THE NAVIGATOR · FERNANDES HEARN LLP NEWSLETTER DECEMBER 2017 PAGE 2 FIRM AND INDUSTRY NEWS • The Legal 500 Canada 2018 “guide to outstanding lawyers naonwide” has listed Fernandes

INTHISISSUE

PAGE1CANADAINTRODUCESELDREGULATIONS

PAGE2FIRMANDINDUSTRYNEWS

PAGE3FERNANDESHEARNLLPANNUALSEMINAR

PAGE4MESA2018

PAGE11DOINGBUSINESSINCANADA-PART3

PAGE14THECARRIAGEOFMEDICALANDRECREATIONALMARIJUANAPAGE17CHANGESTOEMPLOYMENTSTANDARDSACT2000

PAGE20RAILWAY’SFREIGHTCLAIMPERMITTEDTOCONTINUEINFEDERALCOURT

PAGE24CONTEST

FERNANDES HEARN LLP NEWSLETTER DECEMBER 2017

OnDecember16th,2017TransportCanadaintroduceddra;regula>onsfor the implementa>on of electronic logging devices for hours ofservice for commercial motor vehicles (“CMVs”). Stakeholders areen>tledtoprovide TransportCanada withcommentary over the nextsixtydaysonthe dra;regula>ons publishedinthe Canada GazeOePart1Vol.151,No.50.(*1)

Theintroduc>onofthe dra;regula>ons coincides withtheU.S.federalgovernment hours of service rules coming into forceDecember 18,2017 thatmandatetheuseofanelectronic loggingdevice(“ELD”) inCMVs. Canadian motor carriers opera>ng in the United States(es>mated at 82,100) will be required to comply with the U.S.legisla>on.(*2)

AnELDis apiece of hardware that connects directly totheengine’scontrolmodule toautoma>cally recorddriver compliancewithhoursof service requirements. ELDs replicateand automate the logbookprocess. Engine informa>on on speed, mo>on changes, distancedriven,andenginehoursareautoma>callytrackedandloadedintotheELDsystem. GPS loca>on informa>on is alsotracked intheELD. Thedriversimplyneedstologin,andcommentoneachchangeofstatus.

Theexecu>vesummaryofthedra;Canadianregula>onsstates:ThecurrentCommercialVehicleDriversHoursof ServiceRegula6ons(theRegula>ons) requiredrivers of commercialbusesandtruckstoself-report their on-duty >me, off-duty >me and driving >me in apaper- based daily log, and also permit the use of an electronicrecording device (ERD). An ERD is a first-genera>on device that issubject to few technical specifica>ons. The informa>on generatedfrom these daily logs can be falsified, incomplete, duplicated ormissing altogether in an effort to avoid accountability for non-compliancewith theRegula>ons. It can be difficult and frequentlyimpossible for roadsideenforcementor themotorcarrier todetectnon-complianceby thedriversimplybyviewingthedaily logs.Non-compliance with hours of service (HOS) requirements by amotorcarrierordrivercansignificantlyincreasecrashrisk andprovidethe

CanadaIntroducesElectronicLoggingDeviceRegulaNons

THENAVIGATOR

FERNANDES HEARN LLP NEWSLETTER DECEMBER 2017 PAGE 2

FIRMANDINDUSTRYNEWS• TheLegal500Canada2018“guidetooutstanding lawyersna6onwide”haslistedFernandesHearnLLP as aleading transporta>onlawfirm.Rui Fernandes andGordonHearnarelistedas“LeadingLawyers.”

• ConferenceofFreight CounselatTucson,Arizona onJanuary7-8,2018.GordonHearnwillbeaOendingrepresen>ngthefirm.

• TransportaNon LawyersAssociaNon “ChicagoRegional”mee>ngonJanuary 19,2018 in Chicago, Illinois. Rui Fernandes will be speaking on “Cargo Claims.” RuiFernandes,GordonHearnandLouisAmato-Gauciwewill beinaOendance represen>ngthefirm.

• MarineClubAnnualDinner,January19,2018,Toronto.KimStoll,AlanCofman,JamesManson, andAndrea Fernandeswill beaOending thedinner represen>ng thefirm.


FernandesHearnLLP18thAnnualSeminar,January17th,2018,TorontoOntario,byinvitaNon.Tenta>veProgram:

Date:WednesdayJanuary17th,2018LocaNon:TheAdvocates’SocietyEducaNonCentre

250YongeStreet,Suite2700TorontoCost:$65.00-Includeslightlunchandmaterials(bydownload)RegistraNon:SharifaGreen,FernandesHearnLLP416-203-9500

Sendchequesto:FernandesHearnLLP,155UniversityAve.Suite700,ONM5H3B7

Limitedto120aOendees6.0RIBOCredits(TechnicalCategory)

TopicsandSpeakers:8:00-8:25 RegistraNon&Coffee Sponsor:RIOInsuranceBrokers

8:25-8:30 Welcome RuiFernandes

8:30-9:30 NAFTAUpdateandEffectsonTransporta>on

LouisAmato-Gauci–ModeratorStephenLaskowski–OTARuthSnowden–CIFFADanUjczo–DickinsonWright

9:30-10:30 AutonomousVehicles,VesselsandAircra;

KimStoll–ModeratorDonnaBurden-Burden,Hafner&HansenLLCMa_Arbour-HrycayConsul>ngEngineersInc.

10:30-10:45 Coffee Sponsor:AON

10:45-11:45 InsuranceOnline-RisksforBrokers,InsurersandCustomers

AlanCofman–ModeratorTracyMcLean–McLeanHallmarkInsuranceGroupInc.

11:45-12:45 Blockchain,SmartContracts,andAccountability

RuiFernandes–ModeratorSandeepKar–FleetCompleteCraigFuller-TransRisk

12:45-1:30 Lunch Sponsor:Burns&WilcoxCanada

1:30-2:30 Hurricanes,Fires,ClimateChange,RiskAnalysisandLegal/InsuranceIssues

JamesManson–ModeratorGordonRyder-BerkshireHathaway

2:30-3:15 SocialMedia:SourceofInforma>oninLi>ga>on

GordonHearn–ModeratorJuliaValladao-RobertHalfLegal

3:15-4:00 MedicalandRecrea>onalMarijuanaUseDuringEmployment

CaroleMcAfeeWallace-ModeratorOlgaJanek–AphriaInc.BarbaraButler–ButlerConsultants


INVITATIONTOMESA2018CONFERENCE

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

Where?OmniKingEdwardHotel,TorontoCanadaWhen?18-20April2018

Registra<on:hOp://www.mesa2018.com

Wednesday,April18,2018

6:00-8:00pmRegistra>on-Mezzanine,OmniKingEdwardHotel6:30-8:00pmOpeningRecep>on-PalmCourt,OmniKingEdwardHotel8:00pmDinneronyourown-orjoinusatapre-arrangedrestaurantThursday,April19,2018

8:00amtonoonRegistra>on-Mezzanine,OmniKingEdwardHotel

Time JointSession-VanityFairBallroom

9:00to10:00am Arc>cExplora>onandShipping/ThePolarCodeModerator:RuiFernandes,Partner,FernandesHearnLLPPeterPamel–Partner,BordenLadnerGervais,AldoChircop–ProfessorofLaw;CanadaResearchChair(Tier1)inMari>meLawandPolicyDalhousieUniversity

