstoSettletoresolvethematter and to avoid a lengthy, costly andunnecessarytrial.Theseoffershadbeenignored.The jury had awarded more than double theplaintiff’s offer. Thedefendants,ofcourse,wereentitled to adopt their defence strategy, butknewtherisks ofnotacceptinga modestofferof$10,000andthatcosts wouldbe awardedagainstthemshouldtheplaintiffbeatthisoffer.

SandersonJ.agreedanddeclinedtodepartfromtheusual order oncosts wherethe plaintiff didbetter than her own offer at trial. The Courtgrantedcosts ona partial indemnityscaletothedate of her offer and then on a substantialindemnityscaletotheendoftrial.

Onthe quantumofcosts,theCourtwas urgedbythedefencetoconsider the reasonableness andproportionality of the costs sought by theplaintiff’s counsel inlightofthe jury’saward.The


defence submitted that such a modest awardshould not attract disproportionate costs. TheCourt went ontoexaminevariouscourt awardsandprovidedagoodsummaryofthe case lawinthisrespect.

Sanderson J. noted the recent case of Cobb v.LongEstate[2017]OJNO4830whereintheCourtofAppeal stated,“Onanyproportional basis,theplaintiff’s costs,eventakingthedefence offeroutof theequationfor themoment, couldnothavebeen expected to exceed approximately$200,000,giventheresultsachieved.”

SandersonJ.thenstatedatparagraph66,

In saying that on a net judgment of$22,136.30 a costs award on a partialindemnityscale shouldnothaveexceeded$200,000, theCourt of Appeal appearedto have been providing guidance to theeffect that a costs award on a partialindemnity scaleshouldnot exceed9.035timestheamountofthenetJudgment.

SandersonJ. thennotedCorbett vOdorico 2016ONSC2961,where,afterasix-weektrial,thejuryawarded$141,500beforedeductionofstatutorydeductionsandcollateral benefits.Thenetawardwas$108,500. Neitherparty beat its ownOfferto Settle in that case. The Plaintiff claimed$159,249.90 infees onapartial indemnity basisand $242,521.50 in fees on a substantialindemnity basis. The trial judge rejected thesubmission of counsel for the defendant onproportionality andheldthat, tooveremphasizeproport iona l i ty , cou ld resu l t in undercompensationoftheplaintiffs andbeaninjusticeby depriving themof otherwiseappropriateandreasonablecosts because ofamodestrecoveryattrial andin the face of a$7.00 settlementofferfromthe Defendant.Thetrial judge awardedtheplaintiffs costs as follows: fees of $159,249.90,HSTof$20,702.48anddisbursements of$89,347.TheCourt inCorbett statedthat presenting theplaintiff with an offer on the eve of trial thatsuggested she wouldeither have to walk awayfromher case withnocompensationorproceedtotrial,didnotencouragesettlementas intended

by Rule49.Limitingtheamountofcostspayablein the face of such circumstances would onlyserve to encourage defendants’ “hardball”strategies anddeny access tojustice. Rather, acosts awardshouldhavebeenreadilyforeseeableto the defendants andtheir counsel when theychose not to make a “genuine” Rule 49 offer,insteadforcingthe plaintiffstoproceedforward.Thefact that theamountof costs exceededtheamount awarded for damages did not rendersuch costs award inappropriate so long as thecosts and disbursements were legitimatelyincurredandnecessary for theplaintiff toprovetheclaimattrial.

SandersonJ.wentontostatethatthelegislatureintendedtoimposestiffercostsconsequences ondefendants whereplaintiffsbeattheirownOfferstoSettlethanwhendefendantsweresuccessfulin this regard. Further, reducing costs to theplaintiff by application of the proportionalityprinciple serves to deprive the plaintiff of thegreater costs protection intended by thelegislature.

SandersonJ.stated,

[96] The proportionality principle isgenerally invoked to foster access tojustice.

[97] However a strict application of theproportionality principle here couldworkagainst theachievementofthatgoal andcouldhavetheoppositeeffect.

