Law for Architects and Engineers (Quebec) PDF

***Law for Architects and Engineers*** **[01- Intro to law and the civil code of Quebec]** 1. **Concept of Law** +-----------------------------------+-----------------------------------+ | Primary rules (govern human | Secondary rules (reinforce | | conduct):...

***Law for Architects and Engineers*** **[01- Intro to law and the civil code of Quebec]** 1. **Concept of Law** +-----------------------------------+-----------------------------------+ | Primary rules (govern human | Secondary rules (reinforce | | conduct): | primary rules): | +===================================+===================================+ | Public law: relationship between | Rules of recognition | | the persons and the | | | state/administrations | Rules of modification | +-----------------------------------+-----------------------------------+ | Private law: relationships | Rules of adjudication | | between persons among each other | | | and their property | Rules of enforcement: sanctioned | | | by coercive apparatus of the | | | state | +-----------------------------------+-----------------------------------+ 2. **Sources of law and hierarchy of legal rules** Positive sources: Conventional sources: ----------------------------------------------------------- ----------------------------------------------- Legislation (statutory law) Agreements between states; treaties Courts (jurisprudence) Agreements between private persons; contracts Executive branches of gov. (regulatory and executive law) Constitution: sets legal framework for the adoption, application and modification of all laws (Constitution of Canada a body of written rules, etc) Statutory law: set of **rules created by legislatures** that govern how people should behave and interact with each other. Private agreements can modify or set aside these rules only if they don't conflict with laws that are essential **for maintaining public order**. (article 9 CCQ) Conventional law: accompanies and often displaces statutory law but only to the extent that it doesn't target **public policy rules**. Jurisprudence / Case law: when court applies statutory or conventional law Regulatory law: guidelines on how statutory law should be implemented**. Executive branches can create their own rule but those can be overridden by legislation or court decisions.** 3. **History of the C.C.Q rules** - Napoleonic Code (1804): Enacted to reflect the ideals of the French Revolution and to ensure: 1. accessibility of the laws 2. uniformity of laws in their application 3. predictability of their application and interpretation. - Civil Code of Lower Canada (1866): replaced the manorial law in place since 17^th^ century in New France, which was preserved by the effect of the "British North America Quebec Act (1774) (inspired by Napoleonic Code) 4. **Structure of the C.C.Q (1991)** Principles: humans are naturally free, rational and actions taken freely generate individual responsibility. [Persons (Books I, II and III): ] Rights of persons (legal persons) and formalities related to birth, etc., Family, Successions [Property (Book IV): ] Types of property (movable vs. immovable); Modes of acquisition of property; Ownership; Attributes of ownership [Obligations (Book V): ] General obligations (i.e. the duty of prudence and diligence); Contracts (formation, effect, interpretation); Specific contracts (sale, lease, contract of enterprise or services, contract of partnership and association, insurance, etc.) **[02- Contracts]** 1. **What is a contract?** [Contract of adhesion:] The important **clauses are imposed by one** of the parties. [Consumer contract:] A physical **person obtains property/services** for domestic/personal purposes form **someone who offers that property/service**. 2. **Formation of contracts** - Contract can be expressed verbally or in writing, unless the law requires the contract to be written. (articles 1385-1386 and 1414) - Contract is formed when and where acceptance is received by the offeror, regardless of (anything) (article 1387) - ''An offer to contract is a proposal which contains all the essential elements of the proposed contract and in which the offeror [signifies his willingness to be bound if it is accepte]d'' (article 1388) 3. **Effects of contracts** - Contracts are binding between the contracting parties (article 1434, 1590) - Parties are bound to contract by what **is explicitly written** and "incidental" (article 1434) [External clauses:] - Generally valid if referred to in the text of the contract...**business parties are presumed to have knowledge of all clauses before agreeing to be bound** by them. - Valid in a contract of adhesion or consumer only if: i) it was **expressly brought to the knowledge** of the consumer/adhering party at the **time of the contract**; ii) the consumer or the adhering party otherwise knew of it. [Illegible or incomprehensible clauses:] - Null in a consumer contract/of adhesion if consumer/adhering party **suffers injury**, **unless the other party proves that adequate explanation** of the nature and scope of the clause was provided. (article 1436) [Abusive clauses: ] - Definition: clauses that are excessively and unreasonably detrimental to the consumer or adhering party or one that changes the nature of the contract (article 1437) - An abusive clause in a consumer contract or a contract of adhesion [is null]. (article 1437) 4. **Defective contracts** - To produce legal effects the consent must be given in a "[free and enlightened] manner" (article 1398) - Consent may be "vitiated" by error, fear or lesion. (article 1399) [Error: ] (nullified contract -- **neutral blame of the parties**) - Mistakes (by one or both parties): i. The nature of the contract ii. The object of prestation (not buying the one you meant for) iii. Anything that was fundamental in determining consent (e.g.: Peerless case) - Inexcusable (ie : purchase a blue suit, given a red suit) error does not constitute a defect of consent (article 1400) (not grave enough to nullify the contract) - Economic error also does not constitute a defect of consent. - Increase in the production costs, in the context of fixed price (ie: during the duration of the contract the price of iron of the manufacturer doubles) contracts is generally not considered an error in law. - However, a fundamental change in the materials to be used, in the design of the project (or specifications of the final product), **constitute error that vitiates consent**. [Fraud: ] (the victim of the fraud can claim damages for having to nullify the contract) - The error of a party induced by the fraud of the other party: Fraud: **misrepresentation or omission** on the terms of the contract, on the contract, on the object of the prestation, etc. Fraud constitutes a defect in consent when the other party [would not have contracted] or would have contracted on different terms but for the misrepresentation or omission. (article 1401) [Fear:] - To be considered defect in consent, the fear must be serious injury (physical or other) to the person or property of a party to the contract or of 3^rd^ party. (family, friend, related corporation) -\> violence or an illegal threat (article 1402) - The threat of instituting legal proceedings to obtain the recognition and enforcement of one's legal rights **does not generate fear** that vitiates consent -\>BUT fear can be a result of the **abusive exercise of that right** (article 1403) [Remedies for a defective contract: ] - Nullity of the contract - Legal actions to recover damages caused **by fraud/fear** - Reduction of the obligation (article 1407) 5. **Contractual Liability** [1458:] Every person has a duty to **honour his contractual undertakings**. Where he fails in his duty, he is **liable for any bodily, moral or material injury** he causes to the other contracting party and is liable to reparation for the injury. (\...) »\\ [Conditions for a finding of liability ] - Breach of contractual obligations requiring then these elements: - Existence of contract - Validity of contract - Obligation binding on the defendant - Injury (Prejudice) - Causality (demonstration that the [Defendant's fault] caused the loss suffered by Plaintiff) (art.1458) [Demonstration of breach: ] - [Obligation of means:] **take reasonable efforts to** **accomplish the object** of the obligation (ie: result) -\> defence: [diligence] - [Obligation of results]: **accomplish a result**, regardless of the efforts necessary to achieve it. -\> defence: force majeure or act the co-contracting party (smth external that made it impossible to achieve the result) [Obligation of guarantee: ] \***Highest level of obligations (guarantee**): must be respected no matter what (no defense) An obligation to guarantee outcome by parties who obliged themselves or by another person. (e.g.: the obligation of the insurer to indemnify the loss of the insured) [Demonstration of injury and causality: ] - The But For Scenario: situation of the creditor had the breach not occurred - The Actual Scenario: the situation of the creditor after the breach [Remedies for breach of contract: ] - Obtain compensatory damages for the injury sustained as a result of the breach. - Forcing the **specific performance** (the buyer could ask the court to declare the title of the property even though the seller refuses to transfer the property) - Termination of the contract and the parties' obligations - Take other **measure provided by law to enforce the right to the performance of the obligation.