THE NAVIGATOR - Fernandes Hearn LLP · Sameday Worldwide, Division of Day & Ross Inc. (*2)...

INTHISISSUE

PAGE1INSURANCEPOLICYCOVEREDFRAUDULENTORDERFORGOODS

PAGE2FIRMANDINDUSTRYNEWS

PAGE4MOTORCARRIER’SLIMITATIONOFLIABILITY

PAGE6UNPAIDSELLERININTERNATIONALSALEOFGOODS

PAGE11CUSTOMSTARIFFFORSAILBOATFROMUSA

PAGE13ENTRYINTOFORCEOFLRMAANDPRE-CLEARANCEACT

PAGE14LAWYERLIABLEFORNEGLIGENTREFERRAL

PAGE16AREYOUINAN“EXCLUSIVERELATIONSHIP?

PAGE18TRUCKDRIVERDISMISSALFORCAUSEANDHUMANRIGHTSCOMPLAINT

PAGE21CONTEST

FERNANDES HEARN LLP NEWSLETTER AUGUST 2019

Heart Zap Services Inc. (“Heart Zap”) sells defibrillator units (“AEDUnits”) primarily to hospitals. On June 22, 2016, Heart Zap wascontactedbyaDr.ThomasHardywhoplacedanorderfor25AEDunitsand accessories, valued at $37,120.50 in the name of the OttawaGeneralHospital.Thisorderturnedouttobefake.

The ordered property was shipped, as directed, to an address inBrampton,Ontario,alongwithaninvoice onJune24,2016. Asecondinvoice wassentonJuly13,2016,andattempts were made tocontactthenon-existent “purchaser”. Thefraudwas reportedtotheNorthBaypolice,buttheperpetratorwasneveridentifiedorchargedandtheshippedpropertywasneverlocated.

HeartZap fileda claimunder itsall-risks commercial insurancepolicy(the“Policy”)withLloyd’sUnderwriters(“Lloyd’s).

OnNovember21,2016,Lloyd’s deniedcoveragefor theloss basedonanexclusionfor coverage clauseinthePolicy for propertysoldunderconditional sale. InApril 2017, Heart Zap fileda Proof ofLoss whichstated that the loss occurred at the Brampton address where theproperty wasshipped. Lloyd’sagaindeniedcoverage,relyingontheconditional saleexclusionclauseandalsoasserting that the coveragedidnotapplybecausetheloss occurredinBrampton,whichis notaninsured locationunder thePolicy. Heart Zap fileda revisedProofofLoss on July 4, 2018, identifying the loss location as North Bay, alocationcoveredbythePolicy.

As noted, thefirstProofof Lossfiledby Heart Zapstatedthat thelossoccurred at the Brampton address where the property was shipped.Lloyd’s argued that, therefore, the loss did not occur at an insuredlocationasthelossoccurredinBrampton.

The Court held that the location of the loss is not affected by anymisnomerintheProofofLoss,whichwas revisedtostatethelocationoftheloss as NorthBay. This was aloss by fraud. Thepropertywaslostfromtheinsuredlocationin NorthBaywhenitwas shippedas a resultof

InsurancePolicyCoveredFraudulentOrderforGoods–HeartZapServicesInc.v.Lloyd’sUnderwriters(*1)

THENAVIGATOR

FERNANDES HEARN LLP NEWSLETTER AUGUST 2019 PAGE 2

FIRMANDINDUSTRYNEWS

• “Best Lawyers™ in Canada 2020” has recognizedRui Fernandes andGordonHearn in the areas of Transportation Law andMaritime Law, Kim Stoll in area ofMaritimeLawandCarolMcAfeeWallaceintheareaofTransportationLaw.• Women’s Trucking Federation of Canada’s 2019 Bridging the BarriersConference inMississauga,OntarioonSeptember6, 2019.KimStoll andAlanCofmanwillbespeakingonapanelon“DriversInc.”• Association of Canadian Port Authorities Annual Conference will be held inSaguenay,Quebec,September9-12,2019.• CIFFA 2019 Central Region Gulf Tournament: Caledon Woods Golf Club,September12,2019.• 6th International Cargo Recovery Conferencewillbeheld inNew YorkCity onSeptember17,2019.RuiFernandeswillbespeakingon“CanadianInlandLosses.”• IUMI2019(InternationalUnionofMarineInsurance)willbeholdingitsannualmeetinginTorontoonSeptember15to18,2019.• HoustonMarine&EnergyConference,September15-17,2019,Houston.• Canadian Transport Lawyers Association 2019 Annual General Meeting andConference in Winnipeg, Manitoba September 19-21, 2019. Kim Stoll is on theEducational Programme Committee and will be moderating the Ethics Panel onConscientiousLawyeringandCaroleMcAfeeWallacewill bespeakingonDriversInc.andAlanCofmanwillbespeakingonCabotage.• ThirdAnnualConferenceonEnforcementofArbitrationAwards,September26th,2019,Boston.• CMI2019Colloquium,September30toOctober2nd,2019,MexicoCity.

SAVETHEDATE:FERNANDESHEARNLLPANNUALCONFERENCE-FEBRUARY10TH,2020FERNANDESHEARNLLPLAWINTHEFUTURECONFERENCE-FEBRUARY11TH,2020

that fraud. TheCourtstatedatpara.16,“Arosebyanyothername,etc.! The providedaddress inBramptongivenbythefraudsters isnotwhere thelossoccurred.”The location of a loss from fraud or theft issufferednotwhere thefraudstersare,but is thelocationfromwhichthegoods aretaken.Astheloss occurredat theHeartZap’saddress inNorthBay, an insured location, Lloyd’s argumentregardinglackofcoveragefailed.

Lloyd’s alsoarguedthat thelossinthis case wasnotthetype ofloss coveredbythePolicy. Itsaidthattheloss ofgoods voluntarilysurrenderedtoafraudsterarenotcovered.

Lloyd’s arguedthatHeartZapvoluntarilyhandedovertheAEDUnits tothefraudster,andthereforethe loss suffered was not a direct physical losssuchthatitwascoveredbythePolicy.

Thetrial judgefoundthatwhatHeart Zapreallylost was the merchandise which was takenwithout its consent.Itwas only inthe beliefthat“Dr.Hardy”andhisassociates hadcapacitytopaythatHeartZapwaswillingtodeal withthem. Asevidencedby the useoffake namesandcontactinformation, “Dr. Hardy’s” intent from thebeginningwastoobtainthe AEDUnitsby fraud.The tr ial judge found that under thecircumstances, there was no common intentionfora sale totakeplaceandtherefore nocontractofsalewasformed. As such,Heart ZapdidnotvoluntarilyconveytheAEDUnits.

Finally,Lloyd’s arguedthat,ifthe losswas coveredunder the Policy, an exclusion clause removedcoverage,asthe Policydidnotinsurelossunderaconditional sale. Section 6A(j) of the Policyexcluded:

(j) property on loan or on rentalor sold by the Insured underconditional sale, instalmentpayment or other deferredpayment plan, from the time ofleavingtheInsured’scustody.

Heart Zapcounteredthat theclear andobviousintentionofthe exclusionwastolimitexposureincircumstanceswhere the propertywas outoftheinsured’spossessionbutwheretheystillhavetitle.