10:00to11:00am SeabedMiningModerator:JamesManson–Associate,FernandesHearnLLPWylieSpicerQC–Counsel–McInnesCooper

11:00to11:15 CoffeeBreak

11:15amto12:15pm A;ermathandImplica>onsofRecentCatastrophicHurricanesModerator:KimStoll-Partner,FernandesHearnLLPMarkE.Newcomb–CounselandVPClaims&Insurance,ZimIntegratedShippingServicesLtd.(USA)

12:15pmto1:15pmLunch-KeynoteAddress-TBA

http://www.marineenergysymposium.com

http://www.marineenergysymposium.com


MESA2018CONFERENCE

ConcurrentSessionTime SessionA-VanityFair SessionB–Kensington

1:15to2:15pm Applica>onofJurisdic>onClausesinDifferentCountriesShelleyChapelski–Partner,NortonRoseFulbrightRobertReeb–Shareholder,Marwedel,Minichello&ReebLLC(USA)FabianaSimõesMarNns–Partner,Siano&Mar>nsAdvogadosAssociados(Brazil)

LNGContractsandTransporta>onJasonHicks–BernardLLP

2:20to3:20pm ArrestofVesselsinVariousJurisdic>onsArrestofVesselsinVariousJurisdic>ons&Alterna>vesSusanDorgan–AIG(USA)JorgeLuisCordoba–Partner,Cordoba&Associates(Colombia)

NAFTAPANEL

3:25to4:25pm IssuesArisingfromProjectCargoJohnEvans–BerkshireHathawayInc.(USA)

PortSecurityandLiabilityBruceHennis,ManagingPartner,HennesCommunica>ons(USA)

6:00PMMESA2018CocktailRecep>onandDinner–Hotel


Friday,April20,2018

ConcurrentSession SessionA-VanityFair SessionB-Kensington

9:00to9:55am Limita>onofLiabilitybyStatute-Conven>onsandinContractsGeorgeArghyrakis-E.G.Arghyrakis&Co.(U.K.)StevenW.Block–FosterPepperLLC(USA)Hon.J.ElizabethHeneghan–FederalCourtofCanada

ImpactofClimateChangeonShippingandEnergyProjects

10:00to10:45am AutonomousShipsandEquipmentRogerAdamson–Futurenau>cs(U.K.)LauraHill-PerkinsCoieLLP(USA)

CyberterrorisminTransporta>onandEnergyProjectsCarolineLeprince-CanadianCyberIncidentResponseCentre–PublicSafetyCanada

10:45to11:00am Coffee Coffee

11:00to11:45am OffshoreExplora>onandExploita>on:LiabilityandCompensa>onIssuesLawrenceMallizzi–SeniorManager–O’Brien&Gere(USA)LucasLeiteMarques–Partner,KinkaidMendesViannaAdvogados(Brazil)

PipelineTechnologies,DevelopmentIssuesandLi>ga>onJoshuaJantzi,Partner,DentonsCanadaLLPKoriPatrick,TechnicalManager,Research&Development,Enbridge,EdmontonAlberta

11:55amto12:45pm EmergingIssuesinInsuranceinMarineandEnergySimonSwallow–ChiefExecu>veShipowners’ClubBrianMurphy–VicePresident,BerkleyOffshore

WindTurbineLi>ga>onSarahPowell–Partner–DaviesWardPhillips&VinebergLLP

12:45pmto2:00pmLunch–Presenta>ononArbitra>oninCanada

non-compliant operator with a compe>>veadvantage over those motor carriers thatcomplywiththeRegula>ons.

The proposed amendments are applicable toCMVsthatarefederallyregulated;that is,thosevehicles that operate extra-provincially. CMVsopera>ng solely within a province are notaffected.Itwill beuptoeachprovincetodecideif the federal regula>onswill be implementedforprovinciallyoperatedonlyvehicles.TransportCanada es>mates that there are 174,700federally regulated CMVs based in Canada. Ofthis total, thedrivers of an es>mated 146,300CMVs are required by the regula>ons tomaintaina paper-baseddaily log because theyoperate theirCMVoutsideofa 160-kmradiusoftheirhometerminal.

Theproposed regula>ons are alignedwith theU.S. requirements. Theregula>ons requireELDstobephasedinovera two-yearperiodfromthedate the regula>ons become legisla>on. Theproposed regula>ons mandate the use withintwoyears andmandatethe useofmorespecificrequirements for suppor>ng documents (e.g.

bills of lading) that must bekept by the driverandmotor carrier. The regula>ons would alsoincorporatebyreference a technical standardtoestablish minimum performance and designspecifica>onsfor ELDs. (*3) The U.S. Final Rule(giving effect to the current ELD requirement)also includes extensive technical specifica>onsfor the devices and revised requirements forsuppor>ng documents in order to simplify thevalida>onof records of duty by motor carriersand enforcement, thereby reducing theadministra>ve burden on motor carriers anddrivers.

Exemp6ons

There will be four main exemp>ons to themandatory requirement touse anELD,namely:CMVsthat areoperatedunder a permit issuedpursuant to the regula>ons by a provincial orterritorial hours of servicedirector, or under astatutory exemp>on, CMVsthat are subject torental agreements fora termof30days or less,and CMVs thatweremanufactured before theyear2000.


Thefollowingtableillustratestheexemp>onsintheU.S.andCanada:

INVESTOR NEWSLETTER ISSUE N°3 FALL 2008FERNANDES HEARN LLP NEWSLETTER DECEMBER 2017 PAGE 8

Canada U.S.A.Atruck,tractor,traileroranycombinationofthemthathasaregisteredgrossvehicleweightlessthan4,500kg

CMVhasagrossvehicleweightratingorgrosscombinationsweightratingoflessthan4,536kg.

Abusthatisdesignedandconstructedtohaveadesignatedseatingcapacityof10orlesspersons,includingthedriver

ACMVdesignedorusedtotransportlessthan8 passengers including the driver, forcompensation

ACMVdesignedorusedtotransportlessthan15passengersincludingthedriver,andisnotusedforcompensation

Driverswhousepaperrecordsofdutystatusfornotmorethan8daysoutofevery30-dayperiod

• Driverswhoarerequiredtokeeprecordsordutystatusnotmorethan8dayswithinany30-dayperiod.

CMVmanufacturedbeforethemodelyear2000

• Driversofvehiclesmanufacturedbefore2000anddriversofvehiclesmanufacturedbeforethemodelyear2000.(Asreflectedonthevehicleregistration)

Driverswhoconductdrive-away-tow-awayoperations,wherethevehiclebeingdrivenisthecommoditybeingdelivered,orthevehiclebeingtransportedisamotorhomeorarecreationvehicletrailerwithoneormoresetsofwheelsonthesurfaceoftheroadway

-Driverdrivesorisinstructedtodriveacommercialvehiclewithinaradiusof160kmofthehometerminal-thedriverreturnstothehometerminaleachdaytobeginaminimumof8consecutive8hoursofoff-dutytime-themotorcarriermaintainsaccurateandlegiblerecordsshowing,foreachday,thecyclethedriverfollowedandon-dutytimesandkeepsthoserecordsforaminimumperiodof6monthsafterthedayonwhichtheyarerecorded

-ShortHaulException:Operatewithina100/150air-mileradiusofthenormalwork-reportinglocation(100air-milesifyouareacommercialdriver’slicense(CDL)driverand150air-milesfordriverswithoutaCDL).-Startandreturntothesamelocation.-12consecutivehoursofdutytime.-Drivetimecannotexceed11hours.-Mustlogaminimumof10consecutivehoursofoff-dutytimeaftershift.