[98] Here, the party invoking theproportionality principle and therebyseekingtominimizetheeffects ofa usualorder for costs under Rule 49.01(1) is asophisticatedinsurer thatmadea tacticaldecisiontorejecta Plaintiff’sformal Rule49 Offer toSettleunderstanding theriskincoststhatitwastakingbysodoing.

[99]Becauseithadframedits defenceinthemanner that it had, it knew that theresolution of the issues at a trial wouldinvolvethe hearing of lengthy andcostly


evidence, including extensive medicalevidence.

TheCourt concluded that attempting to undulyminimize the quantum of otherwise usualamountsofcosts,includingsubstantial indemnitycosts,onthe basis ofproportionality,wouldbe tosanction under compensation of Plaintiffs forcosts legitimately incurred, to make manylawsuits uneconomic and could generallydiscouragePlaintiffs withmodest claims, evenifvalid, from pursuing them. The benefits toinsurerscouldbe significantandwide rangingandsuch discouragement could seriously jeopardizeoverallaccesstojustice.

Atparagraph103,SandersonJ. stated, “Insurerscan,ofcourse,pursuewhateverstrategy optionsthey deem fit, but especially where suchstrategies may have wide ranging and adverseimplications involving widespread denial ofaccess tojustice, theuse such strategies shouldnot be encouragedby thegivingof cost breaksonforeseeablecostsconsequences.”

The Court further stated there should be nosanction of the adoption of “unalterable”decision-making processes that would rendermeaningless andmake a mockery ofthepretrialresolutionprocess,whichis aimedatencouragingand effecting settlement to avoid unnecessarytrials:

[108] Total unwillingness to reassess/discuss sett lement based on ful linformation and advice should not besanctioned or encouraged in any way,[includingby shelteringinsurers fromtheforeseeable costsconsequences ofsuchadecision, should it fail to yield a resultfavourable to an insurer in a particularcase].

TheCourt went on tofix costs finding that theCourt of Appeal in Cobb, supra, indicated thatpartial indemnity costs shouldnot exceed9.035times the net award and that substantiali n d emn i t y awa r d s ( a lmo s t c omp l e t eindemnificationof90%ofcosts expended)should

be1.5timeshigherthanpartial indemnityawardsor13.5525timesthenetaward.

The total of partial and substantial indemnitycosts awardedwas$62,715 plus$174,302.50 =$237,017.50.

TheJurisdictionIssue

Thesubmissions ofthedefendants’ counsel thatthe matter should have been commenced inSmall Claims Court (jurisdiction of $25,000) orunderSimplifiedRules (jurisdiction$100,000)wasnot accepted. The plaintiff’s decision tocommence in Superior Court was, according toSanderson J., reasonable given the issues(includingdeductibility ofbenefits andchallengetohercredibility)andthe evidenceas requiredbythe defence for the plaintiff to prove herdamages case. The procedures of the SmallClaims Court or those under Simplified Ruleswouldnothavebeenpracticablesincea fulltrial,withliveevidenceandfull examinationandcross-examination,wasrequired.

FinallyThis case is instructive in that a hard foughtposition may indeed be maintained at theinsurer’sdiscretion,buttherisks associatedwithtrial must also beborne. Onewho livesby theswordmayverywell dieby the sword. Iftheriskis taken,theremaybecosts tobepaidshouldthecase gosideways.This costs awardinPersampieriis likelya “costofdoingbusiness”fortheInsurer,giventhelikelysuccess ofothertoughnegotiatingpositionsonspurious(andperhaps other)claims.This judgment was based in part on the“unalterable” decision-making process of thesubject insurer, which attracted the Court’sattention as discouraging legitimate thoughmodestclaims.Itappears thatthecourts expectthedefenceattitudetowardresolutionofactionsand offers to settle to have an overarchinginterest of encouraging settlement generallythroughouttheaction.Tohave anyswaywiththecourts on costs awards, defendants taking atoughdefencestance forcinganultimate trialwillhavetoshowthat,otherwise,theyhadandmade


genuineoffers andhadtakenreasonable steps toencouragesettlementthroughouttheaction.