The Courtfoundthat,whiletheterm“conditionalsale”was notdefinedinthePolicy,onemustreadthe exc lus ion us ing the common lawunderstandingofaconditionalsale.(*2)

A conditional sale is a form of salescontract inwhichsellerreservestitleuntilthe buyer pays for the goods, at whichtime, theconditionhavingbeenfulfilled,title passestothebuyer. Theitems listedin the Policy exclusion convey that theexclusion isconcernedwiththeretentionofriskintheproperty.But the fraudulent sale was not aconditional sale. It was a typical cashdeliverycontractandthereis noevidenceof any agreement or intent to withholdtitle.Ifthemereinclusionof“PaymentNet30days”weretocreatea conditional sale,the law of conditional sale would besubstantiallyaltered.I amnotpersuadedthatthe inclusionofapaymenttermof30daysintheInvoice orPurchase order means the fraudulenttransactionwasaconditionalsale.

JudgmentwasgrantedinfulltoHeartZap.

RuiFernandes

Endnotes(*1)2019ONSC3667.(*2)Seeparagraphs31-33.


2. TheMotorCarrier’sLimitationofLiability:ContractualClarityisKey

Inmost Canadianprovinces (*1)motor carriersmay benefit froma$2per poundlimitationofliability unlesstherehasbeen adeclarationofthe value of the cargo by the shipper. Forcontracts governedbythelawsofOntariotheremustbe adeclarationmadeonthe“faceofthecontract of carriage”. As concerns the otherprovinces giving effect to this limitation ofliability theshippermustdeclarea value onthe“face ofthebill of lading”. Whether there isapractical difference between the two regimeshas not yet been settled by case law and isbeyondthescopeofthisarticle.

Thelegislativeintentis clearthatthe parties toacarriage contract need to be in agreement onmatters of risk and recovery: if the shipperdeclares a value, thecarriermay faceincreasedcargoloss ordamage exposure ifthegoods arevaluedatmorethan$2perpound. Dependingon the prevailing practices and circumstances,wherethereisa declarationofvaluethecarriermighteitherelectto:

i)rejectthecarriagemandate,ii)assessadeclaredvaluation“surcharge”oriii) simply accepting cargo for carriage againstthesamebase“freightrate”as if therewas nodeclarationofvalue.

Giventhatthe$2perpoundlimitationofliabilityis essentially a random (albeit policy based)legislated benefit to a carrier (exonerating itfromfull value liability)acarrierhastoproperly“setup”orqualifyits defenceoflimitedliability.The recently published decision of the NovaScotia Small ClaimsCourt in Shaw v. SamedayWorldwide, Division of Day & Ross Inc. (*2)highlights the importance of clarity in thecontractual structurefora carrier tobe able tolimitliability.

The facts of the case are quite simple,illustratinga common“disconnect”wheremore

than one bill of lading form is used for ashipment:

1.Theclaimantboughtcertain“runningboards”fromaQuebecvendor.

2. Theclaimant contacted Sameday topick upthe running boards from the Quebec vendor’spick up location, and to deliver them to theclaimantathisNovaScotiaaddress.

3. Sameday sub-contracted the pick up andcarriage to a third party carrier, Transit NordPlus.

4.Samedaygenerateda formofits bill ofladingin connection with the shipment. This bill oflading properly identified the vendor as theshipper,Samedayasthecarrierandtheclaimantastheconsigneereceiver.

5.At thepointofpickup, however, theTransitNordPlusdriverissuedhis company’s ownformof billof lading totheshipper. It listedTransitNord Plus as the consignee receiver for thefreight. Neither the claimant’s name nor hisaddresswaslisted. The TransitNordPlus bill ofladingwas signedby both theshipper andthedriver. Theshipperdidnot declare a valueonthisbilloflading.

6. TheSameday form of bill of ladingwas notsignedbyanyone.As itwas notsigned,itdidnotcontainadeclaredvaluation.

Sameday relied on the $2 per pound defence.Thecargoweighedonly69pounds. It reliedonthefact that therewas nodeclarationofvalueonitsformofbilloflading.

TheCourtruledthatSameday couldnotlimititsliability to$2per pound. Noting that,wherethebill ofladingisintendedtobethecontractofcarriage (*3), it is critical that the same beproperlyexecutedandtreatedaccordingly–thatis, it shouldbear therequiredsignatures oftheshipperandtruckingcompanyas requiredinthegoverninglegislation. TheCourt regardedtheabsenceofsignatures as reducing theSameday

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bill ofladingtoeffectively beinganemptypieceof paper, not forming acontract. As concernsthe Transit Nord Plus bill of lading, the Courtruledthat, as itdidnotrefer totheclaimantastheconsignee, thecontract reflectedtherein–includingthe$2perpoundlimitationof liability–wasthennotbindingonthe claimant(*4).Thepaperwork, thus being consideredby the Courtto be confusing, alongwithother factors, alsoworked against the carrier’s l imitationargument:

1. Sameday initially tookthepositionthatithadnorecordofaccepting thecarriagemandate in the first place– evidently onaccount of its bill of lading (likely havingtheeffectof aninternal or anaccountingcontroldocument)notbeingissued.

2. When the claimant first booked thecarriagewithSameday,he was advisedbyits representative thatitwould“lookaftereverything”; therebeingnodiscussiononmatters of transit insurance or thedeclarationofvalues.(*5)

As mentioned, two different forms of bill ofladingwere usedintheequation. This tendstohappen in the marketplace, in facts such asthese(i.e.a delegatedcarrierusingits ownformover that ofthecarrierwithwhomtheshippercontracts) or where a shipper signs its ownshippingorderorbill of ladingformratherthansigning the carrier’s form of bill of ladingtenderedbya driverforsignature. Wealsoseepotentialconfusionincases whereoneformofbill of lading is used at origin to confirm thereceiptofcargo,butyetanother formis usedatdestinationasa“POD”(proofofdelivery).

The take away is simple, in “consumer” basedcarriagemandates suchas inthis case:where ashipper and a carrier have not signed anoverarching carriageagreement; that is, wherethecarrierseeks thebenefitoftheautomaticordeemed limitation of liability pursuant togoverning regulation it must ensure that thecontractual paperwork is clear, issued andsigned“bythebook”. For thatmatter,where a

carrier wishes to rely on certainwebsite-basedterms and conditions (or those containedelsewhere that are not reproducedin a bill oflading form) through “incorporation byreference”onabill ofladingform,ittoomustbecareful as towhichbill of ladingformis infactusedinconnectionwithashipment.

GordonHearn

Endnotes(*1) i.e. Ontario, Quebec, British Columbia,Alberta, Saskatchewan, Manitoba, Nova ScotiaandNewBrunswick.(*2)2019CarswellNS499(*3) The issue did not present itself given thefacts of this case as to the interplay orrelationship between the terms of a signedmasterShipper-Carriercontractontheonehandandthose containedina bill oflading(oras maybedeemedby applicable lawtobe in abill oflading) on the other. There was no mastercontract in this case. The parties only everintendedforanissuedbill ofladingtocomprisethecontract.(*4) It appears that the argument was notadvancedbythecarrier thatthevendorshipperwasactingas theagentforandonbehalfoftheclaimantsoastomake theTransitNordPlusbillof ladingbindingonhim,butat any ratethis isbeside the point for our immediatediscussionpurposes.(*5) While the Court does not appear to besuggesting that carriers have any duty toraisesuchmatters withshippers,therewasconfusiononwhat thecontract was intendedto be andthis clearlymadetheCourtmoresensitive totheshipper’s interests in not being “surprised” bythecarrier’slimitationofliabilitydefence


3. TheUnpaidSellerintheInternationalSaleofGoods

Introduction

In the July 2019 issue of The Navigator, wereportedon theUnited Nations Convention onContracts for the International Sale ofGoods (known as the “CISG”). Ontario hasadop ted the C I SG a s S chedu l e 1 t othe International Sales Conventions Act, R.S.O.1990,c.I.10.

