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Cautionary Tale to Those Who Use Social Media to “Vent”

In the recent decision of Pritchard v Van Nes, 2016 BCSC 686, the Court was faced with the issue of defamation over social media. Defamation is the act of publishing a statement that has the effect of lowering or ruining the reputation of an individual in the eyes of a reasonable person. Justice Saunders for the Supreme Court of BC ultimately found the defendant liable for $67,000 for her comments, which she described as “venting”, on Facebook. The result is a cautionary tale to those who use social media platforms such as Facebook and Twitter to, as the old idiom goes, “air out their dirty laundry”.

In what may be perceived as a safe environment to discuss pressing concerns with friends, one must be ever mindful of how those discussions may effect an innocent third party. In the Pritchard case the defendant, was a real estate agent with over 2000 Facebook “friends” and a profile open to the public. Her and her neighbour, the plaintiff, had an acrimonious relationship that eventually led the defendant to incite a maelstrom of controversy on Facebook.

Justice Saunders found that her comments accused the plaintiff of being a “nutter” and a “creep” when she erroneously stated that the plaintiff was “using a system of cameras and mirrors to keep her backyard, and her children, under 24-hour surveillance”. Justice Saunders was very quick to state from the outset that the defendant’s allegations and attacks on the plaintiff’s character “were completely false and unjustified”. However, despite her baseless allegations, the defendant’s Facebook friends took this as a call to action which only aggravated the situation. Their comments snowballed out of control and, in just over 24 hours, the plaintiff’s “stellar reputation” as a respected and admired music teacher had been completely destroyed.

The Courts are certainly concerned with the ease by which the internet can assist someone in so effectively and instantaneously damaging the good reputation of an innocent person. At paragraph 119 of the Pritchard case, Justice Saunders stated as follows:

… In my view the potential in the use of internet-based social media platforms for reputations to be ruined in an instant, through publication of defamatory statements to a virtually limitless audience, ought to lead to the common law responding, incrementally, in the direction of extending protection against harm in appropriate cases. …

In recognition of the Court’s increasing duty to respond to this discouraging reality, Justice Saunders found the defendant liable for not only her own defamatory comments, but also for the comments made by her Facebook “friends”. The Court set out the following test for liability for another person’s comments:

  1. Actual knowledge of the defamatory material posted by the third party,
  2. A deliberate act that can include inaction in the face of actual knowledge, and
  3. Power and control over the defamatory content.

In a nutshell, in most conceivable situations you will have control over your Facebook page. As a result, if you incite comments from others and, after viewing them, fail to delete them within a reasonable time, you could be liable for those comments.

In today’s Digital Era, the ease, affordability and anonymity by which someone can access the internet and, more particularly, the volatile sharing capacity of social media outlets such as Facebook and Twitter raises legitimate concerns regarding defamation. While Facebook and other social media sites provide a forum to post your views to the world at large, your ability to use those forums comes with the responsibility to make sure that you do not defame innocent parties. Now, with the recent decision of Pritchard ̧ it also means that you are responsible for making sure others don’t post defamatory comments on your pages.

As a result of Pritchard, we can expect an increase in this type of litigation. We can also expect continued developments in the law of internet defamation to protect innocent victims such as Mr. Pritchard as the Court incrementally responds to the ever evolving connectivity power of social media.

 

By: Brian Vickers

Multiple Wills – Benefits, Risks and Uncertainties

Before the Wills, Estates and Succession Act (British Columbia) (“WESA”) came into force in March 2014, any executor applying for a Grant of Probate in BC had to pay probate fees of 1.4% on the value of all assets forming part of the deceased’s estate. However, Section 122 of WESA now states that the applicant for a Grant of Probate is only obligated to disclose assets passing to him or her “in his or her capacity” as the deceased’s personal representative, rather than all assets passing to any and all personal representatives. Accordingly, in theory if a will-maker appoints one executor to administer a Will governing only assets that will require a Grant of Probate, he or she is only obligated to declare and pay probate fees on the value of those specific assets passing to him or her as personal representative, whereas a second executor administering a Will governing assets that do not require a Grant of Probate (such as certain shares of a privately-held company) can simply deal with such assets without needing to apply for a Grant of Probate and therefore avoid the need to pay probate fees of 1.4% on such assets.

However, even for an estate where the value of assets not requiring a grant of Probate (such as company shares) are very high (and so possible thousands of dollars in Probate fees could be saved), there are significant complexities and potential disadvantages to using a multiple Will structure even where thousands of dollars in probate fees could be saved.

The following is a list of just a few of the potential complications that may be encountered in the course of trying to avoid probate fees through the use of multiple Wills:

  1. Two Executors – The need to draft two separate Wills with two different personal representatives in order for the multiple Will strategy to work under WESA costs fees due to the complexity of drafting two separate Wills that must work together. 

