Why Should I Pay a Lawyer to Incorporate My Business?

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When you decide that it’s time to incorporate your business, you’ll be faced with a choice: do you file the incorporation yourself, online? Or do you pay a lawyer to do it for you?

For many people, this choice comes down to price. Yes, you will save money by incorporating your business yourself. You can’t get away from all charges: the BC government charges $350 to incorporate a company, plus a $30 name reservation fee (unless you want to operate as a “numbered company” without a name). Otherwise, the only up-front cost to incorporating yourself is your time.

So, why on earth would you pay a lawyer to incorporate? Because we – the lawyers – are the experts. For the reasons that follow, you’ll see how using a lawyer to incorporate benefits your company and its future growth.

We Give Your Company Robust Articles

When setting up your company, you need to create a set of rules called the “Articles”. The Articles set out, among other things, how a company is governed and how business is conducted, as well as outlining any rights and restrictions that shares have (more on that later).

While the BC government does publish a standard set of Articles, you have to actually adopt those Articles (called the “Table 1 Articles”) when you incorporate your company – it doesn’t happen automatically. For this reason, a self-incorporated company often doesn’t have any Articles, simply because the incorporator missed the crucial step of adopting the Table 1 Articles. Without Articles, a company is technically in breach of the Business Corporations Act and, while this admittedly isn’t the end of the world, this will present a problem when the company seeks financing, tries to attract investors, or is sold. Even if your company does adopt the Table 1 Articles, these general-purpose provisions may not suit your business. Maybe you want to conduct directors’ meetings differently, or maybe you want a different process for approving share sales and transfers. Going to a lawyer to incorporate means that you’ll get a thorough, organized, and legally compliant set of Articles that is fine-tuned to your company’s needs.

We structure your company for future growth

Another aspect of incorporating that’s often overlooked is the company’s share structure. For all but the simplest businesses, you will want to have different classes of shares, each with their own purposes. Some shares may be for voting; some may be for receiving dividends. Some might be given to family members, while others could be sold to investors. Every share class in your company should have its own set of “special rights and restrictions”, which go in the Articles and specify things like voting rights, dividend entitlements, money received on wind-up of the company, and so on.

Yet, when incorporating online, many business owners only put in one type of share. These shares are usually simple “common” voting shares. This setup is fine enough for a company with a single shareholder. But what happens if you want your spouse to have shares for dividends? Or if you want to bring in partners? Unless you’ve incorporated with a robust share structure, you can’t – at least, not without changing the share structure, which costs money to file (and, of course, you need to write the rights and restrictions for the shares). Having a lawyer do your incorporation ensures that your company has different types of shares and is prepared for future expansion or change.

We Keep Your Company in Good Standing

Every year, every BC company needs to file something called an “annual report”, which is essentially a notice to the government that says “hey! We’re still alive!” If you miss filing one annual report, your company falls out of good standing. If you miss filing two annual reports, your company is dissolved, which essentially means that it no longer exists. It’s possible to have a dissolved company reinstated (this is called a “restoration”), but it’s complicated, time-consuming, and expensive. When you incorporate with a lawyer, you have the option of keeping your company’s books at that lawyer’s office, meaning that your annual report gets filed every year, your company stays in good standing, and no unexpected interruptions to your business will happen due to a failure to file the proper paperwork.

Coming to a Lawyer Lets You Focus on Your Business

Incorporating your company through a lawyer, for a modest one-time fee (which you can write off), will help to get all the legal nuts and bolts of your business in place. This, in turn, lets you focus on what you’re best at – running your business – while leaving the legal work to the experts, ensuring that your company has the capacity to handle future growth.

If you’d like to incorporate a company, or if you’ve already incorporated a company but want some help fixing up the books or getting back into good standing, contact us today for a free consultation.

Do I Really Need My Employees to Sign Contracts?

“I trust my employees.”

“I want to keep things casual.”

“We don’t need policies and rules.”