As canvassed, theCISG mightcatcha selleror abuyer to an international sales contract bysurprisegiventhat,ifapplicable,itautomaticallystipulates certain contractual terms andconditions. AnotherpointraisedconcernshowcertainCISG terms andconditions might be atodds withhowa sellerorbuyermayhave cometounderstand their rights andobligations as amatteroftheir“local”ordomesticlaw.Anotherchallenge,presentedbythecasestudybeingthesubject of this article, concernshow therehasbeen only limited judicial consideration of theCISG: exactly what does it impose on thecontractingparties?

Due diligencein“mappingout”sales contracts iscritical.

The recently published decision of theOntarioCourt of Appeal in Solea International BVBA v.Bassett & Walker International Inc. (*1)illustrates an example of a sales contract‘showdown’ concerninghowpartiestoa saleofgoods dispute had different interpretations oftheCISG. This case concerned the questionwhether an unpaid seller is required to try toresell goods toa new buyer rather than suingthedefaultingbuyerforthepurchaseprice.

TheFacts

Solea InternationalBVBA(“Solea”)is abrokerofseafood products. It sold two containers offrozenshrimptoBassett&WalkerInternationalInc. (“BWI”), a Toronto-based company. Soleaoriginally purchased the shrimp from anEcuadorian supplier, Castromar S.A. Under theterms of its sales contractwithBWI, Solea wastodelivertheshrimponCIF(Cost,Insurance and

Freight) terms (*2) at the Mexican port ofManzanillo.

The shrimp arrived at the port and wasdischarged from the ocean vessel on June 13,2014.Bymid-August,BWIstillhadnotbeenableto pass the goods through Mexican customs.Although first assuring Soleathat itwould paythe invoice, ultimately BWI refused to paySolea’s invoice for the contract price of theshrimp.TheshrimpwasreturnedtoEcuador.

Solea commenced an action in the OntarioSuperior Court of Justice for payment of thepurchase price ofU.S.$228,604.50plus interestat a contractually stipulated rate of 8%. TheCourt eventually grantedjudgmenttoSolea forthefull amountofthe purchaseprice,togetherwithpre-judgmentinterest.

TheAppealtotheCourtofAppeal

BWIappealedthisdecisiontotheOntarioCourtofAppealonthebasisthatSolea failedtosatisfya requirement to “mitigate” its claims that iscontained in the CISG. The litigants hadconceded that the CISG applied to thesubjectcontract.BWI arguedthatArticle 77ofthe CISGrequiredSoleatofirsttrytoresell theproducttocollect thepurchasemoniesfromanewbuyerbefore it could start a legal action– that Soleahada dutyto“mitigate”its losses and, infailingto do so, it could not sue for the unpaidpurchaseprice.

Article 77 appears in Chapter V of the CISGwhich deals with “Provisions common to theobligations of the seller and of the buyer”.SectionIIofthatChapterconcerns“Damages”.Art.77states:

Apartywhorelies ona breachofcontractmust take such measures as arereasonable in the circumstances tomitigate theloss, includingloss ofprofit,resulting from the breach. If he fails totakesuchmeasures, theparty inbreachmay claimareductioninthedamagesinthe amount by which the loss shouldhavebeenmitigated.


https://www.canlii.org/en/on/laws/stat/rso-1990-c-i10/latest/rso-1990-c-i10.html

https://www.canlii.org/en/on/laws/stat/rso-1990-c-i10/latest/rso-1990-c-i10.html

In our domestic common law, the “duty ofmitigate”calls for aplaintiff totakereasonablesteps withinits controltoreduceifnotpreventaloss. If a plaintiff takes stepsinmitigation it isable to recover expenses reasonably incurredfrom a responsible defendant. However, if itfails to take such steps that may affect theamountultimatelyrecoveredbycourtaction.

The judge ruled that “[t]heduty tomitigate isnotrelevant toSolea’s claimforpaymentofthepurchase priceofthe shrimp”,acceptingSolea’sargument that the CISG mitigation provisionsapply only toclaimsfor damages(for example,compromised product in terms of quality ordescription, or damages for late delivery) butnottoanactionfor judgment intheamountofthepurchaseprice.

The judge noted Chapter III of the CISG. Thatchapter deals with specific obligations of thebuyer. Section III in that Chapter addresses“Remedies forbreachofcontractby thebuyer”.Articles61(1)and(2)inSectionIIIstate:

(1)Ifthebuyerfails toperformanyofhisobligations under the contract or thisConvention,thesellermay:

(a) exercise the rights provided inarticles62to65;

(b) claim damages as provided inarticles74to77.

(2)The seller is notdeprivedofany righthe may have to claim damages byexercisinghisrighttootherremedies.

CISG Article 62 states that the “seller mayrequire thebuyertopay theprice,takedeliveryor perform his other obligations, unless theseller has resorted to a remedy which isinconsistentwiththisrequirement.”

The “UN Convention on Contracts for theInternational Sale of Goods (CISG), ACommentary” (*3) (the “ CISG Commentary”)takesthe positionthatthatthe dutytomitigatecontained in Article 77 does not apply to anactionfor thepurchasepriceby a seller underArt. 62. The judge regarded Solea’s action for

thepurchasepriceasarequirementbyitas theseller that the buyer pay the purchase pricewithin the meaning of Article 62. Accordingly,the judge in first instance ruled in favour ofSolea.

At the Court of Appeal: It’s Analysis, ChartingComplexWatersandtheVexingArticle28

The Court of Appeal found that the judge’spositionon themitigation issue wassupportedin the CISG Commentary which also addressesArticle 62. The CISG Commentary states onpointatp.858:

Art. 62 grants the seller the right todemand the specific performance of anyobligation owed to him by the buyer,includingthe payment of theprice … Art.62 adopts, at least in principle, thepositionofthe civil lawtradition–specificperformanceis availableas ofrightforanybreach of any obligation of the buyer,includingtheobligationtopaytheprice.

The Court of Appeal noted that while Article61(b) appliesArticle 77’sduty tomitigate to aclaim for “damages” andnot toanactionby aseller pursuant toArt.62 to“requirethe buyertopay theprice,” drawing from a commentaryby the United Nations Commission onInternational Trade Law (UNCITRAL) (*4) onArticle 62 (the UNCITRAL Commentary”). TheUNCITRAL Commentary recognizes that thisprinciplecuts against the grainof common lawremedialprinciplesstating,atp.287:

Article 62 entitles the seller to requirethebuyertoperformits obligations.Thisremedy is generally recognized in civillaw systems, whereas common lawsystemsgenerally allow for theremedy(often under the designation “specificp e r f o rmance ” ) o n l y i n l im i t edcircumstances.

The Court noted theCISG Commentary, whichexplores this tension between Art. 62 andcommon law jurisdiction remedies in a


discussionon“Theright todemandpayment”.TheCISGCommentarystates,atp.859:

The right to demand the specificperformance of the obligation to paythe price is probably the mostcontroversial part of this (Article 62)provision. During the negotiations ofthe Convention the delegation of theUSA proposed that the buyer mayrequire payment unless “in thecircumstances the seller shouldreasonably mitigate the loss resultingfrom the breach by reselling thegoods”.This wouldhavemadetheCISGsimilartothelawinmostcommonlawjurisdictions. This was in fact alsoeffectively the solutionadoptedby theULIS,thepredecessoroftheCISG.