KimE.StollFollowKimon LinkedInand at url: linkedin.com/in/kim-stoll-transportationlaw and on Twitter@KimEStoll

Endnotes

(*1)Rule49 offers areusedinsituations wheretheplaintiff is successful onliabilityandreceivescosts. Rule 57 offers are used where thedefendant wins on liability and are at thediscretionofthecourt.(*2)underSection131(1)oftheCourtsofJusticeAct.TheCourtistoalsoconsiderthefactorssetoutinRule57andthecaselaw.


https://www.canlii.org/en/on/laws/stat/rso-1990-c-c43/latest/rso-1990-c-c43.html




4. Adventurer Owner Ltd. v. Canada: FCADismissesAppealinArcticShipGroundingCase

TheFederalCourtofAppeal recently releaseditsdecision in Adventurer Owner Ltd. v. Canada,2018 FCA 34.Thecasedealswiththegroundingof an expedition cruise ship, the M/V ClipperAdventurer (“Clipper”) owned by the appellant,Adventurer Owner Ltd. (“Adventurer”) .Fundamentally, themainissuewas whether thefederal Crownhad satisfied its duty of care tomariners byissuingacertaintypeofpublicnotice(called a “Notice to Shipping”), but not issuinganothertypeofpublicnotice (calleda “NoticetoMariners”). Adventurer argued that the Crownhad not discharged its duty of care; theCrownargued that it had, and that Adventurer’s ownnegligencewasthecauseofthegrounding.

At first instance, theFederal Court ruled in theCrown’s favour. Adventurer appealed, asdiscussed below. Ultimately, the appeal wasdismissed.

TheFactsThis case was first reported in the FernandesHearnLLPnewsletter’sFebruary2017edition.

On August 27, 2010, theClipper, sailing at fullspeed, ran aground on a submerged anduncharted shoal in the Coronation Gulf, in theCanadianArctic. TheClipper wasinNunavut,enroute fromPortEpworthtoKugluktuk,whenshestruck theshoal withsuchforcethatmorethanhalfher lengthbecamefirmly embeddedontheshoal.

Fortunately,noneof the 128 passengers and69crew members was injured. Over the next fewdays, the passengers and non-essential crewwere rescued by the Canadian Ice BreakerAmundsen.

The shoal itself had been discovered onSeptember 13, 2007 by another icebreaker, theSir Wilfred Laurier. Following its discovery, apublic noticewas issuedto signal its existence.Thenoticeis knownas a “Notice toShipping”–“NOTSHIP” for short. In this case, NOTSHIP

A102/07was ultimately issued, calling attentiontothenewly-discoveredshoal.

Under the existing practice, NOTSHIPs arebroadcast over the radio for 14 days, at whichpoint they become written NOTSHIPs and areplaced on the CanadianCoast Guard’s website.They can also be obtained from the CanadianCoastGuardCentre.Moreover,writtenNOTSHIPsaredistributedonaweeklybasis toallthose whomakea request inthat respect. Theevidenceinthis casewas that neither those on board theClipper nor their managers had made such arequest.

NOTSH IP A102/07 was t o have beensupplementedby anothermorepermanent typeofnoticereferredtoas a “NoticetoMariners”–“NOTMAR” for short.NOTMARsareintendedtobe permanent updates to paper hydrographiccharts.

Directly following the shoal’s discovery, thehydrographerresponsibleforthediscoverydidinfactprepareadraftNOTMAR.Itwas approvedbythegovernmentbutultimatelywasneverissued.

Ultimately, the chart being used by the Clipperwas never updated following the release ofNOTSHIP A102/07. This was apparently becausetheClipper’schartagentonly updatedits chartsfrom NOTMARs.Meanwhile, however, NOTSHIPA102/07 remained in force at the time of theincidentandcouldhavebeenlocated.

