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  • January 1, 2015: no more filling chillers with CFCs

    INTRODUCTIONQuebec regulations create numerous obligations in connection with equipment that poses a risk to the environment. Replacing PCB-containing transformers, for example, or having high-risk oil and gas equipment inspected. Regulatees may be required to file reports, maintain registers or hold permits.From a regulatory perspective, the management of ozone depleting substances is a big file. This article describes Quebec rules on refilling and continued use of chillers that run on CFCs (chlorofluorocarbons).THE PROHIBITIONPursuant to the Regulation respecting halocarbons adopted in 2004 under Quebec’s Environment Quality Act, CFC-operated chillers that were in use on December 23, 2004 had to be replaced or retrofitted to operate with another substance from the time of their first maintenance or major repair occurring after that date.Despite the foregoing, the regulations provide that between January 1, 2005 and December 31, 2014, the grandfathered chillers could be refilled with CFCs for a maximum period of 12 months, provided the owner filed a report with the Quebec government and ceased to run the equipement on CFS within 12 months of the first of these authorized refills.Begining on January 1, 2015, units which will still not have been converted or replaced may no longer may be refilled with CFCs.It is to be noted that under the regulation, the term “chiller” means a refrigeration or air conditioning unit that uses the refrigerant characteristics of a halocarbon to lower the temperature of a secondary cooling liquid circulating in the pipes. A freezing unit is considered to be a refrigeration unit while a heat pump or a dehumidifier is considered to be an air conditioning unit. Also, note that the provisions described in this article do not apply to halocarbons used to operate a household refrigeration or air conditioning unit.PENALTIESEvery person who contravenes the prohibition on CFC refills is liable to an administrative monetary penalty or a penal sanction. Administrative penalty amounts are $1,500 for individuals and $7,500 for legal persons. If the ministry opts to proceed by way of prosecution, fines for individuals range from $8,000 to $500,000. This can be coupled with or replaced by a prison term that can last up to 18 months. For legal persons, fines range from $24,000 to $3,000,000.The penalties described above also apply to every person who operates a chiller with a CFC more than a year after the last authorized refill.CAUTION IS IN ORDERQuebec’s public register for monetary administrative penalties has no entries for the Regulation respecting halocarbons, nor do there appear to have been any provincial prosecutions under this regulation. However, in 2011, a Quebec-based business faced charges under a federal regulation for having illegally imported more than 5,000 tanks filled with halocarbons from China valued at over one million dollars.One may question the liability of the owner of a unit which a specialized contractor has filled with CFCs unbeknownst to him. To be on the safe side, it is important for owners or users of commercial or industrial refrigeration or air conditioning units in Quebec to inquire about the contents of their units and ensure that any contractor retained to inspect, maintain, fill, retrofit or dismantle these units does so in compliance with the law. In any event, the regulation requires owners of refrigeration units to ensure that all components containing halocarbons or designed to contain halocarbons are leak tested once a year.