In theend, however, theUSproposalandtheapproachadoptedby the ULISwere rejectedandthere is, therefore,no need for the seller tomitigatehisloss – he is entitled to ask for thepaymentofthepricewithouthavingtotry tosell the goods to a thirdparty.The CISG adopts a pure civil lawformulation of the rule. In practice,however,itis verylikelythatinthevastmajority ofcases wheretheseller haspossessionofthegoodsandthere isamarket for these goods, theseller willopttocuthis losses,attempt toavoidthe contract as soon aspossible (Art.64) and resell thegoods (maybeevenusingArts 85 and88)rather thanseekan order for specific performance oftheobligation topay thatwouldhavetobeenforcedinthe buyer’s country.In practice, therefore, the theoreticaldifferences between the civil law andthe common law may not be asimportant as they may seem. Inaddition, Art. 28 will often mean thatsellerswillhavetomitigatetheirlossbyresellingthegoods.Therewillhoweverbeinstanceswherethesellerwillprefertoseek thespecificperformanceofthe

obligation to pay. [footnotes omitted,emphasisadded]

TheCourtofAppealAddressestheVexingArticle28

ThereferencetoArticle 28inthelastportionoft h e a b o v e e x t r a c t f r o m t h e C I S GCommentarywas foundtobe significant.Article28states:

If, in accordance with the provisions ofthis Convention, oneparty is entitledtorequire performance ofanyobligationbytheother party, a court isnot boundtoe n t e r a j u d gmen t f o r s p e c i f i cperformance unless the court would dosounder its ownlawinrespectofsimilarcontracts of sale not governed by thisConvention.

(emphasisadded)

AsexplainedintheCISGCommentary:

Art. 28 is a compromisepositionbetweenthe common law’s preferencefor moneydamages in the event of a breach ofcontractandthecivillaw’spreference forperformance…Totheextentthat[Art.28]applies,itrestricts theabilityofthepartiestodemandperformance. (at pp. 370 and375).

TheCISGCommentaryobservesthefollowingonArticle62:

In practice, however, the generalavailability of specific performance underthe CISG will be limited, particularly incommonlawjurisdictionsbyArt.28(atpp.858-859).

Initsstatementofclaim,Soleadidnotexpresslyseekspecificperformance ofthe sales contract.It simply claimed “$228,604.50 U.S. dollars orthe Canadian equivalent at the date ofjudgment.” The Court of Appeal regardedSolea’sactionas onerequiringBWI“topay theprice”withinthemeaningofArticle62but thatanyultimate characterizationofSolea’sclaimforthepurposeof determining whether anArticle


77 duty tomitigate appliedwouldneedtotakeinto account the availability of an Article 62-basedspecificperformanceremedyina commonlaw jurisdiction such asOntario in view of thelimitationplacedbyArticle28.

Theparties didnot address what effect, if any,Article 28 may have on any duty for Solea tomitigate in its Ontario action for the purchaseprice. Asa result, the judge hadnot expressedanyviewonthematter.

The Court of Appeal had to wrestle with thenotion that Article 28 might pose a possibleimpediment to Solea’s argument: if the actionwere subject to Ontario law would an Ontariocourt imposeBWI’spositionthat therewasthedutyonSoleatomitigate byresellingthe shrimp?The Court of Appeal addressed this vexingquestionby consideringBWI’s caseatits highest,assuming (without deciding) that Solea was infact subject to a duty to mitigate. Uponundertakingsuchananalysis,itfoundthat,inanyevent, Solea had in fact satisfied a duty tomitigate.

Solea had, in Fact, Mitigated its Losses, IfRequiredUndertheCISG

BWIhadarguedthatSoleafailedtoestablishthatit tookreasonable measurestomitigate its loss.Having returned the shrimp to Solea, BWIcontended that Solea either resold, could haveresold, or should have resold the shrimp. As aresult,BWI submittedthatSolea’s damageswere“zero”.

The Court of Appeal revisited the trial judge’sfindings thatBWI breachedthecontractbyfailingtopay thepurchase price.Her Honour’sreasonsdisclosedthatshe foundthat titlehadpassedtoBWIupondelivery of thegoodsat theMexicanport andBWI’s subsequent problemsinclearingthegoods hadnot alteredthe fact that title hadpassed to it. The judge had reviewed theevidence about the discussions between theparties in mid to late August, 2014 followingBWI’s disclosurethat ithadencountered importproblems.Shehadfoundthat:

• Soleadidnotmakeany representation,promiseor agreement that it would not

require BWI to pay the purchasepriceiftheproductwasreturnedtoEcuador;

• Thearrangement toreturnthegoods toEcuador was not a new transaction inwhichtitletothe shrimpwas reconveyedtoSolea;and

• The bill of ladingfor the shipment toEcuador named Castromar, the originalsupplier, as consignee,whichledthe trialjudgeto findthat therewasnoevidencethat titletotheshrimphadpassed fromBWItoSolea.

TheCourtofAppeal foundthat thesefindings offact tookthiscaseout ofthecommonsituationwhere, at the time of the buyer’s breach ofcontract,the seller still hadtitletoor possessionofthe goods thatarethesubjectofthecontract.On the motion judge’s findings, when BWIbreachedthecontractinAugust2014byrefusingtopay theinvoice, ithadtitle toandpossessionof the goods, circumstances that limited anyreasonable measures that Solea could take tomitigateitslossescausedbyBWI’sbreach.

The Court of Appeal noted other evidenceconcerning the mitigation issue. An emailexchange between the parties on August 13,2014 disclosed that Solea offered to take thegoods back but only if BWI covered Solea’srelated costs, which it estimated to be in therangeofUS$25,000-30,000.BWIhadrefused.

AlthoughSolea providedsomeassistancetoBWIto arrange the return of the two containers ofshrimptoEcuador, the consigneenamedonthebill of lading for the return shipment wasCastromar, theoriginal vendor of the shrimptoSolea. The containers containing the shrimparrivedback inEcuador onSeptember 21, 2014and were returned, empty, to the shippingcompany onOctober1,2014. Solea’s managingdirector, Adriaan de Leeuw, deposedthat Soleanever received thereturned shrimp, never soldtheshrimp,andwasnot aware whatCastromardidwiththeshrimp. HealsodeposedthatSoleawasneveraware oforinvolvedinanysaleoftheshrimp to China, as suggested in some email


correspondence, or otherwise once the shrimpwasreturnedtoEcuador.

TheCourtofAppeal notedthatArticle77reflectsthecommon lawprinciple that,while it is uptotheplaintifftoestablishwhatithaslostfromthedefendant’s breach of contract, it is up to thedefendant to showthat theplaintiff couldhaveavoidedsome,or perhaps all, oftheselosses. Inthis regardit wasnoteworthy that BWIhadnotled any evidence as to what Solea could haverecoveredonaresaleofthegoodsatthe materialtime.

The foregoing supported the conclusion that,even if Solea was subject to a duty tomitigateunder the CISG, it had taken suchmeasures aswere reasonableinthecircumstances tomitigateits loss, including loss of profit, resulting fromBWI’sbreachofcontract.

Accordingly,the CourtofAppeal dismissedBWI’sappeal and it was liablefor thepaymentofthepurchasepriceandapplicableinterest.

GordonHearn

Endnotes

(*1)2019ONCA617(*2)Cost, Insurance andFreight(CIF)means thatthesellerdelivers thegoodsonboardthevessel.Theriskofloss ofordamagetothegoods passeswhen the goods are on board the vessel. Theseller must contract for and pay the costs andfreightnecessarytobringthegoods tothenameport ofdestination. The seller alsocontracts forinsurancecoveragainstthe buyer’s riskofloss ofor damage to the goods during the carriage.WhenCIFisused,theseller fulfillsits obligationtodeliver when it handsthegoodsover tothecarrierinthemannerspecifiedinthe chosenruleand not when the goods reach the place ofdestination:Incoterms 2010:ICCrules fortheuseofdomestic andinternational trade terms(Paris:International ChamberofCommerce,2010),atp.105.(*3)StephanKroll,LoukasMistelis&PilarPeralesViscasillas, UN Convention on Contracts for theInternat iona l Sa le of Goods (C ISG) , ACommentary, (Munchen: C.H. Beck, 2011) (the“CISGCommentary”),atp.1035.(*4)UNCITRALDigestofCaseLawon theUnitedNations Convention on Contracts for theInternationalSaleofGoods,2016.