Records

Theproposedregula>onsrequiremotorcarrierstoacquire andinstall ELDs intheirCMVs thatarecompliant with the technical standard. (*4)Whatwerepreviouslyreferredtoas “dailylogs”will nowbeknownas “records ofduty status”.Drivers will be required to enter into the ELDsomeof the informa>on associated with theirrecord of duty status (e.g. on-duty >meassociatedwithfueling,loadingorunloadingtheCMV) and theELDwould automa>cally recordtheremaininginforma>on, suchas driving>me,odometer readings, and engine power up, inaccordance with the regula>ons and thetechnicalstandard.Otherprovisions will requirethemotorcarriertocreate dis>nctaccounts foreachdriverwithintheELD’sopera>ngsystemsothat their hours canbetracked independently.At theendofa day, drivers will berequiredtocer>fytheaccuracyoftheirrecordofdutystatusand the motor carrier will have to verify andretain those records. The integrity of the ELDsystem is protected through an>-tamperingprovisions.

Suppor6ngDocuments

The proposed regula>ons are intended to beharmonized with the U.S. rules for suppor>ngdocuments that are used by the motor carrierand enforcement officers to validate theaccuracy of the driver’s record of duty status.The current regula>ons require the motorcarrier to retain all documents that could berequired by enforcement officials to assesscompliance. Transport Canada hasadvisedthatthe “current provisions come with significantcosts tocollect, distribute, organizeand retainthewidevariety ofdocumentsneededtomeetthese requirements.” The amended provisionsfor suppor>ng documents would apply to allmotor carriers anddrivers, includingthose thatwouldcon>nuetomaintaina paper-baseddailylog. The new rules standardize the types ofsuppor>ng documents into five separatecategories: bills of lading, dispatch records,e xpen se r e ce i p t s , e l e c t r on i c mob i l ecommunica>onrecordsandpayrollrecords.

Theprovisions havebeenamendedtomirrortheU.S. provisions and limit the number ofsuppor>ng documents that must be collectedandretainedtoeightforeachdriver’sworkday.Thenew ruleswill also clarify the informa>onthat is required to appear on each suppor>ngdocument, such as the driver’s name andloca>on, thedate and the >me of day. If thedriver retains more than eight suppor>ngdocuments during one day, themotor carriermust retain at least eight of the documents,including those suppor>ng documents thatcontaintheearliestandlast>meindica>ons forthe day. Where thedriver records fewer thaneight suppor>ng documents in one day, thenthose suppor>ng documents must contain atleast the driver’s name and loca>on and thedate. When there are more than eightdocuments retained in one day, each of thesaved documents must include the >me towhichthedocumentpertains.

ForwardingofRecordsByDrivertoMotorCarrier

The proposed regula>ons establish separateprovisions for the forwarding by the driver tothemotor carrier of thepaper records ofdutystatus andoftherecords ofdutystatus thataregeneratedbytheELD.The requirements fortheforwarding of ELD records and accompanyingsupport documents are intended to beharmonizedwiththeU.S. rulesandrequirethatthedriver sendbothtothemotorcarrierwithin13 days a;er their crea>on. The requirementsfor paper records of duty status remain thesameasthey areunderthecurrentregula>ons.Paper recordsofduty status may be forwardedbymail,andinrecogni>onofthe extra >methatis needed for themtoreachthe motor carrier,thedrivers will con>nuetohave20days tosendtheir records of duty status and suppor>ngdocuments to the home terminal out ofwhichtheyaredispatched.

Transport Canada states that the dra;regula>ons areharmonizedtotheU.S.technicalspecifica>onsandshouldresultinCMVsneeding


only oneELDtobecompliant inbothcountries.Therearesomedifferences(*5).

“Aswell the proposed amendments mirrorthe U.S. rules for suppor>ng documents,such as fuel receipts and bills of lading,allowing for both Canadian and U.S.interna>onal motor carriers to retain theprecise number and type of documents toremain compliant with rules in bothcountries.Byaligningwiththerequirementsin the United States, the strengthened andstreamlined daily logging requirements inCanadashouldnotresultinanyimpedimentstotrade.”

Theproposed regula>ons wouldnotmirror theU.S. requirement for vendors of ELDs to self-cer>fyandregister theirdevices like intheU.S.Final Rule. Transport Canada believes thatvendors will make every effort to ensure thattheir devices are compliant, that themarketplacewill quickly iden>fy anyissues withthe devices and that the vendors will quicklyrec>fy any problems that are uncovered. “Self-cer>fica>on by the vendors would not beexpectedtoaddanyvalueintermsofensuring

compliancebythevendor.”However,inordertoassistCanada’s motorcarriers,TransportCanadais considering the establishment of a websitethat wouldincludethenamesofELDsuppliersserving the Canadian market that are alsopreparedtoaOest that theirproducts meettheprovisionsofthetechnicalstandard.

Commentary on the dra; regula>ons can bemade to Transport Canada within 60 days ofDecember16th,2017.Submissions mustbesentto:

AndrewSpoerriSeniorResearchAnalystMotorVehicleSafetyDirectorateTransportCanada330SparksStreet,9thFloorOOawa,OntarioK1A0N5

FernandesHearnLLPwillkeepyouapprisedofthefinalversionoftheregula>onsoncepassed.

RuiM.FernandesFo l l ow Ru i M . Fe rnandes on Tw iFer@RuiMFernandesandonLinkedin. SeealsohisblogathOp://transportlaw.blogspot.ca


http://transportlaw.blogspot.ca


3. DoingBusinessinCanada–Part3(*1)–BusinessStructures

Foreign persons (individuals and corpora>ons)wishing to establisha business inCanadamustdecidewhethertodosoas asole proprietorship,a partnershipofsomeform,ajointventureorasa corpora>on of some form. A decision as towhether to establish a branch office or aseparate Canadian business organiza>on alsomust be made. A wide variety of legalarrangements maybe usedtocarryonbusinessac>vity in Canada. Factors in the decision-making will include the circumstances of theinvestor,the nature ofthebusiness ac>vity,thetax implica>ons and the poten>al liabili>esrelatedtothebusinessundertaken.

Corpora6onswithShareCapital

BranchOpera6ons

A branch opera>on in Canada must beregistered in each of the provinces inwhich itcarries onbusiness. In addi>on, foreignen>>esmust complete many of the same disclosuresand filings with the federal and provincialgovernments as are required of domes>cen>>es.

Generally, iftheCanadianopera>onis expectedto incur significant losses in its early years ofopera>on, the foreignen>ty may wishtocarryonbusiness inCanada directlythroughabranch,inorder todeduct thoselosses for foreign taxpurposes, if possible. A Canadian branchstructure might also be relevant to enable abeOer matchingof theCanadiancorporate taxpaidwiththeforeigntaxcredits available inthehomejurisdic>on.

ProvincialorFederalCorporateRegistra6on?

Most provinces andterritories inCanada havetheir own corporate legisla>on. In limitedcircumstances (for example, banking) theincorpora>on must be done federally. Thefederal legisla>on is the Canada Business

Corpora6ons Act (“CBCA”). The provincial andterritorial legisla>on is similar with minordifferences. Someprovinces and territories, forexample,havenorequirementsforthedirectorsofacorpora>ontoberesidentinCanada.