** (e.g: the aggrieved creditor may perform the obligation itself of at the expense of the debtor) (article 1602) (article 1590) **[03- Contract of Sale (nominate contracts)]** 1. **Legal Lexicon** 2. **Contract of sale general concepts** - [Obligations of the seller: ] [Delivery (article 1717-1722):] the seller has the obligation to delivery the property sold to the buyer [Warranty of Quality (article 1726-1731);] the seller guarantees the property sold is in conformity with the destined use of the property [and the contractual terms] that govern quality. [Warranty of title (article 1723-1725):] seller guarantees that there are no rights on the property other the ones disclosed at the time of the sale. [Conventional warranty (article 1723-1733):] **the parties may derogate from, add or diminish the above-mentioned warranties.** - [Additional obligation of the manufacturer:] [Warranty of safety (article 1468-1469):] **manufacturer and distributor** guarantee the property manufactured and sold down the chain of distribution is **free from defect.** - [Obligations of the buyer:] taking the delivery and payment of the purchase. 3. **Warranty of Quality (highest level of obligation)** Protection of the interests of the utility of the property sold (safety defects) and the buyer against hidden/latent defects before the time of the purchase. → hidden defects: cannot be perceived by a [prudent and diligent buyer without the use of an expert] (considered prudent in some cases (house, cars, etc.) [Elements **attributive** of liability: ] - Existence of hidden defect (art. 1729): the defect existed at **the time of the sale**, where sold by a professional seller, and malfunctions or deteriorates in comparison with similar goods. [ ] - Latency of the defect: subjective-objective test that bears upon the buyer considering what a reasonably prudent and diligent buyer would have made. **The expertise of the buyer is a determining factor.** - Gravity of the defect - Anteriority of the defect - Ignorance of the buyer: the buyer is **presumed to ignore the defect** (the defense must be given **by the buyer**) [Scope of the warranty of quality ] - Manufacturer, suppliers, distributors, etc. (art. 1730) - Subsequent buyers (art. 1442) [Recourses of the buyer: ] - Seek a reduction of the price (art. 1728) - Seek resolution/cancellation of the sale and restitution in full of the price sold - Seek damages to compensate for any suffering as a result of the hidden defect - **Unreputable assumptions of the knowledge of the defect by the seller or the manufacturer (cannot exclude from the liability clause in this case)** [Limitation of liability for the seller:] - Direct and casual fault of the buyer context of use of the property sold - Conventional modification of the warranty provisions (NOT APPLICABLE WHERE SELLER KNEW THE DEFECT) (art.1733) - Professional sellers and manufacturers are always presumed to knew the existence of the defect **[04-Contracts of Enterprise or for Services]** 1. **Legal lexicon** - Client: receives service - Contractor: bound to perform the services 2. **Definitions and Characteristics** [Contract for services -- def:] (art. 2098) [Specificities of contract of services:] - Contract successive performance - Economic and informational imbalance between client and contractor - The contractor is **free** to choose the means necessary to perform the services and is not under the client's control (**no subordination**) (art. 2099) : - key characteristic which shields clients from **direct** responsibility for the faults of contractors toward third person (art. 1464) [Obligations of the contractor: ] - Perform the work in the best interest of the client with prudence and diligence in conformity with 'usual practice' and in with the contract and can only be relievec as a result of 'superior forces' (art. 1470) - Inform the client **at the outset of the contract (materials, method, etc.)** regarding the nature if the task which is to be performed (art.2102) [Obligations of the client:] - Pay the price, accept the works at end of contract and cooperate with the contractor in the performance of the works. (art.2110-2111) 3. **Pricing and Payment** Price of the work is fixed by the contract (art.2106) [Types of contracts: ] 1. [Estimated price contract: ] Estimated price is provided by the entrepreneur or the service provider 2. [Fixed price contract ] Client is legally bound to pay, and the contractor must provide services regardless of any changes in costs. (art. 2106-2109) 3. [Variable-price contracts ] [Modalities of payment:] - **General principle:** client is not bound to pay before the work is accepted (art. [ ] 2111) (although practically that is rarely the case for long projects-\> interval payments) - Acceptance of the works marks the end of the contract's performance. It can be with or without reservations (reservations: what ought to be finished but not necessary to the general functionality) - In theory, this means that the payment is not due until completion of the works. In practice, however, the parties agree on a payment schedule that follows the various steps of the project. This helps insulate the contractor from the weakness in the economic position that occurs towards the end of the contract. - Client is entitled to withhold amounts of final payment to satisfy the following claims: - Reservations made with regard to poor workmanship. However, the client does not have the right to make such reservation where the contractor provides the client with a sufficient "security to guarantee" the performance of the contractor's obligations to perform the work diligently.(art.2111) - \[Amounts necessary to pay the claims of workers who could otherwise have a claim against the building on which the works were performed\] - Amounts necessary to pay the claims of workers who could otherwise have a claim against the building on which the works were performed(art. 2123) 4. **Termination of contract** - The contract can be terminated unilaterally/discretionarily (**without any reason**) only by the client (art.2125) - In such case, the client must pay the portion of the price proportional to work done even if it's a fixed price contract (art.2129) - Contractor can only terminate for **serious reasons** (ie: failure of client to execute its own obligations) **but:** - Terminate only at appropriate time - Do all that immediately necessary to prevent any loss (art.2126) 5. **Immovable works (buildings, parking lot, bridge, etc.)** - The contractor and sub-contractor: they **perform** the construction works. The sub-contractor is generally hired by the contractor to work on a specific area of the project (e.g. masonry, doors and windows, roofing, electricity installation, etc.); - The engineer and the architect: they draw the **plans**, issue opinions regarding the materials, construction methods and they supervise the construction works. - The client: **selects** the land for the project, the materials, the construction methods and **instructs** the contractor and subcontractor. [Overview of the liability of intervenors in construction projects ] - General contractual liability. Client must show: - Breach of a contract or of an extra-contractual obligation (NOTE; breach of contract may be considered a civil fault i.e: the breach of obligation of prudence and diligence art.1457) (art. 1457-1458) - Causation (art.1458) - Injury (art.1458) - Legal warranty for loss and workmanship defects, client must show: - Loss of work or discovery of workmanship defect within the period covered by the warranty. - Value of the work lost (art.2118-2120) - Scenarios where liability of these actors may be triggered by warranty provisions: - Loss of work: degradation of the work that makes it **entirely** unfit fo the purpose of its built. (art. 2118-2119) - Defects resulting from poor workmanship: defects affecting use of enjoyment of the immovable, but not entirely unfit for purpose (art. 2120) - Warranty of CCQ: - Warranty against loss -- 5 years (art. 2118) - Warranty against workmanship defects -- 1 year (art.2120) - **Liability for the loss of the work**: all intervenors are presumed liable for the loss that occurs within five years of the date of completion (art 2118). To obtain finding of liability by the court, client must show: - Implication of architects, engineer, contractor and sub-contractor in the construction project - Loss of the work within five years of the completion of the work - The value of the work (art.2118) The burden of proof shifts on each intervenor to prove: - Architects and Engineers: that defect was not caused by error in their judgment, plans or supervision of the works **or** defects was caused by decision of the client regarding land, material, methods, subcontractors, etc. - Contractor: defects were caused by error in opinion or plan of the **architect or engineer, or** defects result by decision of the client (**contractors are liable for faults by sub-contractor and cannot invoke such faults to avoid liability)** - Subcontractor: the defects were caused by decision of the contractor, by error, plans of architects or decision of the client. (art.2119) Documentary evidence key to demonstrating that defects triggering loss of work were not result of their error: - The correspondence (letters, emails) with client and other intervenors showing scope of professional's mandate. - Plans and opinions themselves - The reports and minutes of worksite meetings - Architects and Engineers notes - **Liability for defects that do not cause loss of work**, client must show: - Intervenors participated in the project - Defect occurred within one year of acceptance by the client (art.2120) CCQ doesn't provide any way the architects, and others, can limit liability under this