TheActionEssentially,theClippersuedthefederal Crownonthebasis that its servants werenegligent,amongotherthings, in failingtoissueaNOTMARwhentheshoalwasdiscovered.

Forits part,theCrowncountersuedtorecoveritscosts (in theamount of$445,361.64) associatedwith clean-up efforts in respect of some oilpollutionoccasionedby theincident. The lowercourt judge dismissed the main action. JusticeHarrington found, essentially, that the Crowndischargedits duty by issuingNOTSHIPA102/07.HarringtonJ.alsoconcludedthatthoseonboard


the Clipper had been negligent in selecting acourse throughthe CoronationGulfwithout thebenefit of NOTSHIPs, which they were legallyrequiredtoconsult(undersection7oftheChartsand Nautical Publication Regulations, 1995,S.O.R./95-149,andalsosection7 ofthe CollisionRegulations,C.R.C.,c.1416).

TheCourtfurtherfoundthat,evenintheabsenceof direct knowledge arising from NOTSHIPA102/07,those onboardthe Clippershouldhaveknowntherewereunchartedshoals in the areaandshouldhave proceededthroughthe areaatamuchslower speedinthe wakeofa zodiac boatwithaportableechosounder.

Thus, the Court found that the Crown haddischargedits dutyofcare,andthattheaccidentwas caused solely by those in charge of thenavigationoftheClipper.

Justice Harrington also allowed the Crown’scountersuit for costs associated with the oilpollutionclean-up.

TheAppealOn appeal, Adventurer did not challenge theCourt’s findingthatithadbeennegligent.Rather,itsoughttochallenge theCourt’sfindingthattheCrown had not been negligent. It argued thatJustice Harrington erred in finding that theCrown’s issuance of NOTSHIP A102/07 wassufficient to meet its duty of care in thecircumstances. Essentially, Adventurer sought a50%apportionmentofliabilitytotheCrown.

Adventurer also argued that Justice Harringtonhadawardedthe Crownpre-andpost-judgmentinterestatanincorrectrate of5%.Itarguedonatechnicalreadingofthe MarineLiabilityAct,S.C.2001, c. 6, that interest shouldonly havebeenawardedat1%.

The Federal Court of Appeal dismissed bothgrounds ofappeal.Writingfor theCourt, JusticeGauthieraddressedAdventurer’s mainargument,which was that, if the relevant NOTMAR hadbeen issued, as it should have been, then theClipper’s chartagentwouldhave foundoutabout

the shoal, the chart wouldhave beenupdated,andtheincidentwouldnothaveoccurred.

Gauthier J. rejected this argument. Her Honourheld,atparagraph31:

Thereisnolegalprinciplethata failuretosatisfythelevelofservicessetby internalmanagementas its targetis determinativeo f t h e s t a nda r d o f c a r e i n a l lcircumstances. It is clearly a relevantfactor to consider in assessing thereasonableness ofone’s conduct,but itisthetaskof thetrierof fact todeterminethe weight to be given to it afterconsidering all the circumstances of thecase.

Essentially, the Court held that this was not acase wherenowarningwas givenofthepresenceof theshoal. Rather, theNOTSHIP A102/07 wasissued,andremainedinforceat thetime oftheincident.

The Court also noted that mariners have theirowndutyofcare atcommonlaw.Theymusthaveonboard,andmakeuseof,up-to-date charts andnauticalpublications.

In short, the Court found there was ampleevidencebeforeJustice HarringtontopermitHisHonourtoconcludethatthe issuanceofNOTSHIPA102/07fulfilleditsdutytowarnmarinersofthepresence of the shoal. Thus, the Court didnotfindthatJusticeHarringtonmadea palpable andoverriding error justifying appellate interventiononthisissue.

Similarly, theCourtfoundthatJusticeHarringtondid not err inawarding the Crown5% interest.Adventurer’s argument infavourof alowerrateinvolveda close and overly-technical reading oftheMarineLiabilityAct.TheCourtdidnotaccedetoAdventurer’sargumentonthisissueeither.