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  • New Fisheries Act permit rules take effect November 25th, 2013

    IntroductionLast week, the federal government took a big step toward bringing the Fisheries Act (Canada) and its application into line with the federal government’s responsible resource development plan. On November 6th, 2013, the Government of Canada announced that November 25th is the date of coming into force of provisions in the 2012 budget implementation legislation that will sharpen the focus of the Fisheries Act habitat protection provisions in order to reduce regulatory overlap with the provinces. The changes are significant. Proponents of new projects and holders of existing s. 35(2) authorizations should take note.This article summarizes the principal changes that will result from these measures and identifies key questions Fisheries and Oceans Canada intends to address in guidance that is currently under development.New FocusHenceforward, the act will concentrate on maintaining the productive capacity of commercial, recreational, and Aboriginal fisheries, including fish and fish habitat that sustain those fisheries.Section 35(1) of the Fisheries Act will now read: No person shall carry on any work, undertaking or activity that results in serious harm to fish that are part of a commercial, recreational, or Aboriginal fishery or to fish that support such a fishery.New Fisheries Act provisions define the different kinds of fisheries as follows: “Aboriginal”, in relation to a fishery, means that fish is harvested by an Aboriginal organization or any of its members for the purpose of using the fish as food or for subsistence or for social or ceremonial purposes; “commercial”, in relation to a fishery, means that fish is harvested under the authority of a licence for the purpose of sale, trade or barter; and “recreational”, in relation to a fishery, means that fish is harvested under the authority of a licence for personal use of the fish or for sport.“Serious harm to fish” is defined in the new act as the death of fish or any permanent alteration to, or destruction of, fish habitat. For its part, Fisheries and Oceans Canada defines serious harm to fish as follows: the death of fish; a permanent alteration to fish habitat of a spatial scale, duration or intensity that limits or diminishes the ability of fish to use such habitats as spawning grounds, or as nursery, rearing, or food supply areas, or as a migration corridor, or any other area in order to carry out one or more of their life processes; the destruction of fish habitat of a spatial scale, duration, or intensity that fish can no longer rely upon such habitats for use as spawning grounds, or as nursery, rearing, or food supply areas, or as a migration corridor, or any other area in order to carry out one or more of their life processes.It remains to be seen what the courts will say when asked to examine the application of these new rules to a given set of facts.Policy FrameworkIn 2013, the federal government issued a Fisheries Protection Policy Statement. Then, to prepare for the coming into force of the above provisions, Fisheries and Oceans Canada put into effect a Fisheries Protection Program Operational Approach. Under this approach, the department is, among other things, working on developing guidance for project proponents regarding: Marginal Water Body Types, where project authorizations will never be required. These include non fish bearing-waters; watercourses not providing migratory corridors or in-stream habitat; and artificial irrigation, water supply, water management, or industrial water bodies not connected to aquatic systems that support fish; Sensitive Species and Habitats whose value to fisheries is so great that applications for authorization will be required even if anticipated impacts are considered minor; and Minor Impacts, for which project review by the Department will not be required, provided proponents follow best practices. These include watercourse alterations, such as channel realignment or vegetation removal, that are temporary or can be done in the dry; temporary obstructions that take place outside critical migratory, spawning and nursery periods for local fish species; and spatial impacts, such as infilling, dredging or excavation activities, that occur within the existing footprint of previous works or that are of a footprint small enough that local effects on fisheries productivity would not likely occur.Existing AuthorizationsThe changes described above may reduce the number of projects requiring Fisheries Act authorizations. Beginning November 25th and only until February 24th, 2014, holders of existing authorizations may apply to Fisheries and Oceans Canada for a review of their files. Before doing so, they should be aware that any changes to terms and conditions under their authorizations may trigger First Nations consultation requirements and consideration of the environmental assessment process which gave rise to those terms and conditions, as the case may be.Applications for New AuthorizationsTo coincide with changes to the Fisheries Act habitat protection provisions, the federal government published new regulations governing the issuance of authorizations for projects that cause serious harm to fish that directly or indirectly sustain fisheries. The regulations will take effect on November 25th. According to the government, the regulations do not change the regulatory burden on project proponents. What follows is a description of the new rules. Note that there are special rules for emergency situations and matters involving national security. In addition, at any time during project planning, a proponent may apply to Fisheries and Oceans Canada for a review of the adequacy of mitigation measures or to request an authorization under s. 35(2), if recommended by a qualified professional or by department staff, after reviewing the file.TimelinesThe regulations are categorical about Fisheries and Oceans Canada acknowledging receipt of applications and any subsequent supporting documents as and when they are received. That is because the date of receipt starts the clock on sixty (60) and ninety (90) day timelines for government review of applications. The