warranty. - Parties can limit their liability arising from the one-year legal warranty for workmanship defects (Massif inc. (Le) c. Clinique architecture de Québec inc., 2009 QCCA 1778) - Parties **cannot** limit or exclude their liability arising from the five-year legal warranty for the loos of the work. (Installations GMR inc. c. Pointe-Claire (Ville de) , 2015 QCCA 1521) **[05 -- Contracts of Employment]** - [2085 :] A contract of employment is a contract by **which a person, the employee,** undertakes, **for a limited time and for remuneration, to do work under the direction or control** of another person, the employer. - [Employee vs Independent Contractor] : - Level of control by employer - Ownership of the working tools - Liberty to delegate tasks - Financial risk, tax status - Terms of contract Relevance of the distinction: - Independent contractor has no statutory right to termination notice: client can terminate/resiliate contract without notice or indemnity (art.2125) - Most minimal labours standards do not apply to independent contractors [Obligation of the employee] - [2088:] The employee is bound not only to perform his work with **prudence and diligence, but also to act faithfully and honestly and not use any confidential information** he obtains in the performance or in the course of his work. These obligations continue for **a reasonable time** after the contract terminates and permanently where the information concerns the reputation and privacy of others - [Duty of Loyalty upon termination: ] Forbids: Denigrating employer in public, disloyal solicitation of clients (false representation/bad comments), acts of sabotage, systematic solicitation of other employees, theft, dissemination or use of confidential information Factors to determine what constitutes confidential information (art. 2088 CCQ) : - Employees level of knowledge of the information within the business - Level of protection of the information by the employer - Value of the info for business and the competitors - Investments made to get the info - Difficulty for public to get this info - Whether employer constantly treated the info as being confidential - Duration of employment - Level in hierarchy - Participation in management - Access to confidential information and nature there - [2089:] The parties may stipulate **in writing** and in **express terms** that, even after the termination of the contract, the employee may **neither compete** with his employer nor participate in any capacity whatsoever in an enterprise which would then compete with him. Such a stipulation shall be limited, however, as to **time, place and type of employment**, to whatever is necessary for the protection of the **legitimate interests of the employer**. The **burden of proof** that the stipulation is valid is on the employer. [Obligation of the Employer ] - [Restrictive covenant (prevent employee to work for competition for a period):] A **Court cannot reduce the scope of a restrictive convenant** to make it reasonable and enforceable (all or nothing) A **restrictive covenant is without effect** if the employer dismisses the employee **without a serious reason** (art. 2095 CCQ) (i.e: Shaffron Vancouver case): - Lay-off - Termination without cause - Constructive dismissal - **Non-competition**: - Normally reserved for managers or employees with access to confidential and strategic information or close access to clients (or suppliers) - Rarely longer than 12 months - Rarely exceeds the territory in which the employee performed his duties - Usually limited to tasks or business areas in which the employee worked, especially in the case or companies with multiple divisions - **Non- solicitation :** - Preferable to non-competition covenant for middle-ranked employee - May forbid solicitation or contact with former clients - Can last 24 months (certain circumstances) - Making general publicity to the public - **Responding** to contact by former client - Following ethical duties vis-a-vis former clients especially for **transition** - [2087:] The employer is bound not only to allow the performance of the work agreed upon and to pay the remuneration fixed, but also to **take any measures** consistent with the **nature of the work to protect the health, safety and dignity** of the employee. - [2090:] A contract of employment is **tacitly renewed for an indeterminate term** where the employee continues to **carry on his work for five days after the** expiry of the term, without objection from the employer. - [2091:] Party to a contract with an indeterminate term may terminate it by giving notice of termination to the other party. The notice of termination shall be given in **reasonable time**, considering, in particular, the nature of the employment, the special circumstances in which it is carried on and the duration of the period of work. - [2092:] The employee may **not renounce** his right to obtain compensation for any injury he suffers where insufficient notice of termination is given or where the manner of resiliation is abusive. - [Notice of termination:] - No notice of termination required when dismissal is based on a **"serious reason**" (art.2094) (i.e: serious misconduct, failure to perform usual functions -\> usually after warnings or performance plan) - Can only be given: - Indeterminate term contract - Either in the form of a working notice of monetary indemnity (severance) - Or a mix of these two elements - Paid overtime or in a lump sum - Criteria for length of reasonable notice: - **Duration of employment**, age(ability to find similar work), salary, position, context at hiring (only guidelines not followed by all) - 2-3 weeks per year of service : mid-rank employee - 1 month per year of service : high-ranked managerial employees - Never exceeds 24 months - Components of the monetary indemnity: - Employment benefits - Pension or RRSP contributions - Expected commission revenue/bonus (pro rata of past performance) - Subject to statutory tax withholdings - Duty to mitigate (by the employee): - Actively searching for a new job - Deducting any employment revenue any employment revenue gained during the notice - Not declining of a reasonable comparable position - [Constructive Dismissal (employee chooses to terminate due to substantial and unilateral modification to the current working conditions):] Test: - Refused by the employee in a reasonable time period - Does not need to be intentional or done in bad faith - Considered to be a dismissal without a "serious reason" even though the employee is the one who terminated the employment contract **[06 -- Environmental Law]** - **Constitution and Legislative Authority** **Federal jurisdiction** - Criminal law - Fisheries - Interprovincial works - Federal lands **Provincial jurisdiction** - Property and civil rights - Natural resources - Matters of local or private nature in the province **Position of Courts** Co-operative federalism: favour, where possible, the concurrent operation of statutes enacted at both levels of government, each within the valid exercise of its respective legislative jurisdiction Copyright: Sheahan LLP - **Legislative, Regulatory and Administrative Instruments** **Law (Legislative branches)** - General in nature - Adoption process long (with consultation in parliamentary commission - Laws are difficult to change **Regulations (Executive branch)** - Spell out the details of the regime - Easier but still difficult to change - Government has to publish a draft and public is entitled to comment **Administrative instruments (Executive branch)** - Clarify definitions/methodologies (more user-friendly checklists, instruct public servants on how they are supposed to apply laws and regulations. - Most are not legally binding - **Control: Before, During and After a Project** **Before : Impact assessment and Permitting from authorities at all levels** 1. **Impact assessment** - What activities: - Lists of projects - Discretionary power of Ministers to subject a project not in a list - Process - Includes extensive studies/opportunities for consultations (ie: public hearings) - Cabinet issues decree/not (Quebec) and Minister/Cabinet authorizes/not (Federal) 2. **Permitting from all authorities : Design requirements as Part of Permitting (Quebec)** - Declaration of "professionals or another competent person": Must attest that information and documents provided is complete and true Offence to provide false/misleading information **Noise** - Administrative instrument with no legal value - Acceptable noise levels established based on municipal zoning - BUT becomes legally binding when incorporated into permits **Act of respecting the environmental performance of buildings (can include things like impact biodiversity)** - Scope regulatory implementation unclear at this time - Declarations and rating system, requirements similar to what is in the ruction Code - Compliance with the Act to be controlled as part of permitting process - ban on fossil fuel heating - consideration of concerns other than greenhouse gases emissions, ie impact on biodiversity **Initiative at the Local Level: Construction Permits** - Protecting birds (The State of Canada's Birds 2024) **Exempions and Fast Track Permitting Processes** - The applicant and "professional/other competent person has responsibility to confirm that all conditions are met (saves times and expenses but comes with risks) **During : Prohibitions and regulatory norms (to complete even with permit) and reporting, notifications and fees** **After: Polluter-pays principle, whoever controls pays** - Protection des sols et réhabilitation des terrains contaminés: - Soil: in concentrations