Under the Federal CBCA, foreigners should beawareofthefollowing:

1. A Canadian corpora>on must havetwenty-five percent of its directors beingresidentCanadians.A resident Canadiancanbeeither a Canadian ci>zen or a Canadianpermanent resident. Each corpora>on isrequiredtohaveaminimumof onedirector.Adirectormustbeanindividualperson.Directorsneednotownanysharesinacorpora>on.2. A director of a Canadian corpora>on issubjecttoanumberofliabili>es andobliga>onsunder corporate law and under federal andprovincial legisla>on. These include liabili>esinvolving environmental, payroll, securi>es,pensionsandtax.3. Single shareholders are permiOed in aCanadian corpora>on. The iden>>es of aCanadian corpora>on’s shareholders arenot amaOerofpublicrecordanda corpora>onis notobl iged to d isc lose the names of i tsshareholders, unlessit isa public company or acompanycarryingonbusinessinQuébec.4. It is common for shareholders to enterinto a unanimous shareholders’ agreement togovern the re la>onsh ip between theshareholders, and to restrict the powers ofdirectors.Minority shareholders have statutoryrightsandremedies.5. Annual financial statements must beapproved by the shareholders at an annualmee>ngproperlycons>tuted.6. Financial statementsareonlyrequiredtobe filed with government bodies for publiccorpora>ons.7. Statutory books and records of aCanadiancorpora>onmustbekeptinCanada.

Theadvantagesofacorporatestructureinclude:1. Liability is limited to the assets of thecorpora>on. The shareholdersdo not own theproperty of thecorpora>on,andtherights and


liabili>esofthecorpora>onare notthoseoftheshareholders. Theliabilityoftheshareholdersisgenerally limitedtothe valueoftheassets theyhaveinvestedinthecorpora>ontoacquire theirshareholdings.2. Thecorpora>on is treatedas aseparateen>ty for tax purposes and there may be taxadvantagestousingacorpora>on.3. Corporate shares are more readilymarketable compared to partnership units/interestsorjointventureinterests. Partnerships

Anotherformofcarryingonbusiness inCanadais in a partnership. A partnership is not aseparate legal en>ty. The “partnership” isusually subject to a partnership agreementwhereoneormore individuals carryonbusinessincommonwitha viewtoprofit.Ondissolu>onofthepartnership,theindividual partners sharein the profits, losses and net proceeds. Thepartnershipagreement typically alsodealswithevents such as death, selling interests in thepartnership,re>rement,managementandothercommonissuestoabusiness.

InCanadaprofits andlosses flowthroughtotheindividual partnerssubject tosomerules underthe Income Tax Act. A general partnership’sdisadvantage is that eachpartner is personallyliablefor theliabili>es of the partnership.Eachpartner’s assets areexposedintheeventoftheassets being insufficient tocover the liabili>es.Limited partnerships are available in someinstances tobe used. The liability of a limitedpartnerislimitedtotheextent ofthe partner’sinvestmentinthe partnership,providedthatthepartner does not take an ac>ve role in thebusiness thatcouldaOractliabilityfora decisionorac>on.

UnlimitedLiabilityCorpora6ons

An unlimited liability company (“ULC”) can beformed under the laws of Alberta, Bri>shColumbia or Nova Sco>a. Legisla>on in eachprovince is different so an assessment of theadvantages anddisadvantages ofthelegisla>on

for thepar>cular business ac>vity is necessary.A ULC is a form of corpora>on where theshareholders of the ULC can be liable for theobliga>ons oftheULC.Inthisrespect,a ULCcanbe similar to a general partnership and isdifferent fromthecommonformofcorpora>onwherethecorpora>on’s shareholdersarenot,ingeneral, liable for the liabili>es, acts oromissionsofthecorpora>on.This uniquenatureof the shareholder liability under an ULC alsorequires that the liability be assessed andmi>gated.Someadvantages mayarise fromtaxperspec>ves. In the U.S., for example, the IRStreats theULC asa flow-through.InCanada,anULCis treatedas anyothercorpora>on.Theendresultis thata ULC is generallya hybriden>ty–a corpora>onfor Canadian tax purposes and aflow-through en>ty for U.S. tax purposes. ForU.S. businesses opera>ng inCanada,theremaybe some advantages in the right situa>on.Professionaladviceshouldbesought.

Proprietorships

The simplest form of business organiza>on, aproprietorship,exists whenanindividualperson carries on business as the soleowner withoutincorpora>ng. At law, there is no dis>nc>onbetweentheproprietorshipandtheowner;theproprietorship’s income is the owner’s incomeand the proprietorship’s liabili>es are theowner’spersonalliabili>es.Fortaxpurposes,theproprietorship is not treated as a separatetaxpayer.

JointVentures

Theterm“jointventure”does not havea preciselegal defini>on inCanada. It typically referstoany situation where two or more legal en>>esshareina commonventure. Itcanrefertojointventure corpora>ons, to partnerships ofcorpora>onsor,mostcommonly, toa structure(usually referred to as a contractual jointventure) under which separate corpora>onsown certain assets in common, in theexpecta>onthattheventuredoesnotcons>tutea partnership, at least for tax purposes. The


rela>onshipis usuallygovernedbyajointventurecontractualagreement.

CorporateandTradeNames

Registra>on of corporate and trade names isavailable federally and in the provinces andterritories.Nameregistra>on,by itself,does notcons>tute “incorpora>on” nor does it give theen>ty proprietary ownership in the name. Itsimply isa prac>cal way toprotectthename asmostoftheregistrars inthe provinceswill refusetoallowa nametoberegisteredinthatprovincethat is the same as, or substan>ally similar to,that of another exis>ng corpora>onwithin thatjurisdic>on. A name that is used in associa>onwith goods or services can be protected byregistering it as a trademark under the federalTrademarksAct. Registra>ongives theownerofthe trademark the exclusive right to use the

trademark in associa>on with its goods andservicesthroughoutCanada.

RuiM.Fernandes

Fo l l ow R u i M . F e r nande s on Tw iFe r@RuiMFernandes and onLinkedin. See alsohisblogathOp://transportlaw.blogspot.ca

Endnotes(*1) This ar>cle is part3of17partsdedicatedto a review of doing business in Canada.Subsequent ar>cles will include Securi>esRegula>on, Canadian Immigra>on, EmploymentLaws,Directors andOfficers, Interna>onal Trade,Compe>>on,Sale ofGoods,Intellectual Property,Privacy, Real Property, Environmental Laws,Taxa>on,Insolvency,Li>ga>onandADR.




3. TheCarriageofMedicalandRecreaNonalMarijuana

Withtheincreasingnumberoflicensedproducersof medical marijuana and the incominglegaliza>onof recrea>onalmarijuanainCanada,carrier companies are star>ng to ask how theycan become involved. For carriers who areinterested in transpor>ng medical andrecrea>onalmarijuana, they may wishtoobtainassistance inconduc>nga reviewoftheircurrentequipment, procedures and contracts anddetermining what changesneed tobemadetoensure compliance with exis>ng and proposedlegisla>on.