department has sixty days from receipt of an application to inform the proponent that the application is complete and is being sent for processing or that it is incomplete and identifying missing information. From the time an application is deemed complete, the proponent is notified and the department has ninety days to either issue an authorization or notify the proponent in writing of its refusal to issue an authorization.As with all good things, there are caveats in respect of the timelines. So, for example, the clock is reset when the proponent makes a significant change to the proposed project. What constitutes a significant change will be explained in guidance to be issued by Fisheries and Oceans Canada. Another caveat concerns projects that require another authorization or consultation before Fisheries and Oceans Canada can get involved. This includes projects requiring an environmental assessment under the Canadian Environmental Assessment Act or First Nations consultation under s. 35(1) of the Constitution Act, 1982. For those projects, the new timelines will only start to run once the other processes have run their course. The government plans to issue guidance regarding situations that will stop the clock and how it intends to handle them.Information RequirementsThe regulations spell out in detail the information a proponent must submit regarding its work, undertaking or activity (for ease of reference, I will refer to all three as the “project”), the fisheries situation in the area where the project will be carried out, the effects of the project on the fishery, the manner in which the proponent intends to mitigate or offset project harm to fish, how the proponent proposes to obtain the necessary rights to access lands required to implement an offsetting plan, and what the proponent will do to ensure the success of mitigation measures and offset measures. (The Department of Fisheries and Oceans is currently considering how to incorporate habitat banking schemes into the authorization process). Letter of Credit The implementation of any required offset measures must be guaranteed by a letter of credit.Appeal from a refusal to deliver an authorizationThe 1986 Policy for the Management of Fish Habitat spells out the right of project proponents to appeal a refusal by Fisheries and Oceans Canada to issue a Fisheries Act s. 35(2) authorization. That policy is currently under review. The government is well aware that proponents are concerned to ensure that a right of appeal remains part of the process.ConclusionCanada is a big country. Even counting Aboriginal fisheries in the North, there is an expectation that narrowing the scope of fish habitat protection to fish and habitat that sustain fisheries means that Fisheries and Oceans Canada will be less involved in project review in the future. Whether that is what happens remains to be seen. Fisheries and Oceans Canada has indicated that it intends to focus on projects with the greatest impacts on fisheries. The department has already adopted measures intended to make project review more consistent across the country and it has designated teams that will focus on projects by industry sector, such as mining, oil and gas, linear development, marine and coastal, and hydro and flows. For smaller scale projects, the department will continue to issue guidance such as the now familiar operational statements, telling proponents of smaller, routine projects what they must do in order to minimize disruption and avoid needing an authorization. Please reach out to any of the members in our environmental law team if you are wondering how these changes may affect your existing s. 35(2) project authorizations or a project you are planning. We are at your service.

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  • Since last October 30, it has become more difficult for non-residents to acquire agriculturally zoned lands suitable for the cultivation of the soil or the raising of livestock in Quebec

    THE 1979 STATUTEIt is well known that, under the legal regime for the protection of agricultural lands, the acquisition of agriculturally zoned lands with a surface area of four hectares or more by a person not residing in Quebec is subject to the authorization of the Commission de protection des terres agricoles. This is the object of the Act respecting the acquisition of farm land by non-residents (CQLR chapter A-4.1) (the “Act”), which has been in force since December 21, 1979.This Act provides that the Commission must authorize the acquisition of land by a non-resident if it finds that the land in question is not suitable for the cultivation of the soil or raising of livestock. It must also do so if the person making the application declares that they intend to settle in Quebec. In that case, the authorization is conditional upon proof by the purchaser that it has become a resident and, once such proof is submitted, the acquisition of the land in question becomes irrevocable. In all other cases, the Commission will consider the application for authorization on the basis of the biophysical conditions of the soil and of the environment, the economic consequences arising from the possible uses of the land for agricultural purposes, the effect of granting the application on the preservation of the agricultural soil and on the homogeneity of the farming community and farming operations.CHANGESBill 46, which was assented to and came into force last October 30,1 substantially reduces the access to agricultural zones by non-resident purchasers. The amendments it makes to the Act have three main restrictive effects: they increase the stringency of the conditions required to qualify as a resident of Quebec; they add an annual limit on the area of the lands open to acquisition by non-residents; and they impose additional criteria which the Commission must take into account when considering an application for authorization.THE QUEBEC RESIDENCY CONDITIONSSince 1979, a natural person2 was considered to reside in Quebec if the person had stayed in Quebec for at least 366 days (12 months and one day) during the 24 months immediately preceding the date of the acquisition of the farm land, or following the acquisition date, in the case of a non-resident who