In the result, the appeal was dismissed in itsentirety.

JamesManson


5.WorkplaceHarassment:StepsToTakeBeforeAComplaintIsMade

You cannot read the newspaper or watch thenews without hearing about another actor,musician, politicianor senior executivewhohasbeen accused of sexual harassment. In today’sclimate, it is imperativethat all workplaces takestock of their policies and procedures so as toensure that they are properly equipped torespond appropriately to any allegation ofworkplace harassment, including sexualharassment.

Human rights laws across Canada prohibitworkplacediscriminationandharassment basedon various protected grounds. In September2016 OntarioamendedtheOccupational Healthand Safety Act (“OHSA”) to include sexualharassment asaformofworkplaceharassment,and to impose new obligations on employers.Similar amendments tothe CanadaLabourCodereceivedfirstreadinginNovember2017.

Underthe OHSAworkplace harassmentis definedas “engaginginacourse ofvexatious commentorconduct against aworker ina workplacethat isknownor ought reasonably tobe known to beunwelcome, or workplace sexual harassment”.TheAct defines workplacesexual harassment as“engaging ina courseof vexatiouscomment orconductagainstaworkerina workplace becauseof sex, sexual orientation, gender identity orgenderexpression,where thecourseofcommentor conduct is knownor ought reasonabletobeknown to be unwelcome, or making a sexualsolicitationoradvancewherethepersonmakingthe solicitation or advance is in a position toconfer,grant or deny a benefit or advancementto theworker and the person knows or oughtreasonable to know that the solicitation oradvanceisunwelcome”.

ThekeychangesundertheOHSArequire:

1. a writtenworkplaceharassmentprogramandpolicy

2. identification of who will investigateclaims if the alleged harasser is anemployerorsupervisor

3. review of the harassment program andpolicyatleastonceayear

4. investigation of incidents and complaintsof workplace harassment; investigationm u s t b e “ a p p r o p r i a t e i n t h ecircumstances”

5. informing the complainant and theallegedharasser, if he/sheis aworker, inwritingof theresultsoftheinvestigationandof any correctiveactiontaken, or tobetaken

6. the Ministry of Labour may order anemployertoundertakeaninvestigationbyan impartial person, with certainexperience or qualifications, at theemployer’sexpense.

Whether you are a provincially or federallyregulatedemployer,whatare thepractical stepsyou should take now, before you receive acomplaint?

1. Reviewyourworkplaceharassmentpolicyandyourprocedureforfilinga complaint,andfor investigating incidents; thepolicyandtheprocedures mustbein writingandbemadeavailabletoallemployees.

2. Train all employees on theseworkplacepolicies and procedures to ensure thateveryone in the workplace knows whatconduct is acceptable and what is not,how incidents and complaints will beinvestigated, and they also understandthe consequences for a breach of thepolicy.

3. Be aware of what is happening in yourworkplace; the duty to investigate istriggeredif theemployerbecomesawareof any incident ofharassment, not just ifan employee makes a complaint. Alsonote that thecomplaintdoes notneedtobeinwritingtotriggeraninvestigation.

4. Train someone in-house to conduct aworkplace investigation. An investigatormustensurethatall informationobtaineddur ing the invest igat ion i s kept


confidential. An investigator mustt h o r o u g h l y i n t e r v i ew b o t h t h ecomplainantandtheallegedharasser,andallowtheallegedharasser torespondtothe specific allegations. There may beadditionalrelevantwitnessestointerview.Theinvestigatormust takenotes,preparestatements,andprepareawrittenreport.Eachofthese stepsrequiresspecificskillsand an awareness of confidentiality andimpartiality. The failure to conduct aproperinvestigationcanleadtosignificantconsequences including an order by theMinistryofLabour thattheemployerhireathirdpartyinvestigator.