In the many discussions I’ve had with small business owners about the importance of having their employees sign employment agreements, these are common objections. Sometimes, the business owner will grudgingly admit the possible usefulness of such an agreement, but then: “can you just give me a general template? I’ll fill in the blanks.” The hesitation on the part of employers about having proper written employment agreements is understandable, especially for smaller businesses. Good employees are a valuable resource, after all. You don’t want to risk scaring off employees with thick tome of archaic legal language – maintaining a certain workplace culture is critical to the success of a business.

Some parts of the employee-employer relationship, however, are too important to leave unwritten. An ideal employment agreement balances the employer’s desire to maintain the business’s workplace culture with the necessity of defining the relationship and protecting the business from liability. If you are an employer currently operating without employment agreements, you should strongly consider defining your employees’ relationships in writing.

Employment Agreements Provide a Framework for the Employment Relationship

The typical employer-employee relationship is complicated. Even for the most casual of positions, many terms of employment come into play, such as:

  • compensation;
  • duties;
  • probation;
  • benefits;
  • termination/notice;
  • policies and procedures;
  • non-competition and confidentiality; and
  • ownership of intellectual property.

This is not an exhaustive list, but it gives an idea of the high-level concerns that an employment agreement addresses. Employers and employees are usually on the same page about things such as compensation and benefits, but misunderstandings and false assumptions can occur in many areas. The more explicit an employee’s rights and responsibilities are from the beginning of the employment, the less there may be to fight on down the road if the relationship turns sour.

For example: unless you are dealing with high-level, executive-type positions, your employees do not owe your business a duty not to compete after the employment relationship ends. This means that, without having employees agree not to compete post-employment in writing, they can solicit business from your customers or attempt to induce away your remaining employees to another position. A written employment agreement with a clear non-competition clause allows you to protect against this situation (note that non-competition clauses must be carefully drafted to be enforceable).

Employment Agreements Provide Certainty on How the Relationship Will End

Both you and your employees should be clear on the ways in which the employment relationship can end, and the subsequent ramifications. The ideal employment agreement outlines not only how an employee can be terminated with cause (“fired” for doing something wrong), but also how you can let an employee go without cause, including severance entitlement and notice periods. Without a written mechanism in place for termination without cause, an employee’s severance and notice is governed by the Employment Standards Act and the common law. In some cases, employees who have been terminated without cause (and without a written employment agreement) have found to be entitled to severance equal to more than 20 months of salary, which could have potentially been avoided by having an agreement with a clear and fair termination and severance section.

Yes – Employment Agreements Can be Simple!

An employment agreement does not need to be a long, dense, or overly “lawyerly” contract. In fact, for all but the top levels of executives, simpler employment agreements are often better – if they cover all the key points discussed above (and any other points that are important to your business).

Whether your business is more suited to formal employment contracts a dozen pages long, or simple two-page over letters, defining the framework of the employer-employee relationship is critical to avoiding misunderstandings and potentially costly litigation down the road. Having your employees sign agreements allows both parties a clear snapshot of rights, roles, and responsibilities. This clear snapshot, in turn, gives a degree of transparency to all aspects of the employee-employer relationship, notably the eventual termination of the contract.

If you’d like to discuss using employment agreements in your business, get in touch with us today to book a free consultation.

BC’s new Franchises Act: What Rights Do BC’s New Laws Give You as a Buyer of a Franchise?

Potential and current buyers of franchises, or “franchisees”, now hold a position of power when negotiating with franchise owners, or “franchisors”, thanks to new laws that came into effect in British Columbia on February 1, 2017. The Franchises Act has strict requirements that franchisors must follow when offering their franchises for sale, with severe consequences for breaking the rules. Three key aspects of the new laws – the requirement to deliver a “franchise disclosure document”, a duty of good faith and fair dealing for both parties, and the right of the franchisee to rescind an agreement or sue for misrepresentation – help to balance the negotiating power between franchisees and franchisors.