intended to settle in Quebec.Henceforth, to be a resident of Quebec, a natural person must be a Canadian Citizen or permanent resident under the Immigration and Refugee Protection Act (S.C. 2001, c. 27) and must have lived in Quebec for at least 1,095 days (36 months) during the 48 months immediately preceding the date of acquisition or, in the case of a person who intends to settle in Quebec, following the date of the conditional acquisition authorized by the Commission, as the case may be.By requiring citizenship or permanent residency and by increasing the duration of the stay in Quebec from 12 out of 24 months to 36 out of 48 months, the legislature aims to reserve access to good farm land to true residents of Quebec.LIMIT OF 1,000 HECTARES PER YEARFurthermore, a new provision has been added to the Act (s. 15.3) which places a limit of 1,000 hectares on the total annual area of land suitable for the cultivation of the soil or the raising of livestock which the Commission may authorize the acquisition of by persons not intending to settle in Quebec.This purpose of this new legislative restriction imposed on the Commission is essentially to reduce the risk of a massive land grab of good farm land by non-residents.NEW CRITERIAFinally, when assessing an application to authorize the acquisition of land where it finds it to be suitable for the cultivation of the soil or the raising of livestock based on the biophysical conditions of the soil and of the environment, the Commission must henceforth take the following factors into consideration:1° the intended use, in particular the applicant’s intention to cultivate the soil or raise livestock on the farm land that is the subject of the application;2° the impact of the acquisition on the price of farm land in the region;3° the effects of the acquisition or projected use on the economic development of the region;4° the development of agricultural products and the development of underutilized farm land; and5° the impact on land occupancy.The imposition on the Commission of this specific set of criteria for its analysis indicates the legislator’s intention of ensuring that the acquired lands are in fact used for agricultural activities and of preventing lands suitable for cultivation or the raising of livestock from being acquired for purely speculative purposes.These amendments have no retroactive effect and do not apply to applications for authorization pending on October 30, 2013.SANCTION OF NULLITYIn closing, we note that the Act provides that the acquisition of farm land by a person not residing in Quebec without the Commission’s authorization, or without complying with the conditions prescribed by law, is null and void, and any interested person, including the Attorney General of Quebec, may apply to the Superior Court for a declaration of the nullity thereof. If no such action is instituted, the Commission may order the contravening purchaser to divest itself of the farm land within a time period determined by it. If the purchaser does not comply with the order, the Commission may apply to the Superior Court for authorization to sell the land by judicial sale (s. 28)._________________________________________ 1. An Act to amend the Act respecting the acquisition of farm land by non-residents (2013, chapter 24).2. A legal person is considered to reside in Quebec if it is controlled by one or more natural persons residing in Quebec.

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  • Accidental discharges: the duty to notify

    On October 17th, 2013, the Supreme Court of Canada released its long-awaited decision in Castonguay Blasting, commonly referred to as the fly-rock case. To summarize, Castonguay was doing some blasting work and rock was unexpectedly projected outside the work site, landing on someone’s property and damaging a home and a vehicle. No one was hurt and there was no environmental damage. The contractor notified the site manager who notified the provincial ministry of transport and the ministry of labour. A month later, the ministry of transport mentioned the incident to the ministry of the environment which then charged Castonguay with the discharge of a contaminant in violation of the Ontario Environmental Protection Act (EPA) and for the offense of failing to report the discharge. At issue before the courts was whether a discharge that causes damage to property but not the environment must be reported. The Ontario Court of Justice acquitted Castonguay. The Supreme Court of Ontario entered a conviction and the conviction was upheld by the Ontario Court of Appeal and the Supreme Court of Canada. This article deals with whether this judgment has an impact in Quebec.In order to trigger a duty to report under the EPA, there must be a discharge of a contaminant into the environment out of the ordinary course of events. Under the EPA, a contaminant “means any solid, liquid, gas, odour, heat, sound, vibration, radiation or combination of any of them resulting directly or indirectly from human activities that causes or may cause an adverse effect”, and“adverse effect” means one or more of:(a) impairment of the quality of the natural environment for any use that can be made of it(b) injury or damage to property or to plant or animal life(c) harm or material discomfort to any person(d) an adverse effect on the health of any person(e) impairment of the safety of any person(f) rendering any property or plant or animal life unfit for human use(g) loss of enjoyment of normal use of property, and(h) interference with the normal conduct of business (“conséquence préjudiciable”)In Quebec, under the Environment Quality Act (EQA), whoever is responsible for the accidental presence of a contaminant in the environment must report the accident to the environment ministry without delay. A contaminant is “a solid, liquid or gaseous matter, a microorganism, a sound, a vibration, rays, heat, an odour, a radiation or a combination of any of them likely to alter the quality of the environment in any way.”We believe that Castonguay brings Ontario closer to the Quebec reporting standard. In both provinces, the environment ministry must be notified when there is a discharge of a contaminant into the environment out of the ordinary course.