greater than D must first be treated and then disposed in special elimination sites - Groundwater: drinking water, resurgence in surface water, no standards for remediation - **Enforcement** **Environmental liability overview** +-----------------------+-----------------------+-----------------------+ | Criminal Liability | Absolute Liability | Strict Liability | | | | Prosecutor must prove | | Prosecutor must prove | Prosecutor must prove | beyond reasonable | | beyond reasonable | beyond reasonable | doubt(penal)/Ministry | | doubt: | doubt(penal)/Ministry | must prove on the | | | must prove on the | balance of | | Prohibited act | balance of | probabilities(adminis | | committed by the | probabilities(adminis | trative): | | accused(actus reus) | trative): | | | | | Prohibited act | | Mens rea(intent) of | Prohibited act | committed by the | | the accused: | committed by the | accused (actus reus) | | | accused (actus reus) | | | - Intent, knowledge | | Defence of due | | or recklessness | Defence of due | diligence available: | | | diligence NOT | | | - Negligence not | available Prosecutor | Must be proven on | | sufficient | must | the balance of | | | | probabilities | +=======================+=======================+=======================+ | Offences where | Environmental | Most | | terms such as | Violations | offences/violations | | 'wilfully,' 'with | Administrative | under environmental | | intent,' 'knowingly,' | Monetary Penalties | laws: | | or 'intentionally' | Act | | | are used | | - Discharge of | | | | deleterious | | | | substances | | | | contrary to | | | | Section 36(3) of | | | | the FA | | | | | | | | Monetary | | | | administrative | | | | penalties in | | | | Quebec(civil law | | | | standard of | | | | reasonable person) | +-----------------------+-----------------------+-----------------------+ **Deference of diligence** **"The defence will be available if the accused reasonably believed in a mistaken set of facts which, if true, would render the act or omission innocent, or [if he took all reasonable steps to avoid the particular event. (foreseeability and prevention)" ]**-R. v. Sault Ste. Marie, \[1978\] 2 S.C.R. 129 - Taking reasonable precautions necessary in the circumstances - Focus must be on what was done prior to the event and not what was done following it. **"Accidents or innocent breaches of a regulatory offence inevitably occur. An absolute liability offence is not at issue here. In assessing the efficacy of a due diligence defence, the court must guard against the correcting, but at times distorting, influences of hindsight".** --R. v. Canadian Tire Corp. Ltd., 2004 CanLII 4462 (ON SC - One cannot be held responsible for what a reasonable person could not have foreseen. [The preventive systems:] Proper system to prevent the act of committing the crime (in the specific field in which the accused operates) must be in place and steps to ensure effective operations and its relevance over time If you start a work and u no longer follow the obligations : might have stop the activity until you follow them or ask for a permission or ministry might come and judge that your interpretation of the rules. During Even if you have a permit, you always need to compile with regulatory norms and prohibitions. After Need a permit if planning on leaving Investigator : call your lawyer, because they are already trying to find evidence that you committed an offense. **[07- Civil Liability ]** **[II. Civil (X-C) Liability ]** **3 Types of civil liability:** - **Fault-based (art.1457)** - **No Fault:** - **Act/fault of another** person **(art.1459)** - **Act of a thing (art.1372)** **The conditions for a finding of extra-contractual liability based on fault:** - A **[fault.]** - An **[injury]** to the victim. Injuries can be bodily, moral or material. Material injuries relate to damage to property or economic interest (e.g. physical damage to tangible property, loss of profits, etc.) - A **[causal link]** between the fault and the injury. The victim must **show that the fault caused the injury** to obtain compensation. This requires a demonstration that, but for the fault, the victim would not have suffered the injury. **Article 1457 C.C.Q** **Fault:** The fault is the failure to abide by the general duty of prudence and diligence binding upon all: **"Every person has a duty to abide by the rules of conduct that lie upon him, according to the circumstances, usage or law (\...)\" Article 1457 C.C.Q** **Rules of conduct " according to the circumstances, usage or law":** - **Elemental and unwritten rules of safety:** eg ; not to run in narrow and crowded places. - **Professional obligations** (Code of ethics of architects, engineers, accountants) - **Industry norms and standards :** (E.g: industry norms and standards with respect to the quality of workmanship) - **Regulations** (e.g: municipal by-laws, etc) - **Contracts :** A breach of contract can give rise to the extra-contractual liability of one of the contracting parties towards a thirds party (stranger to the contract) if the failure to perform the contract leads to a prejudice the third party (e.g.: extra-contractual liability of city crews towards citizens for having failed to perform a contract for the de-icing and snow cleaning of roads) - **Statutory provisions:** (e.g: criminal law) Note: if your conduct was compelled (forced by fear or other) Art. 1457 you could be considered non-liable. Note: civil fault does not lead to civil liability until it is proven it has caused injury. - Conduct in a breach of the applicable norms, standards or regulations will almost always result in a fault BUT on the other hand conduct in strict conformity with laws, norms and regulations **will not always** exonerate against a finding of fault. (ie: driving at speed limit doesn't mean he had the conduct necessary to the situation) - Members of professional orders have **-- among others** -- a duty of counsel and diligence (i.e. to use their professional judgment to advise their client in accordance with the circumstances of the case). **Code of Ethics of Engineers:** \"**2.01**. In all aspects of his work, the engineer must respect his obligations towards man and and **take into account the consequences of the performance of his work on the environment and on the life, health and property of every person.(\...)** **3.03.01.** An engineer must show reasonable availability and diligence in the practice of his profession. **3.03.02.** In addition to opinion and counsel, the engineer must furnish his client with any explanations necessary to the understanding and appreciation of the services he is providing to him" - The obligation of prudence and diligence is always **an obligation of means** (i.e. best efforts) **not of results**. - The duty does not impose an absolute obligation to avoid causing injury to another -- but rather only to take the appropriate precautions (\"according to the circumstances, the usage and the law\") - Typical example: misdiagnosis. Not all cases of misdiagnosis will result in a finding of fault. **The types of faults:** - Simple fault -- simple negligence - Gross fault (gross negligence); - Intentional fault **Consequences of this characterization**: - Punitive damages (damages that have no compensatory purpose and are meant simply to sanction or deter conduct) are attributable in case of intentional fault that results in a violation of a fundamental right (Art 49 QCRF) - Parties **[cannot limit their liability for gross or intentional faults]** that cause material harm. (Art. 1474) **Two regimes of extracontractual liability:** - Fault-based liability (article 1457 C.C.Q.); - **No fault** liability: a. Liability for the **acts or faults of another** (articles 1459 and following C.C.Q.); b. Liability for **the acts of things** (articles 1465 and following C.C.Q.) - In the context of the second regime, a demonstration of fault is not required to generate liability. However, a demonstration that the defendant was **not** at fault is generally always a defence **Extracontractual liability for acts of another: (no fault liability)** - Responsibility of the person having **[parental]** **authority** for the minor under her/his authority: c. Conditions for engaging the parent's liability: Parental authority; The fault of the minor; Injury to the victim; Causal link between the injury to the victim and the fault of the minor. d. Exoneration of the parent upon proving that the parent committed no faults with regard to the custody, supervision or education of the minor. (Art. 1459) - Responsibility of the principal for the acts of their agent (employer for the acts of her/his employee): e. Conditions for engaging the [employer's] liability: **Agency relation** -- one must show that the employee was under the supervision of the employer (using the employer's means of production and accomplishing works pursuant to the design of the employer). That the fault of the employee was committed **in the execution of their functions;** Fault of the employee; Injury to the victim; Causal link **Extracontractual liability for the acts of a thing (no fault liability):** - The general rule: person who have custody (control and supervision) over a thing are responsible for injury suffered by another person as a result of the « autonomous act » of the thing, **[unless they prove that they are not at fault;] Article 1465 C.C.Q** f. Examples i. Owner of an animal responsible for the injury that the animal causes; **Article 1466 C.C.Q.