Med i c a l Ma r i j u a n a - T r a n s p o r t a 6 o nRequirementsundertheCurrentFramework

Pursuanttosec>on28of theAccesstoCannabisforMedicalPurposesRegula6ons(“ACMPR”)(*1),a licensed producer must take any necessarysteps toensurethesafekeepingofmarijuana andcertainother relatedsubstances whenshipping,delivering,ortranspor>ngtheproducts,includingwhen transpor>ng them to a port of exit fromCanada andwhentranspor>ngbetweenthe portofentryintoCanadaandtheproducer’ssite.

Addi>onally, if a licensed producer is shippingfreshordriedmarijuana, cannabis oil or relatedsubstances toanotherlicensedproducer,licenseddealer, individual client, hospital employee orhealth care professional, it must ship thesubstance in only oneshipment per order, andprepare the package in a manner that ensuresthesecurityofitscontentssuchthat:

(i) it will not open or permit the escapeof itscontentsduringhandlingandtransporta>on;(ii) it is sealed so that it cannot be openedwithoutthesealbeingbroken;(iii)itpreventstheescapeofcannabisodour;and(iv)itpreventsits contentsfrombeingiden>fiedwithoutitbeingopened.

Itmustalsouseashippingmethodthatensuresthe tracking and safekeeping of the packageduring transporta>on. The licensed producer

mustonlyshipthe producttoashippingaddressas registered by a doctor, licensed dealer oranother licensed producer. For shipments toindividuals, the quan>ty must not exceed 150gramsofdriedmarijuana.(*2)

Forsubstancesthatare imported,the importerisresponsible for ensuring that a;er it is releasedthroughcustoms, it istransporteddirectlytothesitespecifiedintheproducer’slicence.(*3)

If a licensed producer experiences a the; ofcannabis, it must report the occurrence to thepolicewithin 24 hours of becoming aware of itand provide a wriOen report to the Ministerwithin10days.(*4)

Withrespecttocannabis thatis beingdestroyed,if this is to occur at a loca>on other than thelicensedproducer’ssite,theseniororresponsibleperson in chargemust accompany thecannabistotheloca>onatwhichitisbeingdestroyed.(*5)

MedicalMarijuana–CarrierRequirements

The ACMPR does not set out spec ificrequirements with which carriersmust comply.Rather, the responsibility to ensure that theproduct is safe during transport falls on thelicensed producer. However, since the licensedproducer is handing over power andpossessionof theproduct toacarrier, liability inregards tosafekeeping is o;en shi;ed by contract to thecarrier.

Since carriers are technically in “possession” ofmarijuana whileitis beingtransported,theymustensurethattheircarriagemandateisundertakenpursuant tosec>ons 3(4)and(5)of the ACMPR,whichallowanindividual orcompany topossessmarijuana iftheyareanemployeeoragentofthelicensedproducerandareac>nginthe course oftheiremploymentortheirroleasagent.

While the ACMPR does not dictate specificrequirements forcarriers,inordertoensure thatlicensed producers are in compliance with theACMPR’s requirements for transporta>on,


carriers should consider implemen>ng thefollowingtoassistwithcompliance:

(1) Robust security measures: some producersare requiring carriers to use armoured vehiclesandrequire driverstobetrainedandlicensedtocarry weapons where large quan>>es ofmarijuana are being transported (for example,from one licensedproducer to another or fromone loca>ontoa storage loca>on).Carrierscouldalso ensure that background checks areconductedonalldrivers;

(2) Tracking: carriers should have a system inplacethatallowslicensedproducerstobeable toeasily track shipments and should considerworking with the licensed producer to find amethod that iscomplementary to their exis>ngtrackingmethods;

(3) Recordkeeping: carriers should ensure thatthey keep detailed records and logs of eachshipment, in case the licensed producer isrequired to prove to Health Canada that theproductisbeingkeptsafeandproperlytracked;

(4) Contract: carriers should ensure that theircontracts withlicensedproducersproperlyreflecttheir roleas “agents”oftheproducer, toensurethat they are not offside the rules regardingpossession.Carriers shouldalsoensurethatthesecontracts are carefully dra;ed and reviewedsothattheallotmentofriskandlevel ofliabilitythatthey have agreed to take on is properlyaddressed.

Recrea6onalMarijuana

In November 2017, the federal governmentstarted a consulta>on on their ProposedApproachtotheRegula>onofCannabis.(*6)Theconsulta>on is open un>l January 20, 2018 andwriOen submissions have been requested fromthepublic. Theconsulta>onpaper discusses theproposed framework in connec>on with thelicensing and general regula>on of authorizedpersons with respect to various ac>vi>esinvolvingcannabis under the proposedCannabisAct.

The proposed Cannabis Act would provide theMinisterofHealthwithauthoritytoissuelicencesand permits to conduct certain ac>vi>es. Theframework under the proposed regula>onshasset out the following categories of licensedac>vi>es:

-cul>va>on-processing (whichwouldauthorize“large-scalemanufacturing, packaging and labeling ofcannabis products des>ned for sale toconsumers, and the intra-industry saleof theseproducts, including to provincially/territoriallyauthorized distributors, as well as associatedac>vi>es”)- sale to the public (for medical purposes toregistered clientsand for non-medical purposestoadultsinprovinces thathavenotyetenactedaframeworkforsaleanddistribu>on)-analy>caltes>ng-import/export-research

Many of the above-noted licence categorieswouldinclude theauthority toengageinrelatedac>vi>es,suchas the possession, transporta>on,research and development, storage anddestruc>onoftheproduct.(*7)

It is unclear from the proposal as to whethercarriers couldapply for a“standardprocessing”licence to transport cannabis for licensedproducers without engaging in the otherprocessingrelatedac>vi>es.

Interms ofsecurityrequirements,thesewouldbedesignatedmainly to mi>gateagainst the riskofthe product being stolen during transit. Theproposal indicates that large quan>>es of high-valueproductswouldfacepropor>onally higherphysical security requirements. While theproposal provides an outline of site-specificrequirements, it does not elaborate on transit-relatedrequirements.Theproposal alsodiscussespersonnel security requirements, including thecrea>on and maintenance of an organiza>onalsecurity plan,a list ofkey security posi>ons androles(withvalidsecurity clearances tobeissued


by Health Canada), and iden>fica>on ofshareholders,officers anddirectorsofthelicenceholder.It is notedthatshippingrequirements formedical marijuanawith respect to security willlikelyremainsimilartotheACMRPrules.(*8)

For carriers who are interested in transpor>ngmedical and recrea>onal marijuana, werecommend obtaining assistance to conduct aself-audit of the company’s current equipment,procedures andcontractsandtodeterminewhatchanges must be made to ensure compliancewithexis>ngandproposedlegisla>on.

JaclyneReive

TwiFer:@jaclyne_reiveBlog:hFps://jaclynereive.wordpress.com

Endnotes(*1)SOR/2016-230(*2)Ibid.,s93(1).(*3)Ibid.,s99.(*4)Ibid.,s29.(*5)Ibid.,s30(3)).(*6)“ProposedApproachtotheRegula>onofCannabis”GovernmentofCanada,online:<hOps://www.canada.ca/en/health-canada/programs/consulta>on-proposed-approach-regula>on-cannabis/proposed-approach-regula>on-cannabis.html)>(*7)Ibid.(*8)Ibid.


https://jaclynereive.wordpress.com

https://jaclynereive.wordpress.com

https://www.canada.ca/en/health-canada/programs/consultation-proposed-approach-regulation-cannabis/proposed-approach-regulation-cannabis.html)








4. SignificantChangestotheOntarioEmploymentStandardsAct,2000:NowinEffectIsyourworkplaceincompliance?

Introduc6on

In our June 2017 NewsleOer, we reviewedproposed changes to the Ontario EmploymentStandardsAct,2000(“ESA”),assetoutinBill 148,theFairWorkplaces,BeFerJobsAct,2017. A;era period of consulta>on, Bill 148, with someadjustments,was passed,effec>veNovember27,2017. Somechanges are already in effect andothers areeffec>ve January1,2018,April 1,2018or January 1, 2019. This ar>cle will provide areviewofthesechanges andtheireffec>vedates,anda“to-do”listforOntarioemployers toensurecompliance.

