In the case of Senos v. Karcz (“Senos”), which was released by the Ontario Court of Appeal last June, the use of the Federal Child Support Guidelines came under close scrutiny and the result was that the simple Table Amount of child support was not used, given the facts that were before the Court on appeal. Senos is a reminder that for every “rule”, there usually are, in law, “exceptions” that exist, and one should not be too quick to characterize a child support obligation as a basic duty to comply with a presumptive rule.
The parents in this case were married in 1984, separated in 1991, and were divorced in 1993. At the time of the divorce, the father was obligated to pay child support of $900 per month to the mother, who retained custody of their four-year-old son.
When their son was 18, he was diagnosed with both schizophrenia and bipolar disorder. At age 20, the son began receiving income support payments under the Ontario Disability Support Plan Act, 1997 which amounted to almost $10,000 a year. The O.D.S.P. benefits were paid to the mother as trustee for the adult child and she was required to report annually on how the money was spent.
The father brought a motion before the Superior Court of Justice to change his child support payments to take into account the O.D.S.P. benefits received by the son through his mother as trustee. The father’s motion was dismissed and he appealed to the Ontario Divisional Court who also dismissed the father’s argument. The father carried on and appealed to the Ontario Court of Appeal.
The mother argued that the O.D.S.P. payments belonged to her son, whereas the father’s child support belonged to her. The father argued that his child support should be reduced dollar-for-dollar by the son’s O.D.S.P. monthly benefits.
In allowing the father’s appeal, the Court of Appeal acknowledged that the “one size fits most” approach to child support, as captured under section 3(2)(a) of the Child Support Guidelines, should be displaced by the $10,000 in annual O. D. S. P. benefits received and, therefore, the more fitting basis for child support was the “tailor made” approach as contained in section 3(2)(b) of the Guidelines. It simply did not make sense to calculate child support on the basis that the responsibility fell only on the parents when the O.D.S.P. legislation was operating to help alleviate the child’s economic burden and reflected society’s commitment to help assist those with clear disabilities. The problem with the lower Court’s ruling was characterizing that the O.D.S.P. money was for the adult child to use as he wished. To treat the O.D.S.P. benefits as discretionary spending money did not reflect the purpose of O.D.S.P. as income support.
The Court looked at how, under O.D.S.P. directives, child support paid by a parent of an adult disabled child is not automatically considered income to the child, so as to reduce the amount of the child’s O.D.S.P. benefits. It ultimately depended on whether the payments of child support went directly to the child or if the payments were used generally for the benefit of the child.
The Court remitted the matter back to the trial judge in order to get updated financial information from both parents, a child support budget, and a personal budget for the child. The budgets were to include a description of the mother’s use of the O.D.S.P. payments on the child’s behalf, her use of the support payments she received from the father, and her proposed use of any additional payments she might be seeking. This information was sought to assist in assessing the child’s “condition, means, needs, and other circumstances” as required by the Guidelines under section 3(2)(b) to determine the most appropriate amount of child support, as opposed to simply reverting to the Table Amount and the payor’s annual income.
James M. Peluch. James is a lawyer at SorbaraLaw, practising predominantly family law in the firm’s Guelph office.
19 Feb 2015
On September 26, 2014, the federal Department of Foreign Affairs, Trade, and Development released the full text of the recent free trade treaty established between Canada and the European Union (“EU”). The treaty, formally known as the Comprehensive Economic and Trade Agreement (or “CETA” for short), provides for removal or liberalization of a wide variety of trade restrictions, tariffs, and other economic measures that restricted trade and investment between Canada and the 28 member states of the EU.
CETA represents an unprecedented change in Canadian trade policy toward Europe. With a population of over 500 million people, the EU represents the world’s largest integrated economy – almost twice the size of the U.S. economy. With greatly increased access to European markets, businesses throughout Canada will be able to sell their products and services there far more easily. A favourable exchange rate between the dollar and the Euro will create strong incentives for European customers to purchase Canadian manufactured goods. Canadians will have access to not only a wider range of goods and services from Europe, but also greater access to products previously subject to strict limits on the quantity that could be imported, such as wine and cheese.