** ii. The owner of an immovable is responsible to the injury caused to others by the ruin of the immovable. **Article 1467 C.C.Q** - Manufacturers and distributors are responsible towards third persons (i.e. consumers) for the **safety defects** of the thing manufactured and distributed; **Articles 1468 and 1469 C.C.Q.** g. **[Safety defect]**: failure of a thing to afford the safety that \"users are normally entitled to expect,\" including a failure by the manufacturer or distributor to warn of the risks and dangers inherent in the thing **[III. Limitation of Liability ]** - **Force majeure** (superior force) -- unforeseeable and irresistible events. Art. 1470 - For manufacturers and distributors: **knowledge by the users of the safety defect** and the state of the science. Art. 1472 - **Contractual clauses limiting liability :** h. Void and **inapplicable** for liability generated by **intentional or gross faults.** i. Always void and **inapplicable** for liability **for moral or bodily injury. Article 1474 C.C.Q.** **[IV. Extinctive (extinguished) Prescription]** - [Extensive prescription]: extinction (annulment) of a right and therefore the exoneration of the debtor because of the non-use (non-enforcement) of that right for a [certain period]. **Art. 2921 C.C.Q** - Actions to enforce a personal right (civil action) or a moveable real right (a right on moveable property) are prescribed after three years. **Starting point: first manifestation of the injury Art. 2925, 2926 C.C.Q** - Actions for defamation (prejudice to reputation) are prescribed **[by one year]**. **Starting point: knowledge of defamation**. **Art. 2929 C.C.Q** - Prescription is [suspended] (it does not run) against persons who are unable institute proceedings (as a result of fear, lack of knowledge, etc. or eg: invalidated by hospitalization or incapacity to act from bad advice) **Art. 2892 C.C.Q** - Prescription is interrupted (stops running) on the day of the filing of the judicial application (i.e. the proceedings, the lawsuit) **Art. 2892 C.C.Q** **[06- Property (Right to ownership)]** 1. **[Legal lexicon ]** **[Property :]** Things (physical or not) over which a person has a right and subject to use, enjoyment and disposition of persons. **[Real rights :]** A right to property **follows** (ie: hypothecs) the property and can be exercised against anyone. **[Personal right:]** Exercisable by one person to another who have contractual obligation or statutory duties. **[Ownership:]** Legal right to use, enjoy and dispose of property to the **exclusion of all other persons. (being the owner and able to exercise legal right)** **[Possession (without being the owner):]** State of fact that can generate legal effects. The exercise of the attributes of ownership with the intention of acting as the owner of the property. (i.e: claiming the ownership of a phone that is not theirs for a period) **[Detention :]** Describes the exercise of the attributes of property without more. [**Corporeal**:] property that can be **seen and handled** (i.e. material things). Examples: land, buildings, cars, tools, consumer products, etc. **[Incorporeal:]** typically rights to which the law grants the status of property -- copyright, trademark, patent (Article 899) 2. **[Movable property ]** - **Movable:** Any property which can be physically moved as well as any other property that the C.C.Q. has not qualified as immovable; Articles 905 and 907 of the C.C.Q. - **Immovable:** Land (including the sub-soil), all property that is built upon the land (i.e. buildings and other structures such as walls, fences, sheds, etc.), as well as all movable property that is incorporated to the immovable property or permanently attached to it and that serves its utility; [Exception]: property used to operate a business. Articles 900, 901, 902 and 903 of the C.C. 3. **[Ownership and possession ]** **[Ownership:]** - right to use, enjoy (the fruits of) and dispose to the exclusion of all others and within limits of law. (Article 947) - Grants its holder the right to institute legal proceedings to have that right recognized. (Article 912) - [Limits to ownership rights:] - Expropriation: compelled transfer to the state only legal for public utility and in return for a "just and prior indemnity" (Article 952) - Law of nuisance: an owner of immovable property must accept ("suffer") normal neighbourhood annoyances that are not beyond the limit of tolerance that neighbours owe each other according to the nature or location of their land/local custom. (Article 976) (According to this article, creates no-fault liability which **entitles** person who suffered to seek **compensation against owner** where source of annoyance is located **even** if it is proved that the owner acted as a prudent and diligent one) **[07- Hypothecs and Prior Claims ]** **[Legal Lexicon: ]** **[Pledge:]** Transfer of property to guarantee the performance of one's obligations (e.g: Loan) **[Real Right:]** Right to property that is enforceable against all and confers its beneficiary right to follow the property into whosever hands it may be. 1. **[Basic Principles ]** **[(Common Pledge)]** **[(Equitable Distribution)]** 2. **[Prior claims (exist as of law even without formalities like publication)]** **Article 2650:** A claim to which the law attaches the right of the creditor to be **preferred** over the other creditors, even the hypothecary creditors, is a **prior claim**. Prior claims (isn't a real right that follow the property) is a claim **against the person.** **[Prior Claim vs. Hypothec]:** - Generally, a prior claim does not allow the creditor to follow the property into the hands of a third party subsequent acquirer (i.e. subsequent to sale). - A prior claim is not a real right. - **The only exception to this rule is the prior claim of a municipality for school or property taxes. (Art. 2654.1 C.C.Q)** **Article 2651**: The following are the prior claims and, notwithstanding any agreement to the contrary, they are in all cases collocated in the [**order here set out**:] Note: it is important to establish the prior claims written in a contract, to establish to all creditors the order of the "payments" and foresee how much is to be paid. 1. **legal costs and all expenses incurred** in the common interest; - seizures, prior notices, etc. 2. the claim of a **vendor** who has not been paid the price of a movable sold to a natural person who does not operate an enterprise; - ex: a consumer 3. the claims of persons having the right to retain **movable property**, provided that the right subsists; e.g. Unpaid garage mechanic 4. **claims of the Stat**e for amounts due under fiscal laws; 5. claims of **municipalities and school boards** for property taxes on taxable immovables as well as claims of municipalities, specially provided for by laws applicable to them, for taxes other than property taxes on immovables and movables in respect of which the taxes are due. **2654.1** Prior Claims of municipalities and school boards for property taxes constitute a real right. They confer on the holder of the claim to follow the taxable property into whosever hands it may be. **2655.** Prior claims may be set up against **other creditors**, or against all **third persons** if they **constitute a real right**, without being published. **2657.** Prior claims rank, according to their order among themselves**, and without regard to their date, before movable or immovable hypothecs**. Prior claims of the same rank come in **proportion to the amount of each claim** 3. **[Hypothecs ]** **2660**. A hypothec is a **real right** on a **movable or immovable** property made liable for the performance of an obligation. It confers on the creditor **the right to follow the property into whosever hands it may be**, to take possession of it or to take it in payment, or to sell it or cause it to be sold and, in that case, to have a preference upon the proceeds of the sale ranking as determined in this Code. (direct recourse against the person and on the house, no matter who the house is owned by because it is a real right) **2661.** A hypothec is merely **an accessory righ**t and subsists only as long as the obligation whose performance it secures continues to exist. **2664.** Hypothecation may take place only on the conditions and according to the formalities authorized by law. A hypothec may be conventional or legal: \- [Conventional :] -- created by contract between the parties: \- Immovable: granted upon immovable property. \- Movable: granted upon movable property [- Legal :] - created by the effect of the law (art. 2724 C.C.Q.): \- Claims of state for tax debts; \- Construction; \- Claim of a syndicate of co-owners; \- Claims under a judgment **[(Publication and rank)]** - To be set up against other creditors, upon the appropriate register. **Article 663:** The hypothecary rights conferred by a hypothec may be set up only when the hypothec is **published** in accordance with this Book or the Book on Publication of Rights Two public registers for hypothecs: - Quebec Land Register (immovable) - Quebec register of personal and movable real rights - by property or owner **2941. Publication of rights** allows them to be set up against **third persons**, establishes **their rank** and, where the law so provides, gives them effect. Rights produce their effects **between the parties** even before publication, unless the law expressly provides otherwise. (Prior claims then legal hypothecs and then conventional hypothecs) **2945**. Unless otherwise provided by law, rights rank according to **the date, hour and minute entered** on the memorial of presentation or, in the case of an application for registration in the land register, in the book of presentation, provided that the entries have been made in the proper register **2748**. In addition to their **personal right** of action and the provisional measures provided in the Code of Civil Procedure (chapter C-25), creditors have only the **hypothecary rights** provided in this chapter for the enforcement and realization of their security. Thus, where their **debtor is in default** and their claim is **liquid and exigible** (when it becomes owed to me), they may exercise the following hypothecary rights: they may **take possession** of the charged property to administer it, **take it in payment** of their claim, have it **sold by judicial authority** **or sell it** themselves. There are therefore **4 types of hypothecary recourses**: - Administration of the Property; - Taking in payment; - Sale by creditor; - Sale under judicial authority Conditions for **Exercise of Hypothecary Rights**: - Default of the debtor on obligation; - Prior notice (period depends on whether movable or immovable);whether movable or immovable); - Instituting legal Action. **[08- Legal Hypothecs ]** 1. **[Legal Hypothecs (not necessary published for it to exist)]** **(Conditions for EXISTENCEof legal hypothecs for construction)** 1. Contract either with the [owner] of the immovable, the [contractor or the sub-contractor:] a. Where no contract directly with the owner a **written declaration** to **the owner** under art. 2728 of the C.C.Q. is necessary. 