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  • Legal newsletter for business entrepreneurs and executives, Number 18

    CONTENTS Easing the financing rules while waiting for crowdfunding Avoiding disputes by entering into a shareholders’ agreement Tenth anniversary of Bill 72 : Land protecton and rehabilitationEASING THE FINANCING RULES WHILE WAITING FOR CROWDFUNDINGJosianne BeaudryThere is no doubt that small and mediumsized enterprises (“SMEs”) and businesses in the startup phase (also known as early- stage businesses) face multiple challenges when seeking financing. Not only must they identify investors who are prepared to take the risk of investing in their projects, they must also ensure that they comply with the rules on raising capital imposed by the securities regulators.Under the rules in force in Quebec and the rest of Canada, for a corporation to raise capital, unless it has an exemption, it must retain the services of a firm registered in an appropriate category with the Canadian Securities Administrators, and must also prepare and provide the purchasers with a disclosure document known as a “ prospectus”.This procedure is generally too onerous and demanding for SMEs and startups, not to mention the obligations these companies would have after the financing to prepare and distribute continuous disclosure documents, such as financial statements, management’s discussion and analysis and press releases.Thus, SMEs and startups are often limited to raising funds from business associates, family (“love money”) and accredited investors — which are generally persons with a net income before taxes exceeding $200,000 or net assets of at least $5,000,000.SMEs and startups also have the option of soliciting funds from a broader range of investors without having to prepare a prospectus through the use of an offering memorandum. The offering memorandum is a disclosure document similar to a prospectus but which is more simple to prepare and less costly. This financing alternative seems generally to be overlooked and underused by SMEs and startups. The lack of use of the offering memorandum is likely due to the accompanying regulatory requirement of preparing audited financial statements drawn up in accordance with the IFRS. This type of financing appears to be much more popular in the Canadian West.However, in this regard, on December 20, 2012, the Autorité des marchés financiers (“AMF”) issued an interim local order allowing SMEs and startups that are not otherwise reporting issuers, as defined in the securities legislation, to distribute their securities by means of an offering memorandum without having to include audited financial statements drawn up in accordance with the IFRS.Thus, it is henceforth possible for these corporations to issue an offering memorandum without having to prepare audited financial statements. Moreover, the unaudited financial statements accompanying the offering memorandum may even be drawn up in accordance with the Canadian GAAP applying to private issuers.However, to take advantage of this easing of the regulatory requirements, the issuer must limit the total amount of all of its offerings made under this rule to $500,000 and limit the aggregate acquisition cost per purchaser to $2,000 per 12-month period preceding the offering (and not $2,000 per issuer). A warning must also be added to the offering memorandum clearly informing any purchaser of the fact that the financial statements are not audited and are not drawn up in accordance with the IFRS, and of the limits on the investment threshold.It should also be noted that, under the Quebec legislation, the use of an offering memorandum by a corporation to raise funds is subject to translation requirements. Thus, for purposes of soliciting financing in the province of Quebec, the offering memorandum must either be written in French or in both French and English.Conscious of the financing needs of SMEs and startups, at the same time as the AMF was announcing the easing of the rules on the contents of the offering memorandum (which is slated to apply for a maximum period of two years), the AMF also launched a consultation on equity crowdfunding.Equity crowdfunding consists of raising capital from a large number of investors, who are not necessarily accredited investors, by means of an electronic platform in return for the issuance of securities. Some jurisdictions such as the United States (under development since April 5, 2012), England and Australia have adopted rules authorizing equity crowdfunding.These rules generally provide that corporations may only raise a modest amount through this type of financing. Similarly, the amount investors may invest is also small. At present, this type of financing is prohibited in Canada unless one has an exemption or issues a prospectus.The main objective of equity crowdfunding is to facilitate access to capital at a reduced cost. However, this objective is difficult to reconcile with recent developments in the regulation of Canadian securities markets