4. CustomsTariffforSailboatfromUSA

In the recent decision of the CanadianInternational Trade Tribunal (“Tribunal”) in J.McElligott v. President of the Canadian BorderServices Agency (*1) theTribunal hadtodecidewhether a sailboat imported from the UnitedStatescouldbenefitfromtheUnitedStates Tarifftreatment,pursuanttotheNAFTARulesofOriginforCasualGoodsRegulations(*2).

Mr.McElligott purchased a sailboat (“thegood inissue”)in theUnitedStatesfor$68,500.00USDonMay 8,2017.Hesailedit intoCanadaonMay 30,2017, where Canadian Border Services Agency(“CBSA”)officers determinedthat itwassubject tothe Most-Favoured-Nation Tariff treatment and adutyrate of9.5%.(*3)Mr.McElligottpaidcustomsdutiesandGST.

OnAugust 15,2017,Mr.McElligott fileda requestforarefundwiththeCBSAallegingthat,despite theoriginof its hull (outsideoftheUSA), thegoodinissuewasmanufactured in the United States. Hearguedthen,as hedidbeforetheTribunal,thatall ofthe componentsofthe goodinissue (spars,rigging,sails andhull)wereassembledintheUnitedStates.Mr.McElligottrequesteda refundoftheduty andGSTpaid.Alternatively,herequestedthattheCBSAapplydutyonthesailboatpro-ratedtothecurrentvalueofthehull whichoriginatedinTaiwanandthatthe remaining components of the sailboat beassessed free of duty. Mr. McElligott furthersubmittedthat,becausedutywouldhave beenpaidinthe UnitedStatesatthetimeofthe originalimportofthehull,imposingdutyatthetime ofimportintoCanadawouldconstituteadoubleduty.

OnAugust 20, 2018, the CBSA issued a decisionpursuanttosubsection60(4)oftheAct confirmingthat thegood in issuecouldnot benefit from thepreferential tarifftreatmentunderNAFTA.TheCBSAfoundthattheHull IdentificationNumber(HIN)wasnotissuedbyaboatbuilderinthe UnitedStates andthat therewas nodocumentaryevidence providedin support of the allegation with respect to thesourceof theother equipment, suchassails andrigging.As such, theCBSA foundthat thegoodinissue did not meet the requirements of

theRegulations.Mr.McElligottappealedthisrulingtotheTribunal.

The partiesagreedthatthe goodinissueis a“casualgood”.As such,itissubjecttotheRegulations,whichstatethefollowing:

3. Casual goods thatareacquiredintheUnitedStates

(a) are deemedtooriginate in theUnited States and are entitled tothe benefit of the United StatesTariffif

(i) the markingofthegoodsis inaccordancewiththemarking lawsof the UnitedStates andindicatesthat thegoods aretheproduct oftheUnitedStatesorCanada,or

(ii) the goodsdonotbeara markandthere isnoevidencetoindicatethatthegoods arenottheproductoftheUnitedStatesorCanada

The parties agreed that (i) the good in issue waspurchasedbyMr.McElligottin theUnitedStatesjustprior to importationintoCanada; (ii) thehull wasimported from Taiwan into North America(seeminglyintoCanada)inoraround1986(andthenat some point sold and exported to the UnitedStates); (iii) the HIN indicates that the hull wasmanufacturedinTaiwan;(iv)spars,sails,rigging,andvarious othercomponents wereaddedtothe hull intheUnitedStates;andthat(v)thegoodinissuedoesnot itselfbear amarkindicativeofitsorigin; tobesure,various components thatmake upthe goodinissue, including thehull, haveoriginmarkings,butthe goodinissuedoes nothaveanoverall markofitsown.

The Tribunal notedthataccordingtoparagraph3(a)oftheRegulations,whena casualgood,suchas thegood in issue, is acquired in theUnited States itis deemed to be of U.S. origin in certaincircumstances.

TheTribunalanalyzedtheapplicationoftheRegulationasfollows:


16.Thefirstcircumstanceis setoutinsubparagraph3(a)(i)oftheRegulations:thatthe markingof the goods beinaccordancewiththemarkinglawsoftheUnitedStatesandindicates thatthe goods arethe productof the United States or Canada. Thatcircumstance is notapplicable tothefacts ofthis casebecausethegoodinissuedoesnotitselfbeara markindicative ofits origin(see(v) in paragraph 14 above). As such, theTribunal finds that subparagraph 3(a)(i) oftheRegulationsdoesnotapply.

17. Thesecondcircumstanceis setou t i n s ubpa r a g r aph 3 ( a ) ( i i ) o ftheRegulationsandisdeterminativeoftheTribunal’sfindingthatthegoodinissueis ofU.S.origin.This circumstanceis applicable iftwoconditions aremet: (1) that thegoodsnotbeara markand(2)there benoevidenceto indicate that the goods are not theproductofthe UnitedStatesorCanada.Forthe reasons that follow, the Tribunal findsthatbothconditionsaremet.

The Tribunalfurtherfoundthatthattheoriginofthegoodinissuecannotbereducedtotheorigin ofitshullcomponent.This is becauseeventhoughthe hullhasa HIN,thatmarkwhichis foundona componentofthegoodinissuecannotbeassimilatedtoa markforthegoodinissueitself.

The Tribunal also found that, in regards to thesecond condition of subparagraph 3(a)(ii), whichrequires thattherebe noevidencetoindicatethatthe goods arenot the productoftheUnitedStatesorCanada,thatthere was in factnosuchevidencebeforeitinthismatter.TheTribunaladded:

The evidence also shows that thehull andother components were manufactured orassembled into the good in issue intheUnitedStates:the originalagreementofpurchase,whichindicates thatonlythehull,less spars and riggingwas being procured;the letter from Mr. Peterson; and theinformationrelatingtothecommissioningofthe vesse l in the United States .Fundamentally, the good in issue is anassembly of parts that came into being inthe UnitedStates; it was manufacturedorassembledthere.

The Tribunal found that the good in issue wasdeemedtobeofU.S.originandgrantedthe appealofMr.McElligott.

RuiFernandes

Endnotes(*1)AP-2018-045,2019-07-15(*2)S.O.R./93-593(*3)UndertariffitemNo.8903.91.00.


5. EntryintoForceofLRMAandPreclearanceAct,2016

In March 2015, Canada and the United Statessigned a new treaty entitled the Agreement onLand,Rail,MarineandAirTransportPreclearancebetween the Government of Canada and theGovernment of theUnited States (LRMA), whichwas a commitment of the 2011 Beyond theBorderActionPlan.

The LRMA provides for preclearance operationsto be conducted in all modesof transport (i.e.land,rail andmarineaswell as air)as well as forcargo operations. Like the previous airagreement, theLRMApermits either country toestablishpreclearanceoperations intheterritoryoftheothercountry(i.e.CanadaintheU.S.ortheU.S.inCanada).

Canada’s treaty obligations under the airagreement were implemented in Canadian lawthroughthePreclearanceAct of 1999. Similarly,Canada’streatyobligations undertheLRMAhavebeen implemented in Canada through themodernizedPreclearanceAct,2016.

The LRMA and Preclearance Act, 2016 enteredintoforceonAugust15,2019.

Public Safety Canada has issued the followingnotice:

TheAgreementonLand,Rail,Marine,andAir Transport Preclearance between theGove rnment o f Canada and theGovernment of the United States ofAmericaenteredintoforcetoday,August15, 2019. The entry into force of theAgreementcoincideswiththecomingintoforce of the Preclearance Act, 2016, theconsequential amendments tootherActsc o n t a i n e d t h e r e i n , a n d i t sassociatedRegulations.