2. Construction or renovation of an immovable: b. [Examples of works held to constitute construction:] enlargement of a building; digging of a well; installation of wind turbines in an energy park; installation of signalling equipment along a railway; construction of a road, of a parking lot, etc.; c. [Examples of works held **not** to constitute construction nor renovation:] maintenance works (without modification to the structure), levelling of the ground for landscaping purposes; 3. Added value brought to the immovable 1. Publication of a **notice of legal hypothec** on the land registry **within 30 days of the completion of works**. The notice must : a. Contain description of the immovable charged with the hypothec; b. Contain the amount of the creditor's claim; c. Be served upon the owner; 2. Institution of a **hypothecary action** against the owner or publication of a **prior notice** of exercise of a hypothecary right **within six (6) months** of the completion of the works. - The value of the guarantee given to legal hypothec holders is [limited to the added value] of the property resulting from the construction or renovation thereof (Hypothec only applies on the added value by the work) 1. Limits the amount of the portion of the debt secured by the hypothec (especially where the value of the services billed by an engineer/architect/contractor, etc. exceed the added value brought to the property); 2. Limits the portion to be distributed to beneficiaries of legal hypothecs from the overall proceeds generated by a sale under judicial authority of the property (important where the proceeds of the sale are less than the fair market value of the property) **Calculation of added value [where the proceeds of the sale are less than the fair market value]**: (formula) **(Rights of clients/ owners)** The client/owner of an immovable project is entitled to withhold the payment of a portion of the price sufficient to satisfy the claims of sub-contractors and other intervenors who dealt directly with the contractor (provided they previously sent notice to the owner under **art. 2728 C.C.Q.):** - **Art. 2123 C.C.Q.:** At the time of payment, the client may withhold from the price of the contract an amount sufficient to pay the claims of the workmen as well as those of the other persons who may enforce a legal hypothec on the immovable work and who have given him notice of their contract with the contractor, in relation to the work performed or the materials or services supplied after the notice was given. **[09- Intellectual Property Law (IP) ]** I. **Types of IP rights (for one object)** A screen shot of a chart Description automatically generated II. **IP Laws** - [Patents] : Patent act, RSC 1985 c P-4 - [Copyright] : Copyright Act, RSC c C-42 - [Trademarks] : Trademarks act, RSC 1985, c-T-13 - [Industrial designs (aka design patents)] : Industrial design act RSC 1985 1-9 - [Trade secrets :] N/A III. **Patents** **What can patent protect?** **What is an invention?** **Presentation of a Patent** 1. Cover page j. Abstract 2. Specifications a. Field of invention b. Background of invention c. Summary of the invention d. Detailed description of the invention 3. Claims e. **Independent:** An independent claim [stands on its own] and does not refer to any other claim in the patent. [It defines the broadest scope] of the invention and must include all the essential features necessary to describe the invention. f. **Dependent:** A dependent claim [builds upon and references an independent] claim (or another dependent claim). It narrows or specifies the scope of the invention by [adding additional features or limitations]. 4. Drawings (optional) **The patent bargain between the State and inventors** **Employer v. Employee -- Who owns the rights?** - **The Patent Act does not provide for an automatic assignment of patent rights to employers. In unclear situations, case law tends to favour employees.** k. **Best protection:** Written assignment agreement whereby employees: iii. assign all IP rights to employer in relation to any work done in the course of employment iv. renounce to exercise their IP rights v. agree to sign all documents to give effect to the assignment / renunciation and to the employer's rights, as well as to aid in litigation l. **Alternative**: Convince a court that: vi. The invention was made in course of the employee's duties vii. The employee was hired for the purpose of inventing viii. The employee used company resources to achieve the invention **Patent litigation -- Jurisdiction of federal and provincial courts** - Most patent infringement actions are heard by the Federal Court **Patent infringement actions** **Most common invalidity attack (Patent is invalid)** A screenshot of a computer Description automatically generated IV. **Copyright** **What does copyright protect** - [Original works:] m. literary works (e.g., novel, pamphlet, computer program) n. dramatic works (e.g., film, play, choreography) musical works (e.g., composition -- with or without lyrics) o. artistic works (e.g., charts, [drawings], maps, photographs, sculptures) p. (e.g., buildings, structures, models of a building or structure) q. Compilations of works from various categories. - Copyright protects [the expression of an idea,] not the idea itself - The work must [be fixed in a medium of expression] **Economic rights** The Copyright Act grants copyright owners the [exclusive right] to: - **produce, reproduce, perform or publish any translation** of a work or any substantial part thereof - **convert** a work from one category of works to another - make any sound **recording**, cinematograph **film** or other contrivance by means of which the work may be mechanically reproduced or performed - communicate the work to the public by **telecommunication** - present an artistic work at a public **exhibition** - **rent out** a sound recording in which a musical work is embedded - **sell** or otherwise **transfer** the ownership of a tangible object in which a work is embedded - **authorize** any such acts. Copyright owners may **assign** their right (in whole or in part) **or grant any interest** in the right by licence: - But no assignment or grant is valid unless it is **in writing signed** by the copyright owner (or the owner's agent) **Employee vs. Employer -- Who owns the right?** In general: the **author** of a work is the **first owner** of the copyright therein, - But the Copyright Act specifies that, unless stipulated otherwise, the **employer** is the **first owner** of the copyright in a work made by an employee in the course of employment. The "**work for hire"** doctrine does not exist in Canadian law. - Unless stipulated otherwise, independent workers or consultants remain the first owners of copyright in works they are hired to create. **Copyright- Moral rights** The Copyright Act grants the following rights **ONLY to authors**: The [right of paternity] (attribution), including: - the **right to claim authorship** (w/o pseudonym or pen name), where reasonable in the circumstances, and - The **right to remain anonymous** The [right to the integrity] of the work, infringed in case of: - distortion, mutilation or other modification, or - use in association with a product, service, cause or institution - IF prejudicial to the author's **honour or reputation** [Moral rights are non-assignable], but they can be **waived** in whole or in part **Neighbouring right** The Copyright Act provides [for three types of neighbouring] rights (related rights): - The rights of **sound recording makers** (producer) in sound recordings - The rights of **performing artists** in performances fixed in a sound recording - The rights of **broadcasters i**n communication signals they transmit **When does copyright protection start?** Upon the creation of a work **How long does copyright protection last?** In general, copyright subsists for the life of the author, plus fifty years following the author's death **Territory** Signatory countries to the Berne Convention for the Protection of Literary and Artistic Works (1886) **Should a copyright be registered?** Copyright registration is not mandatory but could be useful. - It creates a presumption of ownership of copyrights **Are copyright owners required to provide notice?