ChangesAlreadyinEffect

Anewprovisionwasintroducedas s.5.1 oftheESA, whichprohibits an employer from trea>nganemployeeas ifthatpersonis notanemployee.Duringaninves>ga>on,inspec>onorproceeding,the employer bears the burden of proving thatanyindependentcontractorithas retainedis not,infact,anemployee,en>tledtotheprotec>onsand rights under theESA. While it hasalwaysbeen thelaw that anemployer cannot avoiditsobliga>ons under the ESA by misclassifying anemployeeas anindependentcontractor,itis nowanexpressprohibi>onundertheESA.

Parental leavehas increasedfrom35weeks to61weeks,foremployeeswhotakepregnancy leave,and from37 weeks to 63 weeks, otherwise, tomirror the recent amendments to theEmploymentInsuranceAct (“EI”),whichallowforan extended period of parental leave benefits.This amendment cameintoeffect onDecember3, 2017 and is available if the child is born, orcomes intothecustody,careandcontroloftheparent,a;erDecember3,2017.

TheCri>cally Ill ChildcareLeave is replacedwiththeCri>cal Illness Leaveandallowsanemployeewhohas beenemployedforatleast6consecu>vemonths to take an unpaid leave of absence to

provide care and support to any cri>cally ill(defined as “baseline state of health hassignificantly changedandlife is atriskasa resultofillness orinjury”)familymember. Theleaveisup to37 weeks inrespect ofa cri>cally ill childundertheage of18,and17weeks foracri>callyill adult. Thisamendmentalsocameintoeffecton December 3, 2017, to correspond with thenew EI en>tlement to Family Caregiver BenefitforAdults.

ChangesinEffectJanuary1,2018

Theminimumwageincreasesto$14anhour.

Paidvaca>onincreasesfrom2weeksto3weeks(and6%ofwages)foremployees with5ormoreyearsof service. This is not retroac>ve, astheincrease does not apply to any vaca>onen>tlementyearthatendsbefore December31,2017. Both ac>ve and inac>veemployment isincluded incalcula>ng lengthofservice – this isnotnew.

PublicHolidayPayisnowcalculatedbasedontheactual daysworkedinthe previous payperiod,asopposedtowages earnedintheprevious 4weeksdividedby20.

The Personal Emergency Leave has beenamendedandnowapplies inall workplaces, notjust those with 50 or more employees. A;erbeing employed for oneweek, an employee isallowed up to 10 days off for personal illness,injury or medical emergency, or for the death,illness, injury or medical emergency of a familymemberorforanurgentmaOerwithrespecttoafamilymember,ineachcalendaryear. The firsttwo days are paid, the remaining 8 days areunpaid. Ifanemployee has beenemployedforlessthanoneweek,theemployeeis s>ll en>tledtotheleave,but is noten>tledtopaiddays un>lemployedforoneweekorlonger.Anemployerisnolonger permiOedtorequirea cer>ficatefroma qualified health prac>>oner to support theleave,butdoes havetherighttorequirethattheemployee provide “evidence reasonable in thecircumstances” that he/she is en>tled to theleave.


Family Medical Leave is increasedfrom8weeksto up to 28 weeks, to care for certain familymembers ifaqualifiedhealthprac>>onerissues acer>ficatesta>ngthattheindividual has aseriousmedicalcondi>onwitha significantriskofdeathwithinaperiodof26weeks.

Thenew ChildDeathLeavereplaces the Crime-RelatedChildDeathorDisappearance Leave,andallowsanemployeewith6consecu>vemonthsofemployment, to take anunpaid leave of up to104weeksifachildoftheemployeedies.

The new Crime-Related Child DisappearanceLeave allows an employee with 6 consecu>vemonths of employment totakeanunpaid leaveofupto104weeks(was previously52weeks)intheeventthatthe employee’s childdisappears asaresultofacrime.

The new Domes>c or Sexual Violence Leaveallowsanemployeewith13consecu>ve weeksofemployment totakea leaveif the employee, orthe employee’s child, experiences domes>c orsexual violence or there is a threatofsame. Theleaveis toallow the employee >meoff toseekmedicalaOen>on, accessvic>mservices, obtaincounselling,retainorseeklegal assistance andtoprepare fora legal proceeding. The leave isupto10days ineachcalendaryear(takenone dayata>me)plusupto15weeksineachcalendar year(whichmust be takeninfull weeks). The first5daysofthisleavearepaid.

It is important to keep in mind that if anemployeetakes a leaveofabsence providedforundertheESA, theemployee’sbenefits con>nueduringthe leave,unlesstheemployee confirmsinwri>ng that he/she does not want them tocon>nueandisnotpayingtheemployeepor>onof thebenefits. Whileonleave,theemployee’slengthofservice con>nuestoaccrue. Finally, atthe end of an ESA leave, the employer shallreinstate the employee to the posi>on he/shemost recently held if it s>ll exists, or to acomparableposi>onifitdoesnot.

Temporary Help Agencies must provide anassignmentemployeewithoneweek’s no>ce,orpay in lieu thereof, if the assignment had anes>matedterm of three months or morewhenoffered,anditis terminatedbefore theendofitses>matedterm,unlessanotherassignment ofatleastoneweekisofferedtotheemployee.

Penal>es for acontraven>onof theESAshall bedetermined in accordance with the regula>onsanditis an>cipatedthattheregula>ons will allowforadministra>vemonetarypenal>es.

The Director of Employment Standards canpublish informa>on, including on the internet,about an employer’s contraven>on of the ESA,including the date and descrip>on of thecontraven>on, the name of any individual whowasbeenissueda penaltyandtheamountofthepenalty.

ChangesEffec6veApril1,2018

The Equal Pay for Equal Work provisions havebeenexpandedtoprovidethatcasual,part->me,temporary or seasonal employees be paid thesame as full >me employees if they performsubstan>ally the samekindofwork, inthesameestablishment, their performance requiressubstan>ally the same ski l l , effort andresponsibility, andthework is performedundersimilar working condi>ons. The ESA defines“substan>ally the same” to mean “substan>allythe same but not necessarily iden>cal”. Anemployee who believes that their rate of paydoes notcomplywiththis provisioncanrequestareview of their rate of pay from the employer,andtheemployershalleitheradjust the pay, orrespondto theemployee, inwri>ng, seyng outwhy theemployer disagreeswiththeemployee.Anemployercannotreduce therate ofpayofanemployee inorder toachievecompliance. Thisprovisiondoesnotapplywhere thedifferenceinrate of pay is due to a seniority system, meritsystem, a system that measures earnings byquan>ty or quality of produc>on, or any otherfactor,otherthansexoremploymentstatus.