TheU.S.iscurrentlyconductingpreclearanceoperationsatthefollowingairportsinCanada:• CalgaryInternationalAirport• EdmontonInternationalAirport• StanfieldInternationalAirport(Halifax)• TrudeauInternationalAirport(Montréal)• Macdonald-CartierInternationalAirport(Ottawa)• PearsonInternationalAirport(Toronto)• VancouverInternationalAirport• WinnipegJamesArmstrongRichardsonInternationalAirport

RuiFernandes


6.Lawyerliablefornegligentreferral

In the course of a retainer, lawyers areoccasionallycalledupontorefer clients tootherprofessional advisors,andeventootherlawyers,particularly where matters are transnational,involving multiple jurisdictions. Referring orrecommending a client to another professionaladvisordoes nottypicallyputthelawyeratriskofbeingliabletohisorherclientforthemistakes orwrongdoingofthereferredprofessional.In otherwords, a lawyer’s referral of a client toanotherprofessional is nottobe takenas aguarantee ofaparticularoutcome.

This appears toaccordwithcommonsense.Thereason lawyers sometimes need to recommendotherprofessionals toclients ispreciselybecauseanotherprofessional mayhavea particularskill orspecialization not possessed by the referringlawyer.Thereferringlawyerthereforeshouldnotbe expected to be an insurer of the otherprofessional’s services. Thevery recent decisionof the SupremeCourt of Canada inSalomon v.Matte-Thompson (*1) remindsus,however, thatdespite this general rule that professionaladvisors are each responsible for their ownconduct,lawyersstill have a minimaldutytotakes o m e c a r e w h e n m a k i n g s p e c i f i crecommendationsofotheradvisors.

Thefacts

InSalomon,theappellant lawyer inquestionhadfor many years been the trusted professionaladvisor toamarriedcoupleandtheir successfulrestaurant business. When the respondent’shusbandpassedaway, the respondent client inthis case became the trustee of certain trustscreatedthroughhis will.Oneofthese trusts wasforthepreservationofthe capital ofhis estateforthe benefit of their children. Her lawyerrecommendedthatsheretainparticular financialadvisors in respect of this trust’s assets. Therecommended financial advisors managedinvestment funds based in the Cayman Islandsand the Bahamas, and the respondent in allinvested$7.5millioninthefunds recommendedby her financialadvisors. Thefunds inwhichthe

respondent invested turned out to be Ponzischemes, however, and before she couldwithdraw her investment her financial advisorsdisappeared together withmost of themoney.Onlyabout$900,000fromthemoney investedintheseoffshorefunds wasultimatelyrecoveredbytheclient.Theclientthensuedbothher financialadvisorsandherlawyers.

Althoughthe trial judge hadfoundthe lawyerhadbreached a professional standard of care ininitiallyrecommendingthe financial advisors,shenevertheless held there was no causal linkbetween that recommendation and the lossultimately suffered.TheQuebecCourtofAppealreversed this ruling, finding instead that thelawyer’s fault was not limited to the initialrecommendation, but extended for a period ofyears during which he reassured the clientregarding her investment, and that thenegligencewas inrespectofadvicegivennotonlyto the individual, but to both her and hercompany, the owner of the trust’s assets. TheCourt of Appeal also reversed the trial judge’sfinding that the lawyer was not in a conflict ofinterest as between his client and the financialadvisors.TheSupremeCourtofCanada dismissedtheappeal,thusupholdingtheCourtofAppeal’sruling.

Thelawyer’sobligationinmakingareferral

In upholding the Court of Appeal’s ruling, themajority intheSupremeCourtofCanada restatedthe already well-established rule regarding alawyer’s duty inmakingreferrals.Asexpressedinthereasonsofthemajority,thatdutyisthat:

Lawyers who refer clients to otherprofessionals or advisors have anobligation of means, not one of result.Although lawyers do not guarantee theservices rendered by professionals oradvisorstowhomthey refer their clients,they must nevertheless act competently,prudently and diligently in making suchreferrals, which must be based onr e a s o n a b l e k n o w l e d g e o f t h eprofessionals or advisors in question.


Referringlawyers mustbeconvincedthatthe professionals or advisors to whomthey refer cl ients are sufficientlycompetent to fulfill the contemplatedmandates(*2)

It was argued for the appellant before theSupremeCourt that this standard, stated in anearlier decisionofQuebec’sCourtof Appeal, ReHarris(Succession)(*3),wasmetbythelawyerinthis case; that is, he was familiar with thefinancial advisors he recommended, who had agood reputation, and hehad even investedhisownfundswiththem.Whilethelawyerwasalsoa personal friendof oneoftheprincipalsofthefinancial advisors, this fact wasdisclosed tohisclientbeforeanyinvestmentwasmade.

Whilethemajorityonthe SupremeCourtagreedthat the standardwas correctly statedinHarris,they distinguishedtheappeal inSalomon onthefacts. In particular, they said the lawyer hadbreachedhisobligation tohis client in thiscaseby repeatedly recommending a particularinvestment product managed by the financialadvisors tohis client, whichwasadvicethat hewasnot competent togive. One key breachofduty of the lawyer identifiedby themajority ofthe SupremeCourt washis failure to notethatthe financial advisors themselves were notregisteredas securitiesadvisors ordealers underQuebecsecuritieslaw.

While this decision of the Supreme Court ofCanada does not on its face signal any newstandard to be met by lawyers when referringtheirclientstootherprofessionals,thedissentingreasonsinthis caseexpressedsomeconcernthatthis mightbeanexampleofa “hardcasemakingbadlaw”.Thelonedissentingvoice ontheCourtnoted that thedecisionmight be imposing toogreat a burden on lawyers, perhaps evenrequ i r ing sys temat ic enqu i ry in to thebackgrounds of advisors they recommend (*4).Recommending other professionals to existingclients,whereappropriate,isroutine inthelegalprofession and generally of great benefit to alawyer’s clients. The concern expressed in thedissenting reasons was that a duty of verifying

thestatus ofa professional advisorwithwhomalawyer is familiar andhas noreasontosuspectwould give poor advice might cause lawyers toavoid making recommendations altogether, outoffeartheyhadnotcheckedthebackgrounds oftheirreferralssufficiently.

Conclusion

The decision in Salomon has lessons for bothlawyers andtheir clients. For lawyers, whilethelawhasnotchanged,inthata referral toanotherprofessional will notgenerallyexpose a lawyertoliability for a bad result, we are reminded thatlawyers still have an obligation to be cautious,ensuringthat they havea reasonablefamiliarityandcomfortwiththestandardsofadvisorstheyrecommend.Ontheotherhand,whileclients cantake some comfort in the fact that a recklessrecommendation may give them a remedyagainst the lawyer whomadethereferral, theys h o u l d n e v e r t h e l e s s r e c a l l t h a t arecommendation by one trusted advisor ofanother is, as thecourts have repeatedly stated,no “guarantee.” The lawyer still has noduty toensurethatareferredprofessionalis givinggoodadvice. Inshort, there is still nosubstitutefor aclientindependentlylookingintothebackgroundandreputationofhis orherprofessionaladvisors,regardless of how much one trusts theprofessionalmakingtherecommendation.

OlegM.Roslak

Endnotes(*1)2019SCC14[Salomon].(*2)Salomonatpara.45.(*3) Harris (Succession), Re, 2016 QCCA 50[Harris].(*4)Salomonatpara.146(dissentingreasons).


7.Areyouinan“exclusive”relationship?