SorbaraLaw`s Municipal, Land Use and Development Group has been paying close attention to developments under CETA because of its potential impact on how governments acquire goods and services. CETA will be a “game-changer” in this area within Canada, for a variety of reasons. Under CETA, the governments of both Canada and the EU have committed themselves, the governments of their respective provinces and member states, their municipalities, and most of their broader public sector organizations (such as school boards, public utilities, hospitals, colleges and universities) to give equal access to both Canadian and European suppliers to be able to sell products and services directly to those governments, municipalities, and organizations. The new government procurement rules make up one chapter out of the 34 in the whole treaty.
One result of this increased access to government procurement contracts is the virtual elimination of “local preference” requirements. For example, prior to CETA, a municipality could lawfully prefer to purchase goods and services provided by its local suppliers over similar goods and services provided by suppliers from another municipality, province, or country. Under CETA, however, that municipality will have to give equal consideration to goods produced in an EU member-state as it does to goods produced locally.
Another major impact that CETA will have on government procurement is the treaty’s requirement for swift, low-cost dispute resolution methods for suppliers who feel their bids were wrongly rejected. Until now, only procurements made by the federal government have been subject to such easy review, thanks to the provisions of the Agreement on Internal Trade (the “AIT”) (a form of trade treaty between the federal government and the provinces) and the Canadian International Trade Tribunal, which implements and adjudicates disputes governed by the AIT. This review process has made it very easy for potential suppliers whose bids were rejected to successfully challenge the federal government over the choices it made in obtaining goods and services. CETA’s provisions may require the creation of a similar system for local government entities and broader public sector organizations. If that happens, the result could be both increased complexity in their procurement processes and increased compliance and legal costs.
Ultimately, these and all the other provisions of CETA will need to be implemented by federal and provincial legislation. SorbaraLaw lawyers are eagerly awaiting the release of the first draft of the federal and provincial legislation implementing the terms of the treaty. Drafts of the legislation have not yet been released, and their precise wording will establish whether CETA will be a boon for businesses that want to compete in the European market, a source of additional “red tape” for local government entities, or both.
Article written by
Michael Letourneau. Michael is a lawyer at SorbaraLaw. He assists clients with a broad range of important municipal and public institutional matters including governance and by-laws, procurement, technology, and operating policies and procedures.
The Supreme Court of Canada released a decision in November 2014 that could result in significant changes regarding the way that contractual relationships and business disputes are dealt with by the courts.
You may know that, while commercial parties are free to act in their own best interest, there was a general common-law principle that parties to a contract must act in good faith and carry out their contractual obligations reasonably and according to the contract’s intent or purpose.
In Bhasin v. Hrynew (“Bhasin”), our Supreme Court acknowledged the general ‘organizing principle’ or requirement of good faith in performing contractual obligations and recognized a new duty in addition to the principle of good faith: honesty. To most businesspeople, it likely seems self-evident that parties to a contract should act honestly when carrying out their respective duties. So what led the Supreme Court to enshrine this new, higher standard?
Summary of Bhasin
In the Bhasin case, Harish Bhasin (“B”), a retailer of financial savings plans, had been doing business with a wholesaler of savings plans since 1998. At one point, the wholesaler began doing business with another retailer (“C”). At one point, the wholesaler altered the wording of its standard contract, and B executed the new contract. A new renewal clause stated that either party could trigger non-renewal of the contract by giving notice before the expiry of a term. When the wholesaler asked that C audit B’s business, B refused to give C access to his confidential information. C was a competitor and was interested in merging with B’s business. The wholesaler ultimately gave notice to B that it would not be renewing B’s contract. B sued the wholesaler and C claiming that they had conspired against him and that the wholesaler had failed to act in good faith when terminating the standard contract; all of which diminished the value of B’s company. Although an appeal court ruled that there was no implied duty of good faith in a contract (the standard contract did not contain a ‘good faith’ clause), B was ultimately successful at the Supreme Court.
The key part of the Supreme Court’s ruling is as follows:
“It is appropriate to recognize a new common law duty that applies to all contracts as a manifestation of the general organizing principle of good faith: a duty of honest performance, which requires the parties to be honest with each other in relation to the performance of their contractual obligations.