ChangesEffec6veJanuary1,2019

Theminimumwageincreasesto$15anhourandis subject to anannual infla>on adjustment onOctober1stofeachyear,star>ngin2019.

A new Part VII.1 is introduced which allowsanemployeewithatleastthreemonthsofservice torequest changes to his/her schedule or workloca>on. Theemployermustdiscuss therequestwiththeemployee andno>fytheemployeeofitsdecision, withina reasonable periodof>me. Ifthechangeis granted,theemployermustprovidetheemployeewiththedateonwhichthe changewill take effectandits dura>on. Iftheemployerdenies the change, the employer must providethereasonsforthedenialtotheemployee.

AnewPart VII.2,alsoknownasthe “three-hourrule”, introducesprotec>onsfor employees withrespect to the scheduling of work. If anemployeewhoregularly works morethanthreehours ina dayaOends atworkready toworkthefull shi;, but works less than three hours, theemployershall paytheemployeeforthreehours.This does notapply ifthereasontheemployerisunabletoprovideworkfor theemployee is duetofire,lightning,powerfailure, storms orsimilarcauses beyond the employer’s control. If anemployeeis oncall andisnot requiredtowork,or is calledintowork,butworks less thanthreehours, the employer shall pay theemployeeforthreehours ofwork,unlessthe employeewas oncall for thepurposeofprovidingessen>al publicservices. The amendments also give theemployee the right to refuse an employer’srequestordemandtowork,ortobeoncall,onaday they were not scheduled toworkor be oncall,iftheemployer’s requestordemandis madelessthan96hours inadvance,unless therequestis duetoanemergency(whichis adefinedterm),toaddressa threat topublic safety,ortodeliveressen>al public services. Ifanemployer cancelstheemployee’s scheduleddayofwork,oroncallperiod, within 48 hours of the start >me, theemployermustpaythe employeeforthreehoursof work, unless the cancella>on is due to fire,lightning,powerfailure,stormsorsimilarcauses,or thenature oftheworkis weatherdependent,

and there is no work due to weather relatedreasons.

Employerto-doList

1. Conduct a workplace audit todeterminewhichemployees are en>tled to an increase inminimumwageoranaddi>onalweekofvaca>on.2. Review the work done by part->me,temporary, casual or seasonal employees andconsiderwhetherthereare anypayequity issueslikelytoarise.3. Review the terms of engagement ofexis>ng independent contractors to ensurethattheseworkers arenotmisclassified. Reviewtheformofindependentcontractoragreementbeingused.4. Review all workplace policies andemployeehandbooks toensure theycomplywiththe new leaves of absence, increased vaca>on>me,paidsickdays,schedulingrequirements.5. Review the form of employmentagreementinusetoensureitcomplieswiththeseamendments.6. Reviewcompany prac>ces for schedulingwork to determine whether thereisany riskofexposuretothe“three-hourrule”. Alsoconsidervaca>on scheduling prac>ces, to account forincreasedvaca>on>me.7. Plan for covering longer parental leavesandconsider impact of any current benefit planthatprovidesfor“toppingup”EIbenefits.

CaroleMcAfeeWallace


5.Railway’sFreightClaimPermi_edtoProceedinFederalCourt

Canadian Na6onal Railway Company v. HanjinShippingCo.Ltd.etal.2017FC198

This legal ac>oninvolvedoneofthemanypiecesofli>ga>onarisingoutoftheHanjinShippingCo.Ltd. (“Hanjin”)insolvency. The Federal CourtofCanada, has very specific limitedsubject maOerjurisdic>on, including that of Admiraltyjurisdic>on. The issue in this case was whetherthe Canadian Na>onal Railway Company (“CN”)couldclaimforpartofa debtallegedtobeowingit by Hanjin for over $20,000,000 could bebrought inFederalCourt. Thedefendant Hanjinbrought a mo>on to aOempt to dismiss thisac>onatanearlystageonaccountofthe FederalCourt not having jurisdic>onover a debt claim;however, Mr. Jus>ce Harrington dismissed themo>on thereby permiyng theac>on to stay inFederalCourt.

Facts

Hanjin operateda worldwidedoor-to-door linercontainer service and also chartered vessels,including the Hanjin Vienna, for the oceancarriage por>on. Hanjin also hired CN for theinlandcarriage por>on,whichincludedthe pick-up of inbound containers at Vancouver andPrince Rupert terminals anddelivering them toconsignees at des>na>on. Hanjin also carriedcontainers to the Vancouver and Prince Rupertterminalsforexport.

As noted,CNbroughtac>onintheFederal CourtofCanada rela>ngtothatpartofHanjin’s allegeddebt associated with the Hanjin Vienna. CNalleged that it was in a contractual rela>onshipwith Hanjin as well as with the owners of thevessels that Hanjinchartered, morepar>cularly,theowners (“Owners”)oftheHanjinVienna.TheOwners sought to dismiss the ac>on under theFederal Courts Rule 221 on two grounds beingeither: (1) the claim disclosed no reasonablecauseofac>on;or (2)the claimwas scandalous,frivolous orvexa>ous. Todoso,theOwners hadto convince the Court that it was “plain and

obvious”(*1)thattheClaimshouldnotgofurtherorwasindeedscandalous,frivolousorvexa>ous.

Mr. Jus>ce Harrington dismissed the mo>onfindingthatitwasnotplainandobvious thattheFederal Court did not have jurisdic>on toadjudicateCN claims on the merits. His Honourfound, at this stage of the early stage of theac>on, it was arguable that (1) CN enjoyed amari>me lien by virtue of s 139 of theMarineLiability Act; (2) CN’s claim was governed byCanadianMari>meLaw; and (3) CN’s claim fellwithintheCanadianTransporta6onAct,afederalstatute, and was in rela>on to a work andundertaking extending beyond the limits of asingleprovince.

The Court stated that no evidence would bepermiOedatthisstageonthemeritsoftheclaim,but allowed some affidavit evidence given thattheCourt’s jurisdic>onoverthesubjectmaOer inques>on was at issue. There would be nodefini>verulingontheCourt’s jurisdic>on. Sincethe Court found that it was not “plain andobvious” that the Court lacked jurisdic>on, theargument that the Court had nosubject maOerjurisdic>onwoulds>llbe openfor theOwners toargueattheeventualhearingonthemerits.

The Court further found that the Claim wasplainly and obviously not, in any event,scandalous, frivolous or vexa>ous. The ac>onwasnotsoclearly fu>le that itdidnothave theslightestchanceofsuccess.

TheburdenuponOwners whenbringingamo>onunder the relevant Court rule relied upon (i.e.Rule 221)was aheavy one:“Ifthere is a chancethatthe plain>ffmightsucceed,thentheplain>ffshould not be ‘driven from the judgmentseat’” (Hunt v Carey Canada Inc., [1990] 2 SCR959, [1990] SCJ No93). TheCourt, at this earlystage, was not going to weigh CN’s chances ofsuccess but only consider whether therewas areasonablecauseofac>onwith“somechance ofsuccess”andwhetheritwas “plainandobvious”thattheac>oncouldnotsucceed(*2)


TheDecision

(1)Mari>meLienundertheMarineLiabilityAct

ThecourtfoundthatCNenjoyedamari>melienpursuanttotheMarineLiabilityActS.139,whichstates:

A person carryingonbusiness inCanadahasamari>melienonaforeignship:

(a) in respect of goods, materials orservices wherever suppliedtotheforeignvessel for its opera>on or maintenance,including, without restr ic>ng thegenerality of the foregoing, stevedoringandlighterage;or

(b)outofa contractrela>ngtotherepairorequippingoftheforeignvessel.