In 2009 theOntario Court of Appeal confirmedthatwhenitcomestoclassifyingworkers,thereisanintermediatecategorybetweenemployeeandindependent contractor. In McKee v. Reid’sHeritage Homes Ltd. (*1) the court confirmedthata “dependent contractor” relationshipexistswhere a worker can show a certain minimumeconomi c dependency wh i ch may bedemonstrated by complete or near-completeexclusivity. If a worker is determined to be adependent contractor, he or she is entitled tonotice of termination, or pay in lieu thereof,equaltothatofanemployee.

In2016, theCourtofAppeal,inKeenanv. CanacKitchens Ltd. (*2), stated that a “high level ofdependency and exclusivity” is needed toestablishthedependent contractor relationship.The Court stated that exclusivity cannot bedetermined on a snapshot approach to therelationship and the full history of therelationship must be considered. There havebeen few reported decisions since then whichhaveofferedhelpful guidancetoabusiness tryingtoapply the legaltest totheparticularfactsofaworkrelationship,inordertoassess whethertheworkerisadependentcontractor.Untilnow.

On July 31, 2019 the Ontario Court of Appealreleased its decision in Thurston. v. Ontario(Children’s Lawyer) (*3) and provided greaterparticularity with respect to the concepts of“exclusivity” and“dependency” in thedefinitionofdependentcontractor.BarbaraThurstonwas asole practitioner lawyer who provided legalservices totheOntarioChildren’s Lawyer(“OCL”)fora periodof13yearsbetween2002and2015.Ms.Thurstonwas a memberofthe OCLpanel of380 lawyers and provided services to the OCLthroughaseries of fixedtermcontracts eachofwhich required reappointment by OCL as therewasnoautomaticrightofrenewal. The contractsdidnotrestrictherabilitytoworkforothers,andsomeofthecontracts expresslyrequiredthatshestatethather practice includedworkfor others.Thecontracts alsodidnotguaranteea minimumvolume of work. Therewas continuous service,

through a series of renewals since 2002;however, OCL did not renew Ms. Thurston’scontractin2015,andshesuedOCLclaimingshewasadependent contractorandwas entitledto20months’terminationnotice.

Ms. Thurston conceded that she was not anemployee and brought a motion for summaryjudgmentseekingadeterminationthatshewasadependent contractor, which motion OCLresisted, arguing that she was an independentcontractor. Key evidence onthemotionwas achart setting out Ms. Thurston’s billings from2002 to2015,showingher gross billings andtheportionof those gross billingsattributedtoOCLwork. Over theof thecourseof 13 years, Ms.Thurston’s work for OCL rangedbetween14.8%to62.6%ofher overall billings(note that inthelast 3 years of the relationship the percentagewas62.6%,47.5%and50.1%).Theaverageoverthe 13-year relationship was 39.9% of Ms.Thurston’soverallbillings.

Themotionsjudgefocusedonthe continuous13-year relationship, the fact that Ms. Thurstonperformed work that was integral to OCL’sservices,andthatOCLhada greatdeal ofcontrolover her work and working conditions. Themotions judge acknowledged that, whilesignificant, the percentage of Ms. Thurston’swork fromOCLwas consistently less than50%.Notwithstanding, themotions judge found thatthepermanency ofthe relationship,andthe factthat the work performed was integral to OCL,tipped the balance in favour of a finding ofdependentcontractorstatus.

OCLappealedthis decision.TheOntarioCourtofAppeal reviewed the McKee decision andconfirmedthatadependentcontractorstatusis anon-employment relationship inwhicha certainminimum economic dependency may bedemonstrated by complete or near completedependency, and that the determination of thestatus must be made in the context of thepurposeoftheconcept: extendingthecommonlaw entitlement to notice of termination fromemployeestodependentcontractors. InMcKee,exclusivity, and therefore income, was key to


determining economic dependence. The Courtwentontostatethat“near-complete”exclusivitycannot be reduced to a specific number thatdetermines dependentcontractorstatus andthatadditionalfactors mayberelevant. Havingsaidthat, the Court went on to state that near-exclusivityrequiressubstantiallymorethan50%ofbillings.Otherwise,exclusivity,thehallmarkofdependent contractor status,wouldberenderedmeaningless. Inthecase at bar, whenthe courtexaminedtheentirerelationship, only 39.9%ofMs.Thurston’s earningscamefromOCLandthiscould not be categorized as a “near-exclusive”relationship.

Inlightofthis recentdecision,businesses shouldundertake an analysis of their independentcontractor relationships in order to determinewhetherthereis a riskofadependentcontractordetermination. Businesses should ensure thattheir contractors are permitted to work for

others, and do in fact work for others, andconsider including express provisions in theircontractor agreements in which the workerconfirms thatheorsheperformsworkforothers.It may also be advisable to build into thosecontracts where exclusivity and, thereforedependency, is a realistic risk, a terminationprovisionthatmeets theemploymentstandardsminimums fortermination,orprovidesaformulafor calculatingnoticeof terminationwhichisnolessthanthoseminimums,soastoavoida costlylegal battle over the appropriate amount ofnoticeoftermination.

CaroleMcAfeeWallace

Endnotes(*1)2009ONCA916(*2)2016ONCA79(*3)2019ONCA640


8. Federal Court Agrees with CHRC, UpholdsDismissal of Truck Driver’s Human RightsComplaint: Rosianu v. Western Logistics Inc.,2019FC1022

In a fairly straightforward decision (Rosianu v.Western Logistics Inc., 2019 FC 1022), ChiefJustice Paul Crampton of the Federal Courtrecently considered and dismissed a judicialreviewapplicationbroughtbyMr.Viorel Rosianu,a disgruntled truck driver who had beendismissedbyhis employer,WesternLogisticsInc.(“WesternLogistics”).

While Mr. Rosianu had been cautioned andwarnedseveral timesaboutspeedingandsafetyconcerns by Western Logistics, the straw thatbroke the camel’s backwas whenMr. Rosianuwas caught driving with two flat tires… in themiddleofsnowyandicydrivingconditions.

Mr. Rosianu, clearly unhappy about being fired,tried to challenge the employer’s decision. Heultimately filed a human rights complaint withthe Canadian Human Rights Commission (the“CHRC”), alleging that he had been unfairlydiscriminatedagainstbyWesternLogistics duetoa disability: heallegedthathehadhada herniaoperation in 2011, that he could not performheavy lifting,butthatWesternLogisticswas notpreparedtoaccommodatehisdisability.

The CHRC investigated but dismissed Mr.Rosianu’s complaint, essentially finding that ithad nomerit. Mr. Rosianu then applied to theFederal Court seeking judicial review of theCHRC’s decision. As described below, the Courtdismissed the application, agreeing with theCHRC that therewas nomerit toMr. Rosianu’sdiscriminationclaims.

Facts

Mr.Rosianuwas a truckdriverwhousedtoworkfor Western Logistics. He was hired in January2011. In October 2011, he had hernia surgery;following that surgery,Mr. Rosianusubmitted amedicalform tohis employer, indicatingthathecould not do any heavy lifting for a period of

time. Duringthis period, he receivedshort-termdisabilitybenefits.

Abouttwoyears later,WesternLogistics learnedabout an incident in which Mr. Rosianu wasallegedtohavedrivenunsafely insnow and iceconditions. Apparently,Mr. Rosianu was drivinginsuchconditionswithtwoflattires.

Western Logistics proceeded to terminate Mr.Rosianu’s employment. In the letter oftermination,WesternLogistics statedthat ithadpreviously cautioned Mr. Rosianu on severaloccasions about safety concerns, excessivespeedsand theneedtoadhereto its Operatingand Safety Policies. The letter concluded bystating that Western Logistics could no longertolerate such behaviour and that, “in theinterests ofpublicsafety”,WesternLogistics hadto relieve him of his responsibilities with thecompany.