The Franchise Disclosure Document

The franchise disclosure document is a “one-stop shop” document that tells potential buyers all about the franchise that they’re potentially investing thousands of dollars in, and its key players. Franchisors need to deliver the document at least 14 days before the buyer signs a franchise agreement or pays any money. The disclosure document includes a lot of important information, such as:

  • information about the franchisor’s key player, such as their business background, and whether any of them have declared bankruptcy or have been convicted of fraud-related charges;
  • information about the franchise, including:
    • The cost to buy a franchise;
    • Territorial rights of the franchisee;
    • Any financing, training, or operating manuals that the franchisor offers;
    • Whether the franchisee must pay into an advertising or marketing fund;
    • The licenses, permits, registrations, etc. that a franchisee needs;
    • Whether the franchisee must personally assist in the operation of the franchise; and
    • The termination, renewal, and transfer clauses from the franchise agreement;
  • financial statements of the franchisor;
  • lists of current and former franchises, closed franchises, and other similar businesses owned by the franchisor; and
  • operating cost estimates and earnings projections.

The goal of this information is to allow a potential buyer to make an informed decision before buying into a franchise.

Duty of Good Faith and Fair Dealing

It’s not enough for the franchisor to deliver a franchise disclosure document. The bargaining and communication must follow the duty of good faith and fair dealing that the Franchises Act imposes. This duty ensures that both the franchisor and a potential buyer act in accordance with reasonable commercial standards. And yes: this duty applies to both parties.

Either party can sue for a breach of this duty. Of course, since this law is fresh in BC, there are no court cases dealing with such lawsuits, but it’s only a matter of time. This duty and the right to sue for a breach go a long way in helping to balance the negotiating power between franchisors and buyers.

Rescission and Lawsuits: Deterring Dishonesty

Finally, the Franchises Act gives buyers two new tools to combat unfair bargaining: the right of rescission (“undoing” an agreement) and the right to sue for misrepresentation.

The Right of Rescission

If a franchisor either fails to give a disclosure document to a franchisee within a certain period, or gives a document that’s materially deficient (i.e. missing required information – typos and minor technicalities don’t count) then the franchisee can rescind (undo) a franchise agreement without penalty. The franchisee gets their money back, and they’re released from the agreement.

Suing for Misrepresentation

Franchisees can also sue if they suffer a loss because of a misrepresentation or a material defect in a disclosure document. This right to sue exposes not only the franchisor, but its broker, associates, and anyone who signed the document. This powerful right helps to balance out the relative positions of power. Individuals who misrepresent the franchise put not only themselves and their business at risk, but anyone else involved in the marketing of the franchise.

Conclusion: Leveling the Playing Field

BC’s new Franchises Act helps to protect potential buyers of franchises by giving buyers crucial information at an early stage. Franchisors still hold the ultimate position of power. But, these new laws bring some balance with strict disclosure requirements, the duty of good faith and fair dealing, and the right of a buyer to rescind an agreement or sue for misrepresentation. These changes help to level the playing field for buyers of franchises in what is often a “take it or leave it” industry dominated by franchisors.

Cohabitation Agreements and Marriage Agreements

Beginning a new relationship or getting married is very exciting on one hand, but on the other hand is also the beginning of a broad spectrum of legal and financial implications along with rights and responsibilities. The question is, in the event of a breakdown of the relationship, how to protect your assets and save yourself from liabilities which get attached with the commencement of the relationship.

Cohabitation Agreements between unmarried couples and Marriage Agreements between married couples are very useful when one or both parties have significant assets or liabilities brought into the relationship or expecting to acquire during the relationship. Cohabitation Agreements may be converted to Marriage Agreements, or may be cancelled, if the parties intend to marry after some time.