Under this new general duty of honesty in contractual performance, parties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract. This does not impose a duty of loyalty or of disclosure or require a party to forego advantages flowing from the contract; it is a simple requirement not to lie or mislead the other party about one’s contractual performance.”
What Does this Mean?
As a result of the Bhasin decision, the duty of honesty in contractual performance is now part of the ‘common law’ – precedents that lower courts are bound to follow, if appropriate based on the facts of a particular case. The Bhasin decision may result in more claims based on one party acting dishonestly being brought forward, and potentially in a variety of different contexts.
As one example, imagine that your business runs out of a key component required in the production of your best-selling product. Your normal supplier does not have the component in stock and says there is a global shortage of the components. You approach two other suppliers who tell you they have the components and you choose Supplier A, who offers you the lowest price. You sign Supplier A’s standard form agreement, and he says that he will deliver the shipment in 10 days. Five days later, Supplier A calls you and says that he was mistaken and that the components in question were out of stock. You call Supplier B and find out that they now have no components in stock. Worse, the next day you learn that your competitor down the street got a big, last minute shipment of components from Supplier A, and apparently at a much higher unit cost than the price set out in your contract with Supplier A. Your production line is shut down for 2 weeks until your normal supplier is able to provide you with the components. You could consider suing Supplier A for failing to fulfill the terms of the contract even though there may be a provision in the Supplier A’s standard form of agreement which exonerates Supplier A in such circumstances. Referring to the standard outlined in Bhasin, you could argue that Supplier A breached the duties of good faith and honesty by knowingly misleading you about the status of the components.
Of course, business relationships are just one of many areas where contracts are used. It will be interesting in the months and years to come to see how the requirement of honest performance from Bhasin is applied in other areas of the law, such as wills and estates, family law (prenuptial or separation agreements) or municipal law. Depending on how far courts are willing to apply this new requirement of honesty, the ramifications from the Bhasin decision could prove to be profound.
Impacts and What You Need To Do
While the full impact of the Bhasin decision will likely take years to be determined, the old adage about honesty being the best policy applies more now than ever. Like many of us remind our teenage children: it’s less about what occurred, and a lot more about how you react. In other words, bad things happen sometimes, but did you own up and tell the truth? In the example above, if Supplier A had honoured the terms of the original contract for the components, he may have received a lower unit price on the transaction, but he would have avoided months if not years of protracted negotiations and litigation that resulted from the lie to the first customer.
If, as a wise businessperson, you operate your business in an honest and ethical manner, then the Bhasin case will likely not impact the way you do things. If, however, you ever find yourself in the unpleasant position of being harmed by a dishonest party, then you may have a cause of action against that party, regardless of whether or not the action is permitted under the terms of your contract.
Article written by
Cameron Mitchell and Nigel Smith, Law Student. Cameron is a business lawyer at SorbaraLaw, specializing in all aspects of corporate-commercial law.
19 Feb 2015
Many property owners insist on a liquidated damages clause in their construction or renovation contracts as a motivator for project completion within a specified time.
Deadlines for the completion of construction projects are good for both owners and contractors. The owner wishes to use the finished product as soon as practical so that he or she may enjoy the benefits of its investment. The contractor who allocates resources to a project wants to ensure that those resources are earning an appropriate return. A delayed project can erode profits and prevent resources from being deployed elsewhere.
Liquidated damages are defined as a genuine pre-estimate of the probable loss that would be suffered from the late completion of a contract. In order to be enforceable, liquidated damages must not be a penalty. Liquidated damages will be considered to be a penalty if they are extravagant or oppressive in relation to the conceivable loss the owner would suffer from late completion. If liquidated damages are found to be a penalty, a Court will compensate the owner based on its actual losses.
The person arguing that liquidated damages are penal bears the onus of establishing this point. Owners will not be held to a standard of perfection. As long as the estimated amount of damages is reasonable, the clause will be enforceable. Courts recognize the utility and value of a fixed pre-estimate of damages because it saves the parties the time and expense of proving actual damages. Many contractors prefer the certainty of a fixed amount of damages if it cannot complete on schedule.
Market forces help ensure that liquidated damages are appropriately set. If the damages are set too high, contractors will not bid on a project or will inflate their bids as a safeguard, which in turn will drive up the cost of projects. If liquidated damages are set too low, a contractor may have an incentive to go over schedule if the prescribed damages are less than the acceleration costs to complete on time.