5. Establish a relationship with an outsideinvestigator; ifthe allegedharasser is thes u p e r v i s o r o r m a n a g e r o f t h ecomplainant, or thein-houseinvestigatoris under the direct control of the allegedharasser, an outside investigator will benecessary to ensure a proper andimpartial investigation. Consider havingcounsel retain the outsideinvestigator inorder to maintain privilege over theinvestigation and report, to the extentpossible.

6. Conductthe investigationpromptly;whilethere is nospecific time limitationinthelegislation, the Ministry of Laboursuggests that it should be completedwithin 3 months of the incident orcomplaint.

7. Communicate, in writing, the results ofthe investigation, and corrective actiontaken or to be taken, to both thecomplainantandtheallegedharasser.

Workplace harassment that is not adequatelyinvestigated can lead to al legations ofconstructive dismissal and human rightsviolations, which can result in expensive legalproceedings and costly damage awards. Anemployer’s failuretodischargeits statutorydutytoensureasafe workplacefreefromharassmentcanalso leadtoaninvestigationby the Ministryof Labour, the issuance of compliance orders,including an order to investigate using a thirdparty investigatorwithspecificqualificationsandexperience,andcanalsoleadtocharges fornon-compliance,withsignificantfines.

CaroleMcAfeeWallace


6. DoEmployersHaveObligationstoWhistleblowersinOntario?

The current state of whistleblower protectionlawsinCanadaare oftendescribedas sparse incomparisontoother countries. This article willfocusonthelegislationthatis ineffectinOntarioand how employers with operations in Ontarioshould be addressing requirements under thatlegislation. It will not discuss theprotections inplacewith respect to public sector employees,suchasgovernmentworkers.

Complying with Ontario legislation involvesensuring that your organization’s workplacepolicies include provisions that deal with anti-retaliation or reprisals against employees whospeak up about issues within the workplace orconcerns with regard to the management andfinancial accounting of the organization. Thesepolicies should also set out internal reportingprocedures andconfirminvestigationandrecordkeeping procedures with which the employerintends tocomply. It is important for employersto have these internal proceduresmapped outandavailabletoemployeesfor review,otherwisethe employeemight feel that the only optionsavailable to them would be to report concernsdirectlytolawenforcementorthemedia.

ApplicableLegislation

Therearefour keypiecesoflegislationthatmayaffect organizationswithoperations in Ontario:The Criminal Code of Canada, the EmploymentStandards Act, 2000 (ON), the OccupationalHealthandSafetyAct(ON),andthe SecuritiesAct(ON).

CriminalCodeofCanada(the“Code”)

Although aFederal statute, theCode applies tocriminal acts that are committed in Ontario.Section425.1 prohibitsanemployeror apersonacting onitsbehalf fromtaking any disciplinarymeasure against, demoting, terminating, orotherwiseadversely affectingtheemploymentofan employee or threatening to do sowith theintent to either (i) compel the employee to

abstain from providing information to; or (ii)retaliate against the employee because theemployee provided information to, lawenforcement respecting an offence that theemployeebelieveshas beencommittedcontraryto the Code or another federal or provincialstatute,bytheemployer.

As a result of the language used in the above-notedsection,protectionundertheCodeis quitelimited as it only applies where an employer’sconduct constitutes a criminal offence or anotherwiseunlawfulact andtheonly extendstoemployees who report the conduct to lawenforcement. This means that if an employeewere to report misconduct internally and theconduct itself wasnot unlawful (perhaps it wasjustunethical),thenthe employeewouldnotbeprotectedundertheCodefromanyreprisals fromtheemployer.

However, where the conduct does meet therequirements oftheCodeandtheemployer hasreported the conduct to law enforcementofficials, punishment for an employer whoengages in retaliatory behaviour towards theemployee could include up to five yearsimprisonmentandfines.

EmploymentStandardsAct,2000(“ESA”)

Pursuant to section74 of theESA, anemployermay not intimidate, dismiss or penalize anemployee or threaten to do so where theemployeehasaskedtheemployertocomplywiththeESA, has madeinquiries of his or her rightsundertheESA,files a complaintwiththe Ministryof Labour, exercises or attempts to exercise aright under theESA or gives information to anemploymentstandardsofficer.