** Giving notice is not required by law, but is recommended as it may have a deterrent effect - Example: XYZ Inc. (2021). All rights reserved. Reproduction in whole or in part is forbidden without the consent of XYZ Inc. **Copyright -- Fair dealing exception to infringement**  V. **Trademarks :** - Unlike the patent owner or the copyright owner, the owner of a trademark is not **required to provide the public with some novel benefit in exchange for the monopoly.** - Its claim to monopoly rests not on conferring a benefit on the public in the sense of patents or copyrights but on [serving an important public interest] in assuring consumers that they [are buying from the source] from whom they think they are buying and receiving the quality which they associate with that particular trademark. - a sign or combination of signs that is used or proposed to be used by a person for the purpose of **distinguishing** or to distinguish their goods or services from those of others, or - a certification mark. - the **character or quality** of the goods or services, - the **working conditions** under which the goods are produced or the services performed; - the **class of persons** by whom the goods are produced or the services are performed; or - the **area** within which the goods are produced or the services performed**.** **Trademark registration: Optional but recommended** A blue and white rectangular box with black text Description automatically generated **Confusing trademarks (s. 6(5) Trademarks Act)** In determining whether trademarks or trade names are confusing, the court or the Registrar, as the case may be, shall have regard to **all the surrounding circumstances** including : - the **inherent distinctiveness** of the trademarks or trade names and the extent to which they have become known - the **length of time** the trademarks or trade names have been in use. - the nature of the **goods, services or business**. - the nature of the **trade**; and - the **degree of resemblance** between the trademarks or trade names, including in appearance or sound or in the ideas suggested by them Trademark litigation Enforcement of trademark rights - Constant watch over competitors - General advertising; trademarks journal - Oppositions proceedings General action for trademark infringement - **Concurrent jurisdiction:** The Federal Court or Superior Court can order an injunction, recovery of damages or profits, destruction of other offending wares and advertising materials - **Exclusive jurisdiction**: Only the Federal Court can expunge a mark from the Register VI. **Industrial Designs** - **Features ** - **Shape** - **Configuration** - **Pattern** - **Ornament** - Features dictated solely by a **utilitarian** function that are applied to an article - Any method or principle of manufacture or construction - **Presumption: the protected design will be applied in the manufacture of at least 50 copies of the article worldwide** - 10 years from the date of registration - Make - Import for the purpose of trade or business - Sell - Rent - Offer or expose for sale or rent VII. **Trade secrets and Confidentiality** **Confidential information -- What is it?** - Confidential information is SECRET - It includes: r. Information for which the company cannot obtain other forms of IP protection (e.g., projects) s. Information which could otherwise be protected which the company prefers to keep secret (e.g., source codes) **Classic exceptions to confidentiality** Information which - is **already known** to the recipient (when this can be readily proved) - is in the **public domain** through no fault of the recipient - is **legitimately acquired** by recipient through third party without confidentiality restrictions - is **independently developed** by the recipient - is **ordered** to be disclosed by the Court and - is **not treated as confidential** by the owner **Protection mechanisms** [Marking (e.g., "CONFIDENTIAL"] [Confidentiality agreements or non-disclosure clauses] [Restricted access to confidential information]: - Secure location for confidential information - Access limited to those with a need to know - Use of access cards, codes and passwords - Visitors' access generally denied or selected, and (if allowed) escorted and documented (log) [Avoid premature public disclosure] (research) - Review presentations, speeches, published materials, patents, etc. - Ensure that product marketing does not result in disclosure of confidential information (process or secret formula) **[10- Private-Public Partnership]** **What is a Public-Private Partnership (PPP or P3)?** - Occurs when a private entity (Private Partner) partners with a government agency (Public Partner) to procure a public infrastructure - The private partner agrees to design, build, finance, operate and maintain public infrastructure (such as road -- A30 bridge -- A25, hospital -- McGill University Health Center) for a certain period (often 20 to 35 years). **Traditional contractual Contract** Owner/Client -\> Design-Build Contract -\> DB Contractor **Public Private Partnership Diagram** Public Partner (not a company, a part of the government) -\> Partnership Agreement -\> Private Partner (Special Purpose Vehicle/ Concessionaire -- made especially for the project) -\> DB agreement -\> DB contractor (for design-build portion of contract) -\> O & M agreement -\> O & M contractor (operation-maintenance of infrastructure) **Differences Between a Standard Design-Build Contract and a P3 Contract** No direct contractual relationship between the Owner and the Contractor. The concept of "Owner" is unclear in a P3: - The Government (Owner of the land and/or infrastructure) transfers the use of land and/or infrastructure to the Concessionaire for the time of the Concession; The Concessionaire is the party entering into a contract with the Contractor for the DB services. This affects: - the communication process between parties - requires more time and effort in establishing and maintaining good relationships between all parties (each having its own "hot buttons") - the Change Order process (many parties having their say; not only one category of "changes", not all monetary) - No surveillance of the work by the public partner's professionals (this is one of the reasons of the resistance to P3of the state engineers\...) and no immediate delivery of the work to Public Partner after completion **Differences Between a Standard Design-Build Contract and a P3 Contract (continued)** - The private sector assumes most of the risks (most but not all, for price issues: some risks are better controlled by the public entity, it would make no sense having to pay fortunes to have the Private partner deal with those; for example, pre-existing contamination) - The model brings a great incentive to complete work on time or even ahead of schedule, because that is when the Private Partner starts collecting revenues from the operation of the infrastructure.  - [Partnership Agreement ("]PA") between SPV(Private Partner) and Public Partner - [DB Agreement](Flow down of all Design-Build obligations of PA, usually by reference to PA to lower the risk of left-out obligations remaining with the Private Partner) - [O & M Agreement](same, but for Operation and Maintenance obligations) - [Interface](Relations between DB, O&M and Private Partner; usually, principal contractors waive their recourse against Private Partner for damages caused by another principal contractor and must therefore go against it directly in a contractual claim - [Direct Agreements](Between Gvmt --Lenders and between Principal contractors and Lenders: protect Lenders' investment: they can step in for Private Partner if defaults) - [Collateral Agreement](Between Gvmt --Principal contractors: protects Gvmt in case of Private Partner defaults) - [Role of the Independent Engineer](not surveillance, not verification, just attestation of contract requirements met and milestones) - The diagram does not show the complicated financing structure, with Trustee, Equity Investors, First Rank and Second Rank Lenders, etc. nor the complicated guarantees (bonds or Letters of Credit, parent company guarantee - The P3 model offers the opportunity to build right now, at no cost (or reduced cost) to the government and make the public infrastructure available for use as soon as construction is complete - The construction costs are assumed through the Private Partner (by its Lenders and complex financing structure),which in turn gets revenue from the operation of the infrastructure (for example: tolling on roads/bridges or service fees - After the Concession period (for example 35 years on A25),the infrastructure is rehabilitated and transferred back to the Public partner, usually at no charge - Perfect in the present context: huge needs for infrastructures-- roadways, energy, medical -- but not enough money to finance all of these right away - Change process much more complicated, therefore you should have a well-defined project, not subject to significant changes, for a P3 model to be cost-effective **[11- Alternative Dispute Resolution (ADR) ]** I. **A) Legislative Context** **Code of Civil Procedure** 1. The main private dispute prevention and resolution processes are negotiation between the parties, and mediation and arbitration, in which the parties call on a third person to assist them. **The parties may also resort to any other process** that suits them and that they consider appropriate, whether it borrows from negotiation, mediation or arbitration. - **Parties must consider private prevention and resolution processes before referring their dispute to the court.