The Family Law Act SBC 2011 c.25 defines a spouse as a person who is either married to another person, or in the case of unmarried spouse, either has lived with another person in a marriage like relationship and has done so for a continuous period of at least 2 years, or has a child together but has lived in a marriage like relationship for a shorter period of time. The unmarried spouses who have lived together for at least 2 years may be entitled to property and pension division, debt division, spousal support, and parenting arrangements if they have a child together. The unmarried spouses who have not lived together for at least 2 years but have a child together may be entitled for spousal support and parenting arrangements.

If the parties have entered into a Cohabitation Agreement in case they are living in a common law relationship, or the parties have entered into a Marriage Agreement if they have married, the Agreement itself can describe the division of assets and liabilities of the parties after they separate. It can also describe the complex issue of entitlement or waiver of spousal support by the parties. Apart from this, the Agreements also have provisions for issues dealing with child support of the eligible children of the parties from former relationships. These Agreements can consist of the parties’ arrangements of living and their rights and responsibilities during their relationship. From daily issues like who will spend money on groceries, and who will pay the rent and the rest of the bills etc. to parties’ obligations towards any properties purchased separate or together, or any liabilities incurred separate or together can be described in the Agreements. The Agreements also provide how to deal with the parties separate bank accounts and joint bank accounts, and the arrangements for doing household chores and taking care of the children if the parties have any.

It is very important that these Agreements be drafted by the lawyers. Both parties should be seeking advice from their lawyers and obtain Independent Legal Advice certificates, so that none of them can later say that he/she was not aware of what they were signing. Complete financial disclosure of both parties is another important aspect of these agreements.

Spending money on getting these Agreements might seem like a waste of money in the beginning, but they are well worth spending money on them, as they will protect you from legal implications down the road, and probably save you thousands of dollars!

Property Transfer Tax Exemptions

Welcome back! My last “blog” introduced you to the Property Transfer Tax (“PTT”) which is payable in most instances where there is a change to a property title. There are, however, exemptions to the payment of tax.

Several common exemptions fall under the heading of “Family” exemptions. For instance, if a related individual transfers a principal residence or an interest in the principal residence to you, you “may” be exempt from paying the PTT. Those people considered to be a related individual are:
• your spouse, child, grandchild, great-grandchild, parents, grandparent or great-grandparent;
• the spouse of your child, grandchild or great-grandchild; and
• the child, parent, grandparent or great-grandparent of your spouse.

Child includes stepchild.

Your “spouse” is:
• a person who you are married to, or
• a person who you are living with in a marriage-like relationship, provided that you have been living in this arrangement for at least two years. The marriage-like relationship includes people of the same gender.

Interestingly enough, people who are not considered to be a related individual include:
• your sister, brother, uncle, aunt, niece or nephew.

Naturally, there are several criteria in order for a property to meet the definition of a principal residence. For instance, one criteria is that either you (being the transferee) or the person transferring the property to you (the transferor) have had to reside on the property and have used it as their home. The second criteria is that the improvements on the land (for example, the buildings) are set up to accommodate three families or less. In other words, you would not be able to claim an apartment building as your primary residence. The improvements on the land must be classified as “residential” by BC Assessment. Finally, the land must be 0.5 hectares, or 1.24 acres or smaller.

Of note is that a person is considered to have only one principal residence at a time.

In the event a principal residence is transferred to two or more people who are not all related individuals of the transferor, the exemption will only apply to the interest acquired to those people who are related individuals of the transferor. For example, your father transfers his principal residence jointly to you and your boyfriend, but you are not living in a marriage-like relationship. The exemption would only apply to the 50% interest acquired by you because your boyfriend is not considered to be a related individual.

There are different rules that apply in the event the property that is being transferred to a relative is considered “recreational”. In this case:
• the person transferring the property must have “usually” resided on the property on a seasonal basis;
• the property must be classified as “residential” by BC Assessment;
• the land is 5 hectares or 12.36 acres or less; and
• the entire property has a fair market value of $275,000 or less.

As you may have determined, the application and calculation of the property transfer tax is not a simple one. More exemptions will be discussed in future blogs.

In the meantime, don’t hesitate to contact us if you are uncertain about the property transfer tax.