This anti-reprisal provision extends to personsactingonbehalfofanemployer,includinghumanresources employees,directors,orofficers ofthecorporation. If this provision is breached, theemployerandsuchpersons couldbesubjecttoaf ine of not more than $50,000 or toimprisonment for a term of not more than 12months orboth(for anindividual)or toafineof


notmore than$100,000(foracorporation)undersection132. Furthermore, section133allowsacourttoordertheemployertopaythe employeeany wages that are owing, reinstate theemployee, and/orcompensatetheemployeeforany losses incurredas a result of thebreachoftheESA.

In order to protect themselves from possibleliability, organizations should set out clearstandardsregardingwhistleblowingconnectedtothe ESA that must be complied with by allpersons actingonits behalf.This canbeachievedby adding a framework to the organization’sexisting workplace policy manual outlining thesteps that must be followed under thesecircumstances.

OccupationalHealthandSafetyAct(the“OHSA”)

Section50 of the OHSA sets out theemployer’sobligationtoprotect whistleblowers. Ifaworkerhas actedincompliancewiththeOHSA, triedtoensure the enforcement of the OHSA, or hasgivenevidence ina proceeding regarding OHSAenforcementor inaninquestunder theCoronersAct, theemployermaynotengageinretaliatoryaction. This includes dismissing the worker,discipliningtheworker, threatening todoeitherof the foregoing, imposing a penalty on theworkeror intimidatingor coercingtheworker. Ifthe employer breaches section 50, it could besubject under section 66 toa fine of not morethan$100,000or toimprisonment for atermofnot more than 12 months, or to both (for anindividual)ortoa fineofupto$1,500,000.00(foracorporation).

Complying with OHSA in this regard can beachievedby includingadditional provisionsintheorganization’s existing occupational health andsafety policy that focuses on internal reporting,anti-reprisal, investigation and record keeping.Notethatwhereanemployerbreaches theOHSAor the ESA,details regardingtheirconvictioncanbepublishedforthegeneralpublictoaccess.

SecuritiesAct(the“SA”)

In July 2016, the SA was amended to addprotection for whistleblowers, as a result ofo n g o i n g c ommen t a r y t h a t C a n a d i a nwhistleblower protections needed to becomemorein line with thevast protectiongranted intheUnitedStates.

Section 121.5 now states that a company or aperson acting on its behalf, may not take anyreprisal measures against an employee of thecompany who has: (i) sought advice aboutprovidinginformation;(ii)expressedanintentionto provide information; or (iii) providedinformation,regardinganactofthe companyorapersonactingon its behalf that has occurred, isongoingoris abouttooccur,wheretheemployeethinks that the conduct is contrary to Ontariosecurities law. This protection extends to caseswhere the information is provided to thecompany, the person acting on its behalf, theOntario Securities Commission (“OSC”), arecognizedself-regulatory organization, or a lawenforcementagency.

Under theSA,a “reprisal” includes“anymeasuretakenagainstanemployee thatadversely affectshis orher employment” andincludes: (i)endingthe employee’s employment; (ii) demoting,disciplining or suspending the employee; (iii)imposinga penaltyrelatedtotheemploymentoftheemployee; (iv) threateningtodoany of theforegoing; and (v) intimidating or coercing anemployee inrelation tohis or her employment.Wherereprisal hasoccurred, theemployeemayberemediedbybeingreinstatedand/orbybeingpaidtwice theamountof theremunerationthatheorshewouldhavebeenpaidifthe reprisal hadnottakenplace.

TheSAspecifically states thatthecompanymaynot try to protect itself from penalty under thissection by trying to use a confidentialityagreement that restricts the employee fromdisclosinginformationtotheOSCorassistingtheOSCinaninvestigation.