** 2. Parties who enter into a private dispute prevention and resolution process do so **voluntarily.** They are required to participate in the process in **good faith,** to be **transparent with each other, including as regards the information** in their possession, and to **co-operate actively** in [searching for a solution] and, if applicable, in preparing and implementing a pre-court protocol; they are also required to share the costs of the process. - They must, [as must any third person assisting] them, ensure that any steps they take are **proportionate**, in terms of the cost and time involved, to the nature and complexity of the dispute. In addition, they are required, in any steps they take and agreements they make, **to uphold human rights and freedoms and observe other public order rules**. **B) Construction Industry context** II. **Ladder ADR modes** III. **Prevention modes** - Contract administration - Partnering - Dispute Resolution Boards(DRB), Project Mediator. IV. **Resolution** - Negotiation (without neutral, by top managers or boss) - Facilitation, conciliation by neutral or board - Meditation - Recommendation, DRB, neutral evaluation - Adjudication: - Origin / prompt payment context - Dispute Adjudication Board (DAB) / Adjudication - Quebec: Pilot project : A diagram of a flight diagram Description automatically generated - Federal law and rest of Canada (Ontario, Saskatchewan, Alberta and others - Med-Arb - Arbitration V. **Any other mode** - Very flexible - Adapt to project/ parties' needs and constraints - Combination of modes - Examples: - Baseball arbitration - Arb-Med-Arb VI. **Choice of Mode/ Choice of Neutral** - Possible missions of your neutral - Inside contract terms or specific to a conflict - How many - Advantages of using a neutral **[12- Business associations ]** I. **[Distinctions ]** - **Entreprise :** The carrying on by one or more persons of an [organized economic activity], whether or not it is commercial in nature, consisting of producing, administering or alienating property, or providing a service" (art. 1525 al. 3 C.C.Q.) - **Business Associations:** Reunion of two or more people working jointly towards the objective of carrying on a [for-profit enterpris]e, or business, and sharing the benefits generated by this enterprise. - Partnerships : Created by contract - Corporations: created by the intervention of the State pursuant to applicable legislation. I. **[Liabilities issues ]** 1. An enterprise may exist independently from "business association": **the sole entrepreneur is therefore fully liable** for debts arising out of it. 2. Where an entreprise exists through a "partnership" **business partners are solidarily liable see (art. 1525 C.C.Q.)** 3. Where an "enterprise" exists through a "corporation": **business partners are not liable** for the corporation's debts (see art. 309 C.C.Q. & Salomon v. Salomon & Co) II. **[Business associations]** +-----------------------+-----------------------+-----------------------+ | Type of entreprise | What it is | Pros and Cons | +=======================+=======================+=======================+ | Individual entreprise | One entrepreneur | [Pros:] | | | carrying on | | | | | Simple and | | | his own business. | economical, very few | | | | | | | The entrepreneur is | formalities (e.g. | | | the | registration) | | | | | | | business: his | Profits not | | | patrimony and | directly taxed, only | | | | as | | | his enterprises are | | | | the same. | personal income, with | | | | possible | | | | | | | | deductions for | | | | business expenses | | | | | | | | [Cons:] | | | | | | | | Personal liability | | | | of the sole | | | | | | | | entrepreneur | +-----------------------+-----------------------+-----------------------+ | Partnership | **A contract** | [Pros:] | | | | | | | by which the | Relatively simple | | | | and economical, few | | | parties, in a spirit | | | | of | formalities | | | | | | | cooperation, agree to | Creation of a | | | carry | distinct patrimony | | | | (own bank account, | | | on an activity, | own assets) -- but | | | including the | | | | | no distinct legal | | | operation of an | personality | | | enterprise, to | | | | | Profits not | | | contribute thereto by | directly taxed -- | | | | redistributed | | | combining property, | | | | | among partners | | | knowledge or | | | | activities and | [Cons:] | | | | | | | to share among | **Personal | | | themselves | liability of partners | | | | for debts** | | | any resulting | | | | pecuniary | **contracted for the | | | | service or | | | profits." | operation** | | | | | | | (Art. 2186 C.C.Q. | **of their | | | | enterprise, in | | | | solidarity** (art. | | | | | | | | 1525 al. 2, 2221 and | | | | 2249 C.C.Q. | +-----------------------+-----------------------+-----------------------+ | Corporations | A distinct legal | [Pros]: | | | person | | | | | | | | created by the State | | | | | \*\*\***No personal | | | pursuant to either | liability for the** | | | the | | | | | **stakeholders of the | | | Q.B.C.A. or C.B.C.A. | corporation (distinct | | | (see | from partnership)** | | | | (i.e. | | | also art. 309 & 2188 | | | | al. 2 | shareholders, | | | | directors, officers, | | | C.C.Q.) | | | | | employees) | | | Probably the most | | | | | | | | popular form of | | | | business | Profits are | | | | redistributed among | | | associations among | | | | | shareholders as | | | entrepreneurs | capital gain and | | | | dividends | | | | | | | | [Cons]: | | | | | | | | Onerous/ complex | | | | legal formalities | | | | (need to follow the | | | | prescription of the | | | | law) | | | | | | | | More complex rules | | | | regulating its | | | | | | | | Operation | | | | | | | | Profits are | | | | directly taxed | +-----------------------+-----------------------+-----------------------+ III. **[Partnerships ]** 1. General partnerships (art. 2186-2235 C.C.Q.) 2. Limited liability partnerships (art. 187.11-187.20 P.C) 3. Limited partnerships (art. 2236-2249 C.C.Q) 4. Undeclared partnerships (art. 2250-2266 C.C.Q) **Rules governing all types:** - Creation : at date indicated in the **contract o**r upon its formation (art. 2187 C.C.Q.) - Registration : mandatory, otherwise deemed an "undeclared partnership" (art. 2189 C.C.Q.) = consequences on liability of partners. Makes clear the liability of the other partners in the partnership. - General rights of partners: - To share profits (art. 2186 C.C.Q.) - To share management powers (not necessarily equal powers, organization as seen fare- advantage of partnership): : partners are "bosses", not employees (McCormick v. Fasken Martineau, 2014 SCC 39) - **General obligations of partners**: - Contribution with property, knowledge **[or]** activities (art. 2186 C.C.Q) - Loyalty/Fiduciary duty (art. 2186 C.C.Q) - **Liability for debts contracted by the partnership**, in solidarity if for the service or operation of the enterprise and jointly in other cases (art. 1525 al. 2, 2221, 2246, 2253-2254 C.C.Q. & 187.14 P.C.) **Specific types of Partnerships** +-----------------------------------+-----------------------------------+ | Type | Specifications | +===================================+===================================+ | General | Obligation of non-competition: | | | "any | | | | | | profits arising therefrom | | | (competition) | | | | | | belong to the partnership" (art. | | | 2204 | | | | | | C.C.Q.) | +-----------------------------------+-----------------------------------+ | Limited liability | Created pursuant to a specific | | | regime | | | | | | within the Professional Code | | | (P.C.): **only professionals may | | | form one** | | | | | | **Partners are not liable for | | | debts arising out of professional | | | misconduc**t (art. 187.14 P.C.) | | | | | | Other rules governing general | | | partnerships also apply (art. | | | 187.12 P.C.) | +-----------------------------------+-----------------------------------+ | Limited | Rules governing general | | | partnerships | | | | | | also apply (art. 2249 C.C.Q.), | | | except | | | | | | there are 2 categories of | | | partners: | | | | | | 1. General partners: managers, | | | fully | | | | | | liable for the debts | | | | | | 2. Special partners: investors, | | | only liable | | | | | | **up to their contribution** | +-----------------------------------+-----------------------------------+ | Undeclared | Not formally registered = third | | | parties may not be aware of their | | | existence. | | | | | | Consequently: risk of full | | | personal liability of partners | | | (art. 2253 C.C.Q.) | +-----------------------------------+-----------------------------------+ IV. **[Corporations]** - Shareholders: "owners" who - Vote at assemblies - Receive dividends - Receive a share of the remaining property of the corporation on liquidation - Ultimately benefit from the success of the corporation's business through capital gain / lose from its misfortune through capital loss (lose value of the share holdings you had but never any personal property) - Directors: "agents" vested with vast management powers - Must always act in the best interest of the corporation (art. 322 C.C.Q.) - rarely enforced by Courts because of the "business judgment rule" - Must act with prudence and diligence - Must act loyally towards the corporation and prevent conflicts of interest - Officers: "executives" to whom directors delegate management powers - Onerous legal formalism governs the creation and operation of a corporation, as per the Q.B.C.A. or C.B.C.A., e.g.:-Shareholder meetings - Meetings of the board of directors-Adoption, updates and enforcement of bylaws - Other formalities prescribed by State agencies