Tax Disputes with the Canada Revenue Agency

Dealing with the Canada Revenue Agency (“CRA”) during tax time can be stressful for taxpayers. However, tax debts can create a tremendous amount of stress for individual and corporate taxpayers alike. Sometimes tax debts create an unforeseen insolvency issue which requires a taxpayer to enlist the assistance of a bankruptcy trustee to file a consumer proposal or assignment to bankruptcy to compromise their tax liabilities. However, depending on the amount of tax debt (usually if the personal tax debt exceeds more than $200,000.00), legal counsel from the Department of Justice will oppose a tax debtor’s discharge from bankruptcy. CRA will usually insist on payment to the tax debtor’s bankrupt estate representing anywhere between 20% – 70% of the tax liabilities in tax-driven bankruptcies [1].

Where CRA is the largest – or only – creditor it is usually prudent to get advice whether there are grounds to fight the tax assessment or deal with the CRA debts outside the insolvency context.

Ignoring your tax debts is generally a bad idea. CRA has the ability to have the tax debts certified as a judgment in Federal Court, and register this judgment against a taxpayer’s interest in land. CRA can then proceed with a forced sale of the property to satisfy the judgement. Furthermore, CRA can freeze bank accounts and garnish wages, which can be highly disruptive to a taxpayer’s personal life or business. In other cases, CRA will hire bailiffs to seize and sell property of the tax debtor.

Outside of the insolvency context, there are a number of mechanisms that can assist taxpayers in resolving their taxes issues with CRA. A cursory list is below – as each of these topics could easily cover its own blog post.

1. Dispute the Tax Assessments/Reassessments

Pursuant to section 152 (8) of the Income Tax Act once a tax assessment is made, it is binding unless set aside by objection or on an appeal at the Tax Court of Canada.

Taxpayers have the right to dispute their tax assessment or reassessment by filing a Notice of Objection to the Chief of Appeals in the taxpayer’s local tax service office. There are strict deadlines to file a Notice of Objection. If the Appeal’s officer dismisses the objection, the taxpayer can appeal to the Tax Court of Canada [2].

2. Payment Arrangements

If there are outstanding tax debts, a taxpayer can attempt to enter into a payment arrangement with a CRA tax collector. This can be done with or without the assistance of legal counsel. The CRA tax collector will usually take into account the taxpayer’s personal circumstances when making payment arrangements. However, interest on the CRA debt continues to run even when a payment arrangement is entered.

3. Voluntary Disclosure Program

Taxpayers can make on a named or no-name basis, a voluntary disclosure provided the following criteria are met:

(a)Voluntary – the taxpayer must not be aware or have knowledge of any CRA collection or audit action;
(b) Complete – the taxpayer must provide full and accurate facts for the tax year or reporting period where the inaccuracies exist;
(c) Penalty – the disclosure must involve the application of a penalty (e.g. a late filing fee); and
(d) One year past due – the disclosure must be at least one year past due (this is usually strictly app
lied).

If accepted by CRA, the taxpayer will be not be charged any penalties and may receive partial interest relief. If the CRA officer’s reasons are unjustified or unreasonable, the taxpayer has the ability to pursue a review of the CRA officer’s decision in Federal Court by way of judicial review [3].

4. Request for Taxpayer Relief

In some cases, CRA will forgive a taxpayer from interest in penalties where the following exist:

(a) extraordinary circumstances;
(b) actions of the CRA;
(c) inability to pay or financial hardship; and
(d) other circumstances which do not fall into the above-enumerated categories.

There are a number of factual circumstances and factors which may warrant CRA to cancel or forgive interest or penalties. These are detailed in Information Circular IC07-1 (Taxpayer Relief Provisions) [4].