Numerous events beyond the control of the contractor can interfere with the completion of the contract within the specified time. As such, a contract with a liquidated damages clause must include provisions for extending the completion date in order for the clause to be enforceable. In the eyes of a Court, it would be unfair to charge liquidated damages without a mechanism that allows for extensions of time for events beyond the control of the contractor.
A prime example of an external event causing a contract to take longer to complete, is a request for extra work from the owner. Contract provisions for the extension of time to complete are as much for the benefit of the owner as the contractor, in that they adjust the completion date and thereby preserve the owner’s right to claim liquidated damages if the project is not finished by the new completion date.
Requests to extend a contract completion date must be handled properly by an owner and its consultant. An owner will lose its right to claim liquidated damages if the owner or its consultant fails to respond to a contractor’s request for an extension within a reasonable time after receiving the request. It is essential that the contractor knows the new date for completion because, without this information, a contractor cannot adjust its schedule and accelerate work if necessary. Liquidated damages must run from a specific date. Without a specific date, they cannot be calculated and the clause will not be enforced by a Court.
The loss of the owner’s ability to charge liquidated damages does not eliminate an owner’s right to claim damages for late completion, but the test for late completion changes to proving a reasonable completion date, and damages will be measured by actual losses and not a pre-estimate of damages.
It is important to review all contracts thoroughly before signing and appreciate their terms. In contracts that provide for liquidated damages, it is important to understand the provisions dealing with requests for extensions of time to complete in the event of intervening events that interfere with timely delivery. Properly documented requests for extensions for contract time, as well as insistence that consultants deal with these requests promptly, go a long way to avoiding disputes over liquidated damages charges and the end of a contract.
Article written by
Greg Murdoch. Greg is a partner in the firm and head of the litigation group at SorbaraLaw. Greg was recently selected by his peers for inclusion in The Best Lawyers in Canada® 2015 for Litigation.
No free man shall be seized or imprisoned, or stripped of his rights or possessions, or outlawed or exiled, nor will we proceed with force against him, except by the lawful judgement of his equals or by the law of the land. To no one will we sell, to no one deny or delay, right or justice.
June of 2015 will mark the 800th anniversary of Magna Carta, the foundation of Canada’s democracy and of our system of justice. This important event is commemorated only every fiftieth year and 2015 will be the first time that Canada has participated. Thanks to early sponsorship from SorbaraLaw, the work of SorbaraLaw lawyer Art Linton, and significant support from the Canadian Government and RBC, Canada’s celebration will rank among the most significant in the world.
Magna Carta is far more than an ancient document. It was the inspiration for Canada’s own Charter of Rights and Freedoms, for the U.S. Constitution, and the constitutions and justice systems of a great many other countries. Over the centuries, it has become the universal touchstone for human rights and the rule of law. In 2015, Magna Carta Canada will invite all Canadians to explore and appreciate these remarkably enduring principles.
Magna Carta Canada has secured all necessary approvals to bring a 1225 exemplification of Magna Carta and its companion document, the Charter of the Forest, for a first-ever tour of Canadian cities. The 1225 issuance is considered to be the most constitutionally important because King Edward I re-issued it along with the Charter of the Forest in 1297, making it one of the earliest of English statutes. Remarkably, three clauses remain in English legislation today.
A major international (Canadian) museum-planning firm has been engaged to create a world-class exhibition to display the documents and illuminate the principles of Magna Carta for the greatest possible number of Canadians. The exhibit will tour Canada throughout the second half of 2015, beginning in June at the Canadian Museum of History in Ottawa, and continuing to other equally prestigious sites in Toronto, Winnipeg, and Edmonton. The tour is designed to reach as many Canadians as possible given the rigid travel, environmental and security restrictions set by the owner of the documents, Durham Cathedral.
We are advised that this tour of Canada is the first time these documents have been allowed outside Durham Cathedral in over 600 years. Our six-month travelling exhibition is the centerpiece of Canada’s 2015 commemoration of Magna Carta.