aimed at protecting investors.Indeed, in carrying out their mission to protect investors, Canadian authorities have continued to increase the regulatory requirements (disclosure, compliance, proficiency, etc.), which also has the effect of increasing the operating costs of the various participants in the financial markets.Some financial market stakeholders are concerned about the risks of an exodus of innovative Quebec corporations and talent which could be tempted to move south to the U.S. to finance their projects, where they would benefit from a more streamlined and less costly financing environment. The Canadian Securities Administrators will have to meet the challenge of finding the difficult balance between the financing needs of SMEs and startups and the protection of investors.AVOIDING DISPUTES BY ENTERING INTO A SHAREHOLDERS’ AGREEMENTJean-Sébastien DesrochesDisputes between shareholders sometimes have serious consequences for a business corporation and can be an impediment to the carrying on of the operations in the ordinary course of business. Such disputes are usually complex and costly while also being protracted in nature. In this context, a well-written shareholders’ agreement that is tailored to the business can help to avoid disputes or, at least, limit their scope and provide a framework for managing them.Shareholders’ agreements may not age well over time. They may not evolve in sync with the business and its shareholders, particularly in a context of expansion and growth. Furthermore, it is generally difficult to change a shareholders’ agreement once it has been signed, and an attempt to change the ground rules in midstream could be a source of additional conflicts between the shareholders. It is therefore imperative for the shareholders to establish their rights and obligations, as well as those of the corporation, in a shareholders’ agreement as early as possible in the life of the corporation.No one will be surprised to learn that money is the main cause of disputes between shareholders, whether it is the money invested (or to be invested) in the corporation or money that the corporation pays (or will pay) to its shareholders in the form of dividends or otherwise. At the same time, the shareholders’ contributions in property, services, time and money often create friction within the corporation, particularly since the shareholders’ business, financial and other expectations may evolve differently - even in opposite directions - over time.Apart from financial issues, personal conflicts can also inflame the relationship between the shareholders, especially when family members are involved with the business. The same is true when decisions are to be made on the global objectives of the corporation and strategic issues.In addition, if the corporation has shareholders from different jurisdictions, cultural differences can also give rise to tension between the shareholders. In such cases, the text of the shareholders’ agreement must be very explicit and should, if possible, be supported by concrete examples of the application of the more complex clauses, such as valuation of the shares and the procedure for exercising a right of first refusal. In all cases, it is essential to provide for the order of priority for the exercise of the various rights, remedies and mechanisms contained in the agreement to avoid adding issues of interpretation of the agreement to the existing business issues.It is often at times when the business of the corporation is not faring so well that the common disagreements between shareholders tend to flare up and lead to litigation. The shareholders’ agreement should therefore anticipate the future situations which the corporation may face, whether positive or negative, such as refinancing, the arrival of new shareholders, family succession, the acquisition or sale of a business, international expansion, the development of new markets, and retirement from the business.The ability to anticipate future developments takes on its full importance when one considers the context in which the shareholders’ agreement is being entered into. Thus, the shareholders’ and drafter’s objectives may be different in the case of an agreement concluded for tax and estate planning purposes versus an agreement dealing, for instance, with the arrival of a new investor, a transaction for the acquisition of the business (e.g., business transfer or succession) or a start-up situation. Even in a very particular context such as this, the shareholders’ agreement should still give the corporation and its shareholders the means to achieve their ambitions and the requisite flexibility to carry out all their business projects.In addition to their status as shareholders, the shareholders may also hold several other titles or functions in the corporation, since they often also act as directors, officers and employees. Disputes may therefore arise as a result of these different roles and the associated rights and obligations, and degenerate very quickly into personal