5. Remission Order

As a last-ditch effort, and when a taxpayer has exhausted all other avenues for relief, taxpayers can apply for a Remission Order to forgive or refund taxes, interest, penalties. A Remission Order is made under section 23 of the Financial Administration Act and is carried out by the Federal Government. The sort of matters a remission order may cover include:

• unintended results of the legislation;
• financial setback coupled with extenuating factors;
• incorrect action or advice by CRA officials; and
• extreme hardship.

Again, these tend to be fact specific reasons why relief should or should not be sought. If the taxpayer is unsuccessful they can seek judicial review of the decision in Federal Court.

In conclusion, there are a number of avenues for tax relief that a taxpayer should explore when dealing with an audit, tax assessment or tax debts. Although, depending on a taxpayer’s personal circumstances, the only realistic option might be to make an assignment into bankruptcy or a proposal under the provisions of the Bankruptcy and Insolvency Act. Even for strategic reasons, it may make sense to reduce a taxpayer’s tax liabilities as much as possible to allow the argument at the taxpayer’s bankruptcy discharge hearing that the bankruptcy is not strictly “tax driven”.

[1] ReAnh Thi Dinh, 2017 YKSC (Yukon Supreme Court) , at para 27 to 32 (link to decision: http://www.yukoncourts.ca/judgements/supreme/2007/2017_yksc_24_re_anh_thi_dinh.pdf)
[2] http://www.cra-arc.gc.ca/E/pub/tp/ic00-1r5/ic00-1r5-e.pdf
[3] http://www.cra-arc.gc.ca/E/pub/tp/ic00-1r5/ic00-1r5-e.pdf
[4] http://www.cra-arc.gc.ca/E/pbg/tf/rc4288/rc4288-16e.pdf

Responsibility of the Step Parent to provide child support

BY KIRAN BRAR, APRIL 19, 2017

To what extent does the step parent owe responsibility to provide child support? This question is a big concern for many couples who want to be in a relationship, but are scared of stepping into the shoes of a parent for their step children.

What is the definition of a step parent? The Family Law Act [S.B.C. 2011, C.25] (“FLA”) defines step parent as a spouse of the child’s parent and having lived with the child’s parent and the child during the child’s life.

Therefore, the first requirement to be a step parent is that a person needs to qualify as a “spouse”; that means a person either needs to get married to the child’s parent, or has lived with the child’s parent in a marriage-like relationship for at least 2 years, or has a child with the child’s parent.

Section 147(4) of the FLA provides that a child’s step parent does not have a duty to provide support for the child unless the step parent has contributed to the support of the child for at least one year, and a court proceeding for the child support against the step parent is started within one year after the date the step parent last contributed to the support of the child.

In D. (D.C.) v. C.(R.J.P.), 2014 BCSC 2420, the court held that the expenditures by the step parent on behalf of the step child that are trivial in nature, sporadic, or in the character of gestures of occasional generosity or kindness may not qualify as contributions that attract a duty of support.

In MME (Guardian Ad Litem) v. LMJ, 2002 BCCA 568, a jury’s decision finding the step parent not liable for support was found reasonable by the Court of Appeal because, although the parties shared a bank account from which child expenses were paid from, there was no evidence the guardian contributed to this account past the amount he withdrew from it.

Section 147(5) of the FLA says that a duty to provide support for a child by a step parent is secondary to that of the child’s parents and guardians, and extends to be based on the standard of living experienced by the child and the length of time during which the child lived with the stepparent.

In Russenberger v. Rebagliati 2000 BCSC 82 (CanLII), it was found that since the step parent supported the children, indirectly, by bearing the cost of the home the children were living in for some time after the relationship, the step parent’s support obligations were satisfied and the Court would not order any further support.

According to section 149 of the FLA, the step parent has a duty to provide child support only when the step parent and the child’s parent are separated.

Section 5 of the Child Support Guidelines grants discretion to the court to determine the quantum of support payable by a stepparent:

  • Where the [person] against whom a child support order is sought stands in the place of a parent for a child, the amount of a child support order is, in respect of that [person], such amount as the court considers appropriate, having regard to these Guidelines and any other parent’s legal duty to support the child.