In March 2014, an inspector with Employmentand Social Development Canada concludedthatWesternLogistics hadjust cause todismiss Mr.Rosianu under the Canada Labour Code. Thatdecision was later confirmed by a Refereeappointed by the Minister of Labour. Amongother things, theReferee found that therewas“sufficientevidencethattheAppellantengagedinunsafe behaviour on November 20, 2013 thatwarrantedimmediatedismissal”.

Mr.Rosianuthenfileda humanrights complaint,allegingdiscriminationonWesternLogistics’part.He alleged that he has been abused, harassedand discriminated against by his formersupervisoratWesternLogistics, invarious ways,foraperiodofclosetotwoyears.

Inparticular, Mr. Rosianu alleged that followinghis herniasurgeryinOctober2011,headvisedhissupervisor that he was not fit tounloadtrailers.Heallegedthat,despitethis advice,his supervisorrefusedtoaccommodatehis disability,continuedto“force”himtodosuchwork,andtriedtoforcehim to quit his job. He further alleged that headvisedseveral other personsin seniorpositionsatWesternLogisticsregardinghisdisability.


With respect to the incident that had triggeredhis termination, Mr. Rosianu explained that hehadintendedtofixtheflat“tire”uponarrivingathisdestination.

The Canadian Human Rights CommissionDismissestheComplaint

The CHRC investigated the matter, as per itsmandate. The CHRC decided to dismiss Mr.Rosianu’s complaint, as the investigator whoinvestigated the complaint prepared a reportrecommendingdismissal.

Theinvestigator’sreport(the“Report”)beganbynoting that Mr. Rosianu’s allegations of “abuseandharassment” didnotappear tobe linkedtohis alleged disability. Accordingly, thoseallegations wouldnotbeinvestigatedsincethoseallegationsarenotwithintheCHRC’sjurisdiction.

The Report continued that Mr. Rosianu haddeclined to be interviewed by the investigatorandtherefore couldnotbequestionedabouthisallegations. It also noted that no evidence hadbeen provided either to support the claim thatMr. Rosianu had been terminated due to hisdisability,ortoindicate that he hadany ongoingaccommodation needs related to the effects ofhis surgeryoranydisabilityfollowinghisreturntoworkinNovember2011.

Accordingly, the Report concluded that Mr.Rosianuhadnotbeen“treatedinanadverseanddifferentialmanner on thebasisof a disability”andhadnotbeenterminatedonthatground.

The Judicial Review Proceeding in the FederalCourt

Mr. Rosianu then sought to have the CHRC’sdecisionjudicially reviewedintheFederal Court.As isoftenthecase injudicial reviewproceedings(whichareakintoappeals),Mr.Rosianualleged,first, that his rights to procedural fairness hadbeen violatedby the CHRC in the course of itsinvestigationofthe complaint.Second,heallegedthattheCHRC’s decisiontodismiss his complaint

should be overturned because i t was“unreasonable”.

Ultimately, the Court made short shrift of Mr.Rosianu’s arguments, and dismissed theapplicationforjudicialreview.

The Court Dismisses Mr. Rosianu’s “ProceduralFairness”Allegations

First, the Court addressed Mr. Rosianu’s“procedural fairness” argument. Mr. Rosianusubmitted that his rights to procedural fairnesswere violated in the CHRC’s investigation.Specifically,Mr.RosianuarguedthattheCHRC:

a) improperlyadmittedhearsayevidence

b) failedtopermithimtobeinterviewed inwriting,ashehadrequested

c) failedtoprovidehimwithanopportunitytoidentifywitnessestosupporthiscomplaint

d) only interviewed witnesses identified byWesternLogistics;and

e) failed to investigate certain evidencesubmittedbyWesternLogistics

Chief JusticeCramptondisagreedwithallofMr.Rosianu’s arguments on this issue. First, HisHonour noted that theCHRC is an investigativeand screening body, and accordingly has noadjudicative role. Thus, it is not subject to thesamerulesofevidencethatapplyincourt.

Second, the Court noted that, despite Mr.Rosianu’s contentionthattheCHRCdidnotgranthis request for awritteninterview, thefactwasthat Mr. Rosianu actually did provide writtensubmissions to the CHRC before it made itsdecision. Thus, he did have an opportunity toconvey his writtenviews to theCHRC before itmadeitsdecision.

Third, the Court noted that Mr. Rosianudid infact identify eight witnesses supportive of his


complaint,andthattwoofthesewitnesses wereactuallyinterviewedbytheCHRC.

Fourth,theCourtrepeatedthatinfact,theCHRChadinterviewedtwoofMr.Rosianu’s witnesses,andthathis procedural rights werenot violatedsimply because all of the witnesses he hadidentified were not interviewed. The Courtobserved that two of the persons interviewedwere “key” and “obvious” persons to interviewbecause they were “directly involved with” Mr.Rosianu’sworkandrelatedexperience.

Finally, the Court found that Mr. Rosianu’sargumentthattheCHRChadfailedtoinvestigatecertainevidencesubmittedbyWesternLogisticswassimplyabaldallegationwithnoexplanation.

The Court Dismisses Mr. Rosianu’s SubstantiveAllegations

Mr.Rosianu’smainargument,however,was thattheCHRC didnot infactdeal withthesubstanceof his complaint, was based primarily onirrelevant factors, andwas arbitrary. Inaddition,Mr.Rosianumaintainedthatitwasunreasonablefor the investigator to have failed to interviewany medical experts and to provide him anopportunity to provide amedical certificate tosupporthiscomplaint.

Again,ChiefJusticeCramptondisagreed.

Withrespecttothe“substance ofhis complaint”,the Court noted that in his complaint, Mr.Rosianu stated, “Despite my warnings, [thesupervisor] continued to force me to unloadtrailers and not to try to accommodate mydisability”. In addition,Mr. Rosianuallegedthatthesupervisorbulliedhiminanattempttoforcehimtoquitandgavehimfewerhours ofwork,inpartbecauseofhisdisability.

The Court also noted that the investigatorexplicitly addressed these allegations in herReport. She began by noting that fiveWesternLogisticsemployeeshadstatedinwritingthatMr.Rosianuwas notrequiredtoloadorunloadtrucksaspartofhisregularduties.

Importantly,theinvestigator alsonotedthatMr.Rosianu had failed to provide any evidence tosupportthe various allegations thathehadmadeinconnectionwithhis disability. Shealsonotedthat he hadonly ever beenasked to physicallyhandlefreightonthree occasions duringhis threeyearsofemploymentwithWesternLogistics; hehadrefusedthe requestoneachoccasionanddidn o t s u f f e r a n y a d v e r s e emp l o ymen tconsequences.

The investigator also noted the variousprogressive disciplinary letters given to Mr.Rosianu with respect to speed and safetyconcerns, and that he had allegedly failed tofollowdispatchinstructionsonseveral occasions.Finally,shenotedtheincidentthathadtriggeredMr.Rosianu’stermination.

Accordingly, the Court concluded that theinvestigator’s findings(thatMr.Rosianuhadnotbeendiscriminatedagainst or firedbecauseof adisability but instead for safety concerns) werereasonable.

The Court also concluded that it was notunreasonable for the investigator not to haveinterviewed medical experts. Chief JusticeCramptonheldthat itwas in factMr. Rosario’sburdentoprovidesuchevidence totheCHRC tosupporthiscomplaint,butthathefailedtodoso.

Conclusion

Forall oftheabove reasons,theCourtdismissedMr.Rosianu’sapplicationforjudicialreview.

JamesManson



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