disputes.The drafting and negotiation of a shareholders’ agreement is a complex and exacting exercise requiring both legal and practical experience. Thus, a review of the cases in the courts shows that disputes pertaining to the most complex terms and conditions of the agreement, such as the mechanisms for the arrival and departure of shareholders and transfers of securities (right of first refusal, purchase and sale (shotgun) clause, etc.) as well as interpretation of non-competition, non-solicitation and intellectual property provisions, are among the subjects most frequently debated in the courts.Valuation mechanisms for assessing the price of the shares in different situations should also be clearly established in the shareholders’ agreement. Such mechanisms should oversee and govern any discussions on the value to be attributed to the shares of the corporation in the context of a sale or transfer, including in complicated situations where there are ongoing disputes among the parties.Lastly, it is fundamental to provide for effective conflict resolution mechanisms tailored to the needs of the parties ( confidentiality of the process, cultural and linguistic factors, obligation to pursue the operations of the business as a going concern in spite of the dispute, etc.) that allow for action to be taken quickly to preserve the value of the business. This will enable the parties to avoid the forced liquidation of the business, with its disastrous consequences for the employees, suppliers and clients.TENTH ANNIVERSARY OF BILL 72: LAND PROTECTION AND REHABILITATIONSophie PrégentThe planning of a construction project or start-up of an industrial activity requires prior verification of a number of matters. Despite the introduction, ten years ago this year, of rules in the Environment Quality Act (EQA) governing the protection and rehabilitation of contaminated lands, the physical condition of the project site is often still a neglected issue.While the question of soil contamination can raise issues of civil relations, such as, for example, civil liability or the warranty of quality (against latent defects), in this article, we will focus exclusively on the obligations that can arise from the EQA.The purpose of the EQA is environmental protection. This protection is embodied in measures for prior protection, emergency responses and rehabilitation in the EQA. The EQA also imposes certain duties to act on the users of immovables.POWER TO ISSUE ORDERSThe Minister of Sustainable Development, Environment, Wildlife and Parks ( MSDEWP) has broad powers, including, in particular, the power to order the filing of a rehabilitation plan if he has reason to believe, or ascertains, that contaminants are present on land in a concentration exceeding the limit values prescribed by regulation,1 or that they are likely to affect the environment in general.2Since 2003, this power has applied to all persons who have had custody of the land, in any capacity whatsoever. Such an order can therefore be imposed on tenants and is not limited only to the owner or “polluter” of the land.Thus, it is important for any purchaser to be familiar with the history of the land so that it can assess whether there is a risk that this type of situation could arise.Where such an order has been issued, some means are available for a person to exempt himself from it, in particular, where (i) he was unaware of or had no reason to suspect the condition of the land having regard to the circumstances, practices and the duty of care, or (ii) he was aware of the condition of the premises, but shows that he acted at all times with care and diligence in conformity with the law and, finally, (iii) he shows that the condition of the premises is a result of circumstances exterior to the land and attributable to a third party.CESSATION OF INDUSTRIAL OR COMMERCIAL ACTIVITYWhere a person permanently ceases carrying on a commercial or industrial activity referred to in schedule III of the Land Protection and Rehabilitation Regulation3 (LPRR), the operator must conduct a characterization study of the land.4 This obligation applies where the activity permanently ceases and it triggers the further obligation to carry out the rehabilitation of the land if the contaminants present in the soil exceed the regulatory concentration limit. This work must be performed in accordance with a rehabilitation plan which is submitted to the MSDEWP and approved by him.While this obligation to carry out the rehabilitation of the land only applies to the operator of the activity, it creates a restriction on the use of the land which must definitely be taken into account by the purchaser in the context of a transaction. Indeed, the failure by the operator to perform the rehabilitation will have significant consequences for the purchaser, especially if it wishes to change the use of the land.CHANGE IN USEWhere a person wishes to change the use of land which served as the site of a commercial or industrial activity listed in schedule III of the LPRR, he must conduct