If theclaimwerewithrespect tostevedoringorlighterage,theserviceswouldhavetohavebeenprovided at the request of the shipowner or apersonac>ngontheowner’s behalf.However,inthis case, the Court found that the servicesrendered by CN were clearly not by way ofstevedoring or lighterage. The issuehere waswhether the services allegedly rendered totheHanjinViennaweresuppliedforits opera>onandthecourtfoundthatthesupplyofcontainersfellwithinthatcategory.(*3)

TheCourtalsofoundthatHanjinandtheOwnersarguably operatedaninterna>onal liner service,whichserviceformedpart ofCanadianMari>meLawinvirtueofs92(10)oftheCons>tu>onAct.

(2)CanadianMari>meLawApplied

The Owners had submiOed that CN and theywere both sub-contractors of Hanjin and wereunrelated to each other in their roles. CNconductedland-basedac>vi>es anddidnot loadcontainers onboard nor discharge containersfromtheHanjinVienna.CNtookcontainers from,ordeliveredthemto,the terminalsatVancouverandPrinceRupert.Thesefactswereuncontested.

TheFederal Courtwasestablishedpursuanttos101 of the Cons>tu>onAct, 1867 andCanadianMari>meLawis referredtoinss 2,22,42and43of the Federal Courts Act. Essen>ally, the Actconfers jurisdic>onupontheFederal CourtinanymaOercomingwithintheclass ofnaviga>onandshipping,unlessotherwiseassignedtoadifferentCourt. Sec>on22(2) provides specific instancesoverwhichtheCourthasjurisdic>on,including:

f)any claimarising out of anagreementrela>ngtothe carriageofgoods ona shipunder a through bill of lading, or inrespectofwhichathroughbillofladingisintendedtobeissued, for lossordamageto goodsoccurring at any >me or placeduringtransit;

CN’s claim,however,was not aclaimrela>ngtoloss ordamage togoods butratherone for non-paymentoffreight.

The leading case on the content of CanadianMari>meLawis theBuenosAiresMaru,(*4).TheSupremeCourt heldthat the Federal Court hadjurisdic>onover aclaim for loss ofcargocarriedunder a port-to-port Bill of Lading from Caen,France, toMontréal where it was stolen in thehands of the terminal operator a;er dischargefromtheshipbutbeforedelivery.

The Court went on to review the nature ofCanadian Mari>me Law and jurisdic>on of theFederal Court’s jurisdic>on. Under s 22(1), thelaw to be administered is the law that theAdmiralty divisionof theExchequer Courtwouldhave administered had it had unlimitedjurisdic>on in mari>me and admiralty maOers.Sec>on22(1)confers jurisdic>onupontheCourtin any maOer coming within the class ofnaviga>on and shipping, unless otherwiseassigned.

Mr.Jus>ceHarringtonstated,

[33] The division between sea andshore is notnearly asclearas theownersof the Hanjin Vienna would like. If theywere suedunder a throughBill of Lading


for cargodamage, thisCourtwouldhavejurisdic>on over their indemnity claimagainstCNR(seeQuebecLiquorCorpvTheDark Europe, [1979] FCJ 518, [1979] 3ACWS 10, and Bou6que Jacob Inc. vPaintainer (sic)Inc.,2008FCA85,375NR160).

[34] CNR’s claim is for unpaid freightandthus doesnot fall withins 22(2)(f). Itmay, however, fall within s 22(1). Is itreasonable that CNR would have todefendacargoclaimintheFederalCourtbutwouldhavetogotoaprovincial courtto sue its shipper for freight? As Mr.Jus>ce Binnie statedin Canada(AOorneyGeneral) v TeleZone Inc., 2010 SCC 62,[2010]3SCR585,atpara18:

Thisappealisfundamentallyaboutaccesstojus6ce.Peoplewhoclaimtobeinjuredbygovernmentac6onshould havewhatever redress thelegal system permits throughp r o c e d u r e s t h a t m i n im i z eunnecessary cost and complexity.The Court’s approach should beprac6cal and pragma6c with thatobjec6veinmind.

[35] T h e o c e a n c a r r i e r i s t h esh i ppe r v i s - à - v i s CNR (Bou6queJacob,above).Oneofits obliga>ons is notto ship undeclared, dangerous goods.Anotheris topayfreight.ItseemspeculiartomethatCNRcoulddefenda claimfordamagetodangerous goods inthis Court,butcouldnotsueforunpaidfreight.

(Emphasisintheoriginal)

The Court also noted that the Bill of Ladingdefined thecarrier as not only meaning HanjinShippingCo.Ltd.butalsoits“vessels,agents andsubcontractors atallstagesofcarriage;incontextofMul>modalTransporta>on”. TheCourt foundthat it was certainly arguable that therewas, infact and in law, a contractual rela>onshipbetween CN and theOwners. The Court found

thatany interpreta>onmustbemade withinthemodern context of commerceandshipping andthe understanding of naviga>on and shippingcouldevolvefrom>meto>me.

(3) CN’s claim fell within the CanadianTransporta6on Act,a federal statute,andwasinrela>on to a work and undertaking extendingbeyondthelimits ofa single provinceinthatCN’srailway connected Bri>sh Columbia with otherprovincesandtheUnitedStates.

The Court considered whether federal lawsapplied and found that, while the CanadaTransporta6on Act, S.C. 1996, c. 10 and theRailwayTrafficLiability Regula6ons,SOR/91-488,didnotcreate the causeofac>on,itwas partofthe statutory framework that applied to theissuesandcons>tutedapplicable federal lawforthepurposesof determining jurisdic>on. It wasnoted that The Canadian Transport Act wasapplied inthethroughBill of Lading context bythe Federal Court of Appeal in Bou6que Jacob(*5) and Cami Automo6ve Inc. v WestwoodShippingLinesInc.,(*6).Further,andapartfromathroughbill of ladingwhichhadanoceanleg, itwas noted that the Federal Court had takenjurisdic>onover a claimagainsta railway whichhadnomari>meconnec>on.

Finally

The Court was not prepared to upon mo>ondismiss a claimunless it was plain andobviousthat it shouldnot gofurther or was scandalous,frivolous orvexa>ous. Itwouldappearthatsuchmo>ons (which are expensive and >meconsuming)shouldberaregiventhe heavy onusonthemovingparty.

KimE.StollFollowKimon LinkedInand at url: linkedin.com/in/kim-stoll-transporta6onlaw and on TwiFer@KimEStoll

Endnotes(*1)Rv Imperial TobaccoCanada Ltd, 2011 SCC42,[2011]3SCR46(*2)Opera6onDismantlev TheQueen, [1985]1SCR441,[1985]SCJNo22


atpp486and487(*3) Textainer Equipment Management BV vBal6c Shipping Co, 84 FTR 108, [1994] FCJ No1267(*4) ITO-Interna6onal Terminal Operators Ltd vMiida Electronics Inc, [1986] 1 SCR 752(theBuenosAiresMaru)

(*5) Bou6que Jacob Inc. v Pantainer Inc., 2008FCA85,375NR160(*6)2009FC664,aff’d2012FCA16).



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