Experts in education and justice have been recruited to create age-appropriate educational programs and materials intended to reach every grade school and high school student in Canada during 2015. These materials are designed to encourage an appreciation of Magna Carta, to help students understand the importance of the rule of law in their daily lives, and to encourage greater civic engagement. Magna Carta Canada will continue to develop these materials to provide a relevant, compelling, and sustainable legacy of constitutional learning for future generations.
You can learn more about Magna Carta and Canada’s plans for a momentous celebration of the 800th Anniversary, and contribute to the celebration at www.magnacartacanada.ca.
Art Linton. Art is a lawyer at SorbaraLaw, bringing thirty years of international business leadership to the practice of law and to finding pragmatic solutions to his client’s corporate, expropriation and environmental liability concerns.
Human rights legislation prevents employers from discriminating against employees based on national or ethnic origin, race, ancestry, or other enumerated grounds. Some forget, however, that human rights laws across Canada also prohibit employers from discriminating against prospective employees or job applicants.
A recent case from the Human Rights Tribunal of Ontario acts as a reminder and serves as a lesson on how not to act towards prospective employees.
Ottawa Valley Cleaning and Restoration, a company located in Ottawa, was ordered to pay $8,000 plus interest to Mr. Malek Bouraoui, an individual who had sought employment with the company but was subsequently denied employment.
Bouraoui submitted a job application to Ottawa Valley Cleaning in June 2013. He was later contacted by a man named Jesse, who asked Bouraoui what country he was from and about his race. Bouraoui informed Jesse that he was not from Canada. Bouraoui subsequently received a text message from Jesse, telling him “try learning English you will have better luck I don’t hire foreners (sic) I keep the white man working.” Bouraoui responded back and commented that the text messages were discriminatory and if they continued, he would file a complaint against the company. Jesse continued to send text messages of a discriminatory nature and in one particular text, he wrote, “go file a complaint he will probably be a white man and he will probably laugh at you and tell you to go away.”
The adjudicator accepted the printed versions of the text messages that Bouraoui submitted as evidence. The company’s failure to respond to the allegations, file supporting documents or participate in the process was not viewed favourably by the Tribunal. In its decision, the Tribunal said, “Though the applicant’s interactions with the respondent were of a very short duration, the contents of the text messages sent to the applicant are not only discriminatory but they are egregious and abusive in nature”.
Here are some lessons to take away from this case:
- While an employer has full discretion as to who it wishes to hire, decisions for hiring and termination should not be based on discriminatory grounds.
- An employer may be found liable for discriminatory comments made by an employee or an agent of the employer. Employees who interact with prospective employees or the public must be informed about their obligations to abide by human rights laws in Ontario and Canada.
- It may be in the employer’s best interest to have a company policy on how to deal with prospective employees, especially those who are not selected for the position. A clearly and carefully worded response to unsuccessful job applicants may be advisable.
Employers would be well-advised to keep these considerations in mind when accepting job applications or discussing employment opportunities with prospective employees.
Article written by: Abira Balendran
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It is often said that there is no substitute for experience. Student internship programs allow students to gain valuable experience, develop transferable skills, and network with professionals. In return, employers can benefit by being able to select, train, and influence their potential future workforce, reduce workload, and retain fresh and diverse talent for new insight and ideas. There are undoubtedly mutual benefits. However, before setting up an internship program or hiring interns, employers must be aware of their legal obligations under Ontario’s Employment Standards Act, 2000 (“ESA”).
STUDENT INTERNS CAN BE “EMPLOYEES” FOR THE PURPOSES OF THE EMPLOYMENT STANDARDS ACT
In most cases, a person who performs work for an organization is an employee. As an employee, he or she is generally entitled to all of the rights under the ESA including the right to be paid minimum wage. There are some exceptions (discussed below), but they are very limited. Unpaid internships are illegal under Ontario law unless they fall within an exception.
PAYING STUDENT INTERNS
In recent years, there have been a number of reports that suggest that unpaid internships in Canada are on the rise.
