Friday News Finds – October 30, 2020

By Thien Hoang

Welcome back to Friday Finds! This week, we will be discussing proposed limitations on COVID-19-related liability in Ontario, changes to Alberta’s construction law, a recent appeal case on duty of care, and recent developments concerning the Hudson’s Bay Company.

Last week, the Government of Ontario introduced Bill 218, also known as the Supporting Ontario’s Recovery and Municipal Elections Act, 2020. If Bill 218 is passed, no cause of action would arise against a person, directly or indirectly, as a result of an individual being exposed to or infected with COVID-19 on or after March 17, 2020, provided that (1) the person acted or made a good faith effort to act in accordance with public health guidance and government laws, and (2) the act or omission does not constitute gross negligence. Bill 218 defines a “person” as “any individual, corporation or other entity” including “the Crown in right of Ontario”. It defines a “good faith effort” as including “an honest effort, whether or not that effort is reasonable”. Despite the general carve-out for gross negligence, which requires a high degree of misconduct, the good faith effort threshold would arguably provide very broad protections to businesses and their employees, as well as the Government of Ontario, from suits related to COVID-19.

Over in Western Canada, the Minister of Service Alberta tabled Bill 37, The Builders’ Lien (Prompt Payment) Amendment Act, 2020, which proposes substantial amendments to Alberta’s Builders’ Lien Act, RSA 2000, c B-7 (Act). These amendments include, but are not limited to, (1) prohibiting “pay-when-paid” clauses in construction contracts (with respect to subcontractors), (2) allowing for dispute resolution through the creation of a new adjudication body, and (3) introducing new rules allowing holdback money on large, multi-year projects to be released without risk at pre-set times. If passed, Bill 37 could result in the first substantial amendments to the Act in over twenty years, significantly changing the construction industry landscape in Alberta. Similar legislation is being enacted across Canada, with the hope of alleviating perceived payment delays.

On October 22, 2020, the Court of Appeal for Ontario (ONCA) rendered its judgement in the case of Foodinvest Limited v. Royal Bank of Canada, 2020 ONCA 665. The appellant, Foodinvest, had contracted with the respondent, RBC, for the use of a self-service transfer facility (RBC Express). The service allowed Foodinvest to personally transfer and receive funds from other financial institutions. Between March and May 2015, Foodinvest had used RBC Express to transfer funds to accounts in a Polish bank. In April 2015, the Polish bank notified RBC that it suspected fraud in relation to two transactions. RBC did not relay this information to Foodinvest, who subsequently claimed the beneficiary of the transferred funds had misappropriated the funds and defrauded the company. Foodinvest, in turn, sued RBC for failure to pass on the information regarding the suspicious transactions, maintaining RBC was under a duty of care to do so. Dismissing the appeal, the Court agreed with the motion judge that “RBC’s duty of care related specifically to the execution of the transfers made using the service provided by RBC… That duty did not require RBC to concern itself with the specifics or bona fides of the underlying transactions giving rise to the transfers” (para 10). The ONCA maintained that the scope of the duty of care depends on the nature of the service provided and the terms of the contractual relationship governing that service.

Finally, the Hudson’s Bay Company (HBC) has filed a lawsuit at the Ontario Superior Court against Oxford Properties Group (Oxford), the landlord of several of its retail department stores, alleging a failure to operate and maintain “first class shopping centres”. Included in the suit are the owners of Square One and Yorkdale Shopping Centre. HBC claims that Oxford has refused to sufficiently adapt its properties to the realities of the pandemic and that they no longer provide a retail environment viewed as safe or attractive by the public. HBC also seeks a declaration that it does not have to pay rent until Oxford fixes the issues, as well as disgorgement of any rent paid since April of this year. On a related note, Oxford and Cominar Real Estate Investment Trust filed lawsuits at the Quebec Superior Court against HBC earlier this month, alleging that HBC has not paid rent at multiple locations across Canada since April. The documents filed to the court allege that HBC owes more than $3.5 million in rent and other related fees. As we enter the second wave of the pandemic, we will likely see similar stories of other retailers and commercial landlords engaging the courts to try to renege on their contracts and receive or defer rent payments. While it is evident that HBC is facing an ongoing financial crisis, it remains to be seen whether the Canadian retail giant will be able to weather the storm or if it will follow the likes of Le Château, which filed for bankruptcy last week.

That wraps up this week’s Friday Finds! Thanks for reading and be sure to check back next week for more business law news stories.