Notethatifacompany,orapersonactingonitsbehalf, commits an offence under the SA, asdescribed in section 122, which includes


“contravening Ontariosecurities law”, they maybe found liable to a fine of not more than$5,000,000.00or to imprisonment for a termofnotmorethanfiveyears lessaday, or toboth.Notethata directoror officerofthecompany issubject to the same penalties, irrespective ofwhetherthecompany is foundguilty,ifheorsheauthorized, permitted or acquiesced in thecommissionofanoffencebythecompany.

Inadditiontothe sectionsundertheSA,the OSChas goneevenfurther topromote thereportingof breaches of securities law and to protectwhistleblowers through OSC Policy 15-601 (the“Policy”). The Policy sets out confidentialityrequirements and establishes a framework forthepaymentofrewardstowhistleblowers undercertain circumstances where informationprovidedtotheOSCwas meaningful andresultedin an “ impactfu l breakthrough” of aninvestigation. The Policy also restates the anti-reprisalprovisionsoftheSA.

Under the Policy’s reward program, if theinformation provided by the whistle blowerassistedinobtaininganorderimposingmonetarypenalties of$1,000,000.00ormore, pursuant tosection 18, the OSC will pay an eligiblewhistlebloweranawardofbetween5%and15%of the total monetary sanctions that wereimposedorpaymentsthatwerevoluntarilymadebythecompany.

EmployeeFidelity

Many employee agreements will includeconfidentiality provisions or, depending on thelevel ofemployment,a personmayoweadutyoffidelity totheiremployer.Howdoesthis affect asituation where the employee learns that itsemployer has actedunethically or unlawfully?In2005,the SupremeCourtofCanada statedthatinmost cases, theemployeemust first report theconduct internal ly, rather than to lawenforcement, regulatory authorities, or to themedia.(*1)Inthatcase,theCourtsuggestedthatemployers have robust and transparentwhistleblower protection policies as this wouldassistwithdetectingwrongdoingbyemployees at

anearlierstage,wouldprotecttheemployeewhoengaged in the whistleblowing, and wouldprovide justification to employers if they takedisciplinary action against an employee whobreachedhis or her duty of loyalty, the policy,and his or her confidentiality obligations. (*2)However, employers should keep in mind thatthere may be circumstances where it is moreappropriate for the employee to go to lawenforcement first, andthis shouldbeaddressedintheemployer’spolicy.

Key Items to Cover in Your Whistle BlowerProtectionPolicy

Awhistleblowerpolicymay takeseveral forms.Itcould be a stand-alone policy, or it might beadded to existing policies; for example, anoccupational healthand safety policy. Themostappropriate form wil l depend on eachorganizationandtheirexistingpolicy framework.Aneffective policywill include detailedprovisionsr e g a r d i n g i n t e r n a l r e po r t i n g c h a i n s ,confidentiality requirements, investigationprocedures, investigativereports,preservationofevidence, recordkeeping, anti-reprisal, andremediationmeasures.

JaclyneReive

Twitter:@jaclyne_reiveBlog:https://jaclynereive.wordpress.com

Endnotes(*1)Merkv.InternationalAssociationofBridge,Structural,OrnamentalandReinforcingIronWorkers,Local77,2005SCC70.(*2)Ibid.,at25-26.


https://jaclynereive.wordpress.com

https://jaclynereive.wordpress.com


DISCLAIMER & TERMS This newsletter is published to keep our clients and friends informed of new and important legal developments. It is intended for information purposes only and does not constitute legal advice. You should not act or fail to act on anything based on any of the material contained herein without first consulting with a lawyer. The reading, sending or receiving of information from or via the newsletter does not create a lawyer-client relationship. Unless otherwise noted, all content on this newsletter (the "Content") including images, illustrations, designs, icons, photographs, and written and other materials are copyrights, trade-marks and/or other intellectual properties owned, controlled or licensed by Fernandes Hearn LLP. The Content may not be otherwise used, reproduced, broadcast, published,or retransmitted without the prior written permission of Fernandes Hearn LLP.

Editor: Rui Fernandes, Articles Copyright Fernandes Hearn LLP, 2018

Photos: Rui Fernandes, Copyright 2018,

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