Unpaid internships are illegal unless the internship falls under one of the three narrow exceptions listed in the ESA:
1. Internships that are part of a program approved by a secondary school board, college, or university
2. Internships that provide training for certain professions (i.e. architecture, law, public accounting, veterinary science, dentistry, optometry)
3. Internships that meet all of the following six conditions required for the intern to be considered a “trainee”:
a. The training is similar to that which is given in a vocational school;
b. The training is for the benefit of the individual;
c. The person providing the training derives little, if any, benefit from the activity of the individual while he or she is being trained;
d. The individual does not displace employees of the person providing the training;
e. The individual is not accorded a right to become an employee of the person providing the training;
f. The individual is advised that he or she will receive no remuneration for the time that he or she spends in training.
In addition, simply giving a worker the title of “intern” does not shield the employer from meeting statutory minimums outlined in the ESA.
If the internship does not fall within any of these exceptions, the intern must be paid at least the Ontario minimum wage of $10.30 per hour for students if under the age of 18 and work less than 28 hours a week or $11.00 per hour at the general rate. (Visit the Ontario Ministry of Labour’s website for more information – http://www.labour.gov.on.ca/english/es/pubs/guide/minwage.php).
CONSEQUENCES FOR NON-COMPLIANCE
A recent article by The Toronto Star (“the Star”), reported that “nearly 42 per cent of businesses with internships were found to be breaking the law in a recent inspection blitz.” According to the Star, the “proactive enforcement blitz” conducted by officials from the Ontario Ministry of Labour resulted in 37 compliance orders and $48,543.00 in fines and orders for back pay.
The Ministry of Labour has also reprimanded high profile companies such as Bell Canada, and two media outlets: The Toronto Life and The Walrus. Bell Canada cancelled its extensive unpaid internship program, known as the Professional Management Program, after former interns at the telecom company initiated a federal labour dispute, seeking wages on a retroactive basis back to 2012.
Along with financial consequences, non-compliance can affect an employer’s reputation and brand.
Employers are encouraged to assess their internship programs to ensure compliance with the ESA.
Feel free to contact our office for more information or assistance.
Article written by: Abira Balendran
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Too little attention is paid to cross-border tax traps. Even when advice is sought, the response is often incomplete or simply wrong because it is restricted to the jurisdiction—and residents of that jurisdiction—in which the particular tax advisor happens to practise. As a result, many step blindly into that space where jurisdictions intersect, specialized domestic rules apply, and treaties govern.
A situation commonly encountered by Canadians in their personal lives is the application of U.S. estate tax. While it is generally known that this tax applies to Florida vacation properties, it is not so well known that: (i) this tax applies to many other assets besides; and, (ii) a treaty exemption is often available. As a result, U.S. estate tax issues are too often missed, and time and money is wasted on unnecessary or ineffective trusts.
What Canadians should understand about U.S. estate tax is this: U.S. taxpayers are subject upon death to an estate tax on the total value of their worldwide assets. This tax applies at graduated rates ranging from 18 to 40% currently subject to an exemption for the first $5,340,000 of asset value. Non-U.S. taxpayers are also subject to this tax in respect of U.S. real estate, U.S. securities, certain U.S. debt obligations, U.S. business assets (unless held through a corporation), U.S. mutual funds, and interests in certain trusts such as RRSPs, RRIFs, RESPs, and TFSAs that hold U.S. assets. Unlike U.S. taxpayers, Canadians are entitled under U.S. law to an exemption of only $60,000 of asset value. U.S. estate tax therefore extends well beyond the Florida condo. But does this mean that all U.S. assets should be thrown into a trust?
In many cases, the Canada-U.S. tax treaty provides Canadians with a full exemption from U.S. estate tax. Specifically, the treaty provides that Canadian taxpayers are entitled to the same $5.34 million exemption as U.S. taxpayers in proportion to the percentage of worldwide assets located in the U.S. In other words, if 50% of your estate value is attributable to assets otherwise subject to U.S. estate tax then you are entitled to 50% of the $5.34 million exemption.
Since the application of U.S. estate tax is determined by both the estate value and the percentage allocation to the U.S., one cannot make generalized assumptions. These rules must be understood and the analysis performed in each case. If, having done the analysis, one concludes that U.S. estate tax does apply, then and only then should one consider placing ownership in a trust. And, here again, one must be wary since the trust must be drafted to accommodate both Canadian and U.S. tax and legal considerations. Any old trust will not do. Only a trust prepared by Canadian and U.S. lawyers in collaboration will avoid U.S. estate tax without triggering unexpected legal or tax consequences on either side of the border. There is no such thing as a one-size-fits-all trust.