  2. Wills Variation Risk – Whereas the Will that will be submitted to Court for a Grant of Probate will be protected from a Wills Variation application under WESA by an unhappy spouse or child once 180 days from the Grant of Probate has passed without any variation application being made, the Will governing the assets not subject to probate will never be protected from a challenge no matter how much time passes, since the 180 day limitation period will never start to run without a Grant of Probate. 

  3. Uncertainty – There is also an element of uncertainty regarding how British Columbia courts will interpret the provisions of WESA which allow for multiple Will planning in BC. While the wording of WESA seems to clearly allow for such planning, until the BC Supreme Court actually considers and approves an estate structured to avoid probate fees by using multiple Wills and executors, an element of uncertainty will remain. 

  4. Graduated Rate Estate Rules – On January 1, 2016, the Income Tax Act (Canada) was amended to provide that a deceased’s estate is able to access graduated tax rates only in accordance with a series of new “Graduated Rate Estate” restrictions. However, questions have arisen regarding whether having two separate Wills with two separate personal representatives will force the two personal representatives to choose only the assets governed by one Will to be eligible for the tax benefits of being a Graduated Rate Estate. Even if Canada Revenue Agency were to take the official position that only one estate arises out of a person’s death even if there is more than one Will, it would still be necessary for the personal representatives to work together very closely to ensure that the 36 months of graduated tax rates are not lost and that all necessary joint elections are made. 


While multiple Wills planning under WESA may lead to significant probate fee savings, especially for estates that have valuable privately-held company shares, the potential pitfalls and complexities outlined above will need to be carefully considered in consultation with accountants and estate planning lawyers before proceeding.

 

By Jordan Forsyth

New Franchise Legislation In British Columbia

Until now there has been no legislation in British Columbia which specifically addresses franchise law despite the ever-increasing popularity of the franchise structure as a business model. However, on October 20, 2015, Bill 28 – Franchises Act passed Third Reading in the BC Legislature, meaning that it has been fully approved and will come into force once the government has drafted related regulations and the business community has been provided with a transition period to become familiar with the new requirements. The new Franchises Act will be largely consistent with legislation already in place in five other provinces in Canada (Alberta, Ontario, New Brunswick, P.E.I. and Manitoba all have franchise legislation modeled on the Uniform Franchises Act developed by the Uniform Law Conference of Canada).

The introduction of the Franchises Act is an important development in BC franchise law, especially given the imbalance of power that can exist between a multi-national franchisor corporation and an individual with limited resources who is faced with what is often an onerous and lengthy “franchise agreement” drafted by the franchisor’s legal team.

Some of the major new requirements that will come into effect when the Franchises Act comes into force include the following:

  • The franchisor must provide a “disclosure statement” setting out speci ed information about the franchise at least 14 days before the earlier of the signing of the agreement or the payment of any consideration by the franchisee to the franchisor;
  • The above 14-day “cooling off” period will permit prospective franchisees to withdraw any commitment to proceed with the franchise agreement within that period;
  • Perhaps the most significant aspect of the new Franchises Act will be the ability for a franchisee to rescind the franchise agreement within 60 days after receipt of a disclosure statement if the franchisor failed to disclose a material fact in the statement, as well as a right of rescission for a period of two years from the date of the franchise agreement if the disclosure statement was never actually given to the franchisee;
  • In addition, if rescission is permitted due to inadequate disclosure, the Franchises Act will impose very onerous restitution obligations pursuant to which the franchisor must:
    • return any money received from the franchisee other than payment for items like inventory, supplies and equipment;
    • purchase back any current inventory, supplies and equipment from the franchisee; and
    • compensate the franchisee for any other losses incurred in the course of setting up and running the franchise (which could be very signi cant if almost two years have passed!). Before signing a franchise agreement, whether before or after the new Franchises Act comes into force, it is critical that prospective franchisees receive professional legal advice. A franchise agreement is just like any other agreement in that both parties need to understand and agree on all aspects of the agreement.

Pay When Paid Clauses

There is a growing trend among contractors to shift the risk of the owner not paying to the subcontractor. This is done by inserting a pay when paid clause into the subcontract.

A good example of a pay when paid clause which was upheld by the Court is:

“Payments will be made not more than thirty (30) days after the submission date or ten
(10) days after the certification or when we have been paid by the owner, whichever is later.”
This clause really means: “If I do not get paid then you do not get paid”.

If that happens, the subcontractor did the work for free and will have to use its own resources to pay its trades and suppliers or go broke.

This type of clause is usually missed by the subcontractor in a rush to sign the subcontract to get the work started. It is very unfair. The subcontractor has no idea about the ability of the owner to pay the contractor. What is the incentive for the contractor to aggressively push the owner for payment?