To summarise, the step parent has to be cautious not to assume a parent’s role voluntarily, if he/she does not want to be in place of a parent and be liable for child support when separated from the parent of the child. Occasional gifts or buying treats or meals for the child may not affect the step parent’s position of not assuming parent’s role, as long as the step parent is not assuming the financial liability of the child.

If you find yourself in such a situation, please contact the writer for legal advice.

CASL – Anti-spam Legislation

On July 1, 2017, the transition period ended for Canada’s new anti-spam legislation (“CASL” – pronounced ‘castle’) [1]. This means that businesses and individuals doing business in Canada should be CASL compliant though the entire act is not yet in order. For example, the private right’s provision for litigants to sue under CASL has been suspended. However, what does this mean for businesses and individuals engaging in business activities? To the point, why should they care? Simply put, it means that unaware businesses or individuals could be caught by this new anti-spam legislation and face significant exposure from regulatory bodies but also lawsuits in the future.

The Canadian Radio-Television & Telecommunication Commission (“CRTC”) is responsible for investigating violations and complaints under CASL. The CRTC has the power to levy fines against non-compliant senders. Fines for a CASL violation can range up to $1 million dollars for individuals and $10 million dollars for “any other person” (which broadly includes corporations, societies, partnerships, ect). As well, these violations attract directors/officer’s liability, meaning company directors can be personally liable for these fines.

The first question is what exactly does CASL cover? That is not an easy question to answer given the number of exemptions. At this time, it does not include voice calls, faxes, etc. CASL does cover “spam”, but more broadly covers “commercial electronic messages”. This is defined in CASL as any electronic message that has the purpose of encouraging participation in commercial activities. A specific example is an electronic message that “offers to purchase, sell, barter or lease a product, goods, a service, land or an interest or right in land”, or offers in relation to a “business, gaming or investment opportunities”. CASL goes further and also includes any related advertising or promotion in the previous offers described, or promotes a person who does or intends to do any of the aforementioned.

Exceptions to commercial electronic messages include messages of a personal nature or where the sender has a family relationship with the person. Furthermore, there are a number of exceptions where the sender and receiver have an ongoing business relationship, or where a sender is responding to an inquiry regarding commercial or business services.

Senders of electronic commercial messages should ensure that express consent is properly documented in the event of a complaint. A key component of each commercial electronic message is that the sender must provide a working unsubscribe mechanism that works for at least 60 days, there is no cost to the receiver, and any requests must be processed without delay. But if a business does not have an existing business relationship or consent cannot be implied (or another exemption made out), then that business cannot attempt to solicit express consent by email. They would be limited to contacting the person by telephone, regular mail or some other means.

Again, one of the key reasons of having best practices, by documenting and ensure compliance, is that CASL contains a due diligence defense for violations. That is, a person must not be found liable for a violation under CASL if “they establish that they exercised due diligence to prevent the commission of the violation”. It is too early to tell how aggressive the CRTC will be in enforcing violations now that the CASL transition period has ended. Given the costly risk of each violation, it is safe to assume it would be money well invested to ensure an organization is CASL compliant.

[1] CASL’s full title is An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act, SC 201, c. 23.

Property Transfer Tax

If you have purchased a home in the past, you have likely heard of the “Property Transfer Tax” in British Columbia. But what is it? How is it calculated?

In most situations, whenever there is a change to a property title, a property transfer tax will be charged by the provincial government. This includes acquiring an interest in a property, acquiring an additional registered interest in a property, or becoming a registered holder of a lease, life estate, or right to purchase the property.

The amount payable is based on the fair market value of the land and improvements (for example, buildings) on the date of registration. The tax is charged at a rate of:

  • 1% on the first $200,000
  • 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000 and
  • 3% on the portion of the fair market value greater than $2,000,000

For example, on a property transfer based on a fair market value of $600,000, the tax payable would be $10,000 – $2,000 would be payable on the first $200,000 and $8,000 would be payable on the balance of $400,000.