a characterization study, unless he already has such a study in hand, and it is still current.5Obviously, in the context of an acquisition, if this obligation exists, it is advisable for the purchaser to ensure it is satisfied by the vendor, or, at the very least, that the condition of the premises be very clearly disclosed to avoid any unpleasant consequences down the road.If the characterization study reveals that contaminants are present in amounts exceeding the regulatory limits, a rehabilitation plan will have to be submitted to the MSDEWP for approval, after which the rehabilitation will have to be done before the new use of the land can commence. This work will obviously create delays for the purchaser since the municipality will not issue the necessary permits to proceed with the subdivision or construction until the land has been decontaminated.In the event that the land has already been decontaminated in accordance with the applicable procedures, it is important for the purchaser to carefully review the rehabilitation plan submitted to the MSDEWP and the various entries made in the land register to determine whether there are any restrictions on the use of the land, or whether any excess contaminants may have been left in the ground with the consent of the MSDEWP.REGISTRATION REQUIREMENTSThe EQA contains a series of measures requiring the publication of notices in the land register with respect to contaminated lands,6 specifically, notices of contamination, notices of decontamination, and notices of use restriction. In addition, in some circumstances, certain notices must also be given to the local municipality, to the Minister of SDEWP, and even to neighbours.Clearly, the existence of such notices must be verified when any transaction is being undertaken. However, it is important to remember that the EQA does not regulate all of the situations relating to contaminated lands and, in particular, historic contamination and contamination resulting from activities not covered by the LPRR. The existence or lack of registrations against the land in the land register does not therefore guarantee that the premises are in compliance with the rules of the EQA on the rehabilitation of contaminated soils.LIMITED APPLICATIONThus, as far as contaminated soils are concerned, the application of the EQA is limited. For instance, there is no general obligation to perform the rehabilitation of land following the completion of a characterization study done on a voluntary basis. However, the presence of contaminants could trigger a restriction on the use of the land which could prevent the purchaser from being able to use it for the planned activity.7Accordingly, as a purchaser, it is very important to be well informed of the condition and history of an immovable, and even, most of the time, to obtain an environmental characterization of the subject property. It is a question of exercising the care and diligence of a responsible purchaser._________________________________________ 1 The Land Protection and Rehabilitation Regulation, CQLR, chapter Q-2, r 37.2 Section 31.43 of the Environment Quality Act, CQLR, chapter Q-2, provides more specifically that this applies to contaminants which are “likely to adversely affect the life, health, safety, welfare or comfort of human beings, other living species or the environment in general, or to be detrimental to property”.3 Supra, note 1. This is a list of most of the activities that are likely to cause soil contamination.4 See sections 31.51 and following of the EQA.5 See sections 31.51 and following of the EQA.6 See sections 31.51 and following of the EQA.7 For example, a residential development that cannot proceed on land where contaminants exceed the acceptable limits for residential usage.

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  • Francization – Bill No 14 amending the Charter of the French language

    This publication was authored by Luc Thibaudeau, former partner of Lavery and now judge in the Civil Division of the Court of Québec, District of Longueuil. The title of this newsletter gives a good summary of the explanatory notes that serve as an introduction to Bill 14, entitled An Act to amend the Charter of the French language, the Charter of human rights and freedoms and other legislative provisions (the “Bill”). The legislator is concerned that English is being used systematically in certain workplaces. The Bill was tabled on December 5, 2012 and the proposed amendments are designed to reaffirm the primacy of French as the official and common language of Quebec.

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  • Carbon Market : Are you ready to take advantage of it?

    As of January 1, 2013, Quebec and California will emerge as the first two Western Climate Initiative (WCI) partners to create a carbon market that imposes binding targets on businesses identified as major greenhouse gas (GHG) emitters. These new regulations are raising some concerns among the regulated industries but the government is taking the