When, therefore, you seek advice on any matter involving more than one jurisdiction, ensure that your advisor is well-versed in the legal and tax issues on both sides of the border as well as in the possible application of treaties. If necessary, consult counsel in the other jurisdiction—because the world is not as small as it was and the cost of ignorance will always exceed the cost of proper planning.
A recent case decided in Ontario’s Superior Court of Justice interprets a section of a homeowner’s fire insurance policy that does not appear to have previously been judicially considered.
An accidental fire destroyed the house. The homeowner was covered under a fire insurance policy which included a Guaranteed Replacement Cost on Buildings (GRC) endorsement.
The homeowner decided to buy a home in another location rather than rebuild the insured property.
The homeowner claimed as his loss the amount of the fire coverage under the GRC endorsement. The insurer said that their liability under the policy was limited to the face amount of the basic fire coverage because the homeowner did not rebuild on the same location.
Both parties agreed that the rebuilding costs on the original location would have exceeded the amount of the basic fire coverage.
After a detailed analysis, the Court concluded that the homeowner was not entitled to the higher GRC amount and his claim was limited to the basic fire coverage.
The GRC endorsement stated that the homeowner was only entitled to the higher coverage if the house was rebuilt “on the same location”.
The homeowner argued that the choice of a replacement home at a different location unnecessarily limits the additional coverage which the homeowner paid for with the GRC endorsement.
It has long been recommended that the GRC endorsement should be carefully considered by the homeowner, as it transfers the risk of calculating the rebuilding cost to the insurer for an additional premium.
This case highlights the necessity of carefully reading the fire insurance policy and reviewing your plans with your agent to avoid disappointment in the event of a loss.
This question often arises during interviews with potential medical negligence claims. Over the years, I have discussed these types of claims involving physicians, hospitals, nurses; virtually every type of medical professional. During those discussions, I often provide suggestions related to “how to speak to a doctor”.
A more detailed article on this topic and “Do I have a medical negligence claim?” can be found on our website.
Whether the reason for your doctor’s visit is a regular check-up, a discussion of test results, or a specific complaint, it is very important that you have an informed discussion with your physician, particularly when the meeting pertains to a procedure or treatment that requires your consent.
Each of us approaches our health issues differently. We do, however, share a common experience – anxiety. Do I have some unknown disease? Is my cholesterol high? Do I need to lose weight? Why does my heart race? These are very common questions, and can contribute to an anxious meeting.
Anxiety affects our hearing and memory. We think that we are listening, and absorbing what the doctor is saying. The physician assumes we are listening because we are sitting in a chair, staring at the physician’s face, and possibly even nodding.
It is highly recommended that you have a family member or close friend attend the appointment with you. This is especially important when the discussion involves a serious health concern. A companion will listen, ask questions, recall and even record what is discussed.
The appointment should be a two-way discussion. If a procedure or treatment is to occur, then you need to know the following: What? Why? How? When? Where? What are the risks? Possible consequences? Other options?
Be sure to take time and ask questions. A physician needs to know your concerns, complaints, and emotional state prior to any procedure or treatment.
Many patients believe the physician will discuss or mention anything that is important, and therefore, it is not necessary to prepare questions. A physician is medically trained to advise and inform of specific medical issues. Each physician has his or her method of conveying information. Physicians can forget or make assumptions as to what a patient needs to know. When problems arise from a procedure or treatment, it is late in the day to then ask questions that should have been asked at the beginning.
Do not assume the physician will advise you of all necessary facts. We are all human, and have good and bad days. This is your health issue, whether serious or not. Ask for a brochure or other written information. In some teaching hospitals, residents are allowed to perform or participate in the procedure. Is this your situation?
The more informed you are, the better you are prepared for any known risk to occur. Information does not guarantee a safe or risk-free procedure or treatment. Complications can arise without any fault on the part of the medical professional.
Then there are situations that do involve medical negligence. If you are involved in a medical trauma, seek help. This could be a discussion with your family doctor, specialist, family or friends. It may require legal advice. Take time to locate the appropriate lawyer. If I or my colleagues (Greg Murdoch and Cynthia Davis) can assist, please contact us.