Can the owner and contractor manipulate a “settlement” so that no money is actually paid to the contractor? Is the subcontractor able to pursue a claim under a Labour and Material Payment Bond? After all, the money is not owing. The bonding company can oppose the subcontractor’s claim for payment under the bond by using the contractor’s “pay when paid” defence.

Courts recognize that these clauses are unfair, but have struggled with not enforcing them when there is clear and precise language in the subcontract. In these circumstances, Courts have upheld the parties’ right to contract by strictly interpreting construction contracts. An unfair deal is still a deal. However, it must be obvious to the subcontractor that it is assuming the risk of not getting paid at all.

Where the clause is unclear or ambiguous the courts have interpreted these clauses in a way that still requires the contractor to pay the subcontractor at some point.

Furthermore, these Courts have inserted into the contract an obligation on the contractor to pay its subcontractor within a reasonable period of time regardless of whether or not the owner pays the contractor. That being said, you should not rely on the Courts to interpret the contract in this way. This depends on specific judge’s interpretation and can only be done in limited circumstances.

Review your contracts carefully for a pay when paid clause. Get rid of it and keep the risk of non-payment by the owner onto the contractor where it belongs.

New British Columbia Franchise Legislation


In an increasingly globalized and internet-dependent business marketplace, franchising has continued to expand as one of the world’s most popular business structures. A 2014 British Columbia Law Institute Report on the prospect of new franchise legislation in BC states that franchises are “estimated to account for 40 per cent of Canadian retail sales and to employ one in every 22 inhabitants of Canada”. No matter how large a multinational corporation may be, the actual owners of individual franchised locations of the business may for all intents and purposes be “small business” owners in terms of day-to-day operations and resources, except that their rights with respect to the operation of the business are often governed by an onerous and lengthy franchise agreement drafted by the franchisor’s legal team.

Until now there has been no legislation in British Columbia which directly addresses franchise agreements despite their ubiquity, but on October 20, 2015, Bill 28 – Franchises Act passed Third Reading in the BC Legislature, meaning that it has been fully approved and will come into force once the government has drafted related regulations and the business community has been provided with a transition period to become familiar with the new requirements. The new Franchises Act will be largely consistent with legislation already in place in five other provinces in Canada (Alberta, Ontario, New Brunswick, P.E.I. and Manitoba all have franchise legislation modeled on the Uniform Franchises Act developed by the Uniform Law Conference of Canada).

The BC Government has stated in a press release that the “the Government recognizes that franchise purchasers make a significant capital investment yet they are often at a disadvantage when relying on the information provided by the company offering the franchise due to a lack of knowledge and experience, and access to expert advice”. The release goes on to suggest that “Franchise legislation will help to rectify this imbalance and support the expansion of franchises by standardizing regulatory requirements, while at the same time encouraging investment in BC”.

Some of the major new requirements that will come into effect when the Franchises Act comes into force include the following:

  • The franchisor must provide a “disclosure statement” setting out specified information about the franchise at least 14 days before the earlier of the signing of the agreement or the payment of any consideration by the franchisee to the franchisor;
  • The above 14-day “cooling off” period will permit prospective franchisees to withdraw any commitment to proceed with the franchise agreement within that period;
  • Perhaps the most significant aspect of the new Franchises Act will be the ability for a franchisee to rescind the franchise agreement as a whole within 60 days after receipt of a disclosure statement if the franchisor failed to disclose a material fact in the statement. There is also a right of rescission for a period of two years from the date of the franchise agreement if the disclosure statement was never actually given to the franchisee;
  • In addition, if rescission is permitted due to inadequate disclosure, the Franchises Act will impose very onerous restitution obligations pursuant to which the franchisor must:
    • return any money received from the franchisee other than payment for items like inventory, supplies and equipment;
    • purchase back any current inventory, supplies and equipment from the franchisee; and
    • compensate the franchisee for any other losses incurred in the course of setting up and running the franchise (which could be very significant if almost two years have passed!).

Before signing a franchise agreement, whether before or after the new Franchises Act comes into force, it is critical that prospective franchisees receive professional legal and accounting advice, as franchise agreements tend to be presented as “set” forms without the prospect of alteration. However, a franchise agreement is just like any other agreement in that both parties need to understand and agree on all aspects of the agreement. While certain clauses may be “non-negotiable” from the franchisor’s perspective, franchisee parties often find out too late that there is a clause buried in the (frequently very lengthy) franchise agreement they would not have agreed to if the clause had been fully considered with the benefit of legal advice.


This blog entry is provided for general informational purposes only, is not legal advice, does not create a solicitor-client relationship, and should not be relied on without first obtaining detailed and specific legal counsel.