New rules that were instituted in 2016 provide that an additional 15% property transfer tax must be paid if the purchaser is a foreign entity or taxable trustee and the property is located in the Greater Vancouver Regional District. The writer will not go into further detail regarding the new tax in this blog.

What is the fair market value? The government has determined that this is the price that a willing purchaser would pay a willing seller (land and improvements) in the open market as of the date of registration. In most cases, the purchase price is considered the fair market value provided you register the property within a few months of the date of the sales contract. In the event you do not, you will have to verify that the purchase price does in fact still reflect the fair market value. There might be a difference between the purchase price and fair market value: if a) there was a significant change in the value; b) the condition of the property changed; or c) you did not purchase the property in the open market.

What if you purchase a property from in a non-open market transaction? How do you determine the fair market value then? One way is to obtain an independent appraisal. A second option is to look to the valuation provided by BC Assessment. Be careful how you use the assessment though. The 2016 roll value actually reflects market conditions as at July 1st, 2015, so the assessed value may not accurately reflect the current fair market value of the property when the transfer takes place. You cannot be flippant when it comes to providing the “fair market value” on the property transfer tax return – the government has the right to audit and potentially serve you with a notice of assessment for additional taxes if you have not been forthright in the valuation.

Next blog: What are the exemptions for paying the property transfer tax?

Enforcement of Money Judgments Act

To the chagrin of creditors – and delight of debtors – the civil enforcement process to collect debts can be time consuming, complicated and expensive. Creditors may discover that their efforts result in either no recovery or losses for the creditor seeking to enforce a debt or money judgment. Judgment creditors have a variety of byzantine tools to assist them in collecting a money judgment, including garnishment, debtor examinations, using bailiffs to seize and sell personal property, or forcing the sale of a judgment debtor’s interest in land. The province of British Columbia is currently drafting a new civil enforcement legislation – Enforcement of Money Judgments Act – to overhaul this system.

By way of brief background, in 2005, the BC Law Institute authored a report entitled “Report on the Uniform Civil Enforcement of Money Judgments Acts” (the “BCLI Report”) [1]. The BCLI Report identified the policy rationales for an effective and just civil enforcement legal regime:

  • Just debts should be paid;
  • The law must balance this goal with protecting debtors and their dependents; and
  • Judgment creditors should provide for the orderly distribution of the judgment debtor’s estate. This would require any judgment creditors to share in the recovery on the basis of their judgments.

BCLI Report goes on to identify ways that the proposed legislation will attempt to modernize and streamline the process of enforcing money judgments in British Columbia. One of the proposed mechanisms is assigning an enforcement officer to the judgment creditor who will then direct enforcement actions against the debtor. This would remove the significant burden to make expensive and time consuming court applications for enforcement.

A second proposed method to modernize practices is to allow a judgment creditor to register a notice of judgment in the Personal Property Registry to allow a charge or interest in the judgment debtor’s present and after acquired personal property.

Effectively, this would permit the judgment creditor to become a secured creditor. It is foreseeable that this would then cause a myriad of priority issues between other secured creditors with charges or security. Any new legislation would need to account for the complex priority issues and balance rights between existing creditors, and previously secured creditors.

From June to July 2015, the province of British Columbia solicited public consultation from the public and other stakeholders to comment on the proposed legislation and BCLI Report [2]. However, it has been largely silent since then. We will need to wait and see how Enforcement of Money Judgments Act will affect the debtor-creditor landscape in British Columbia.

Cody Reedman is an associate lawyer at Becker & Company. He has a general civil litigation practice as well as practicing in bankruptcy and insolvency, collections, employment and strata law.

[1] http://www.bcli.org/sites/default/files/Unif_Civil_Enf_Money_Judgments_Act_Rep.pdf
[2] http://www2.gov.bc.ca/gov/content/justice/about-bcs-justice-system/legislation-policy/closed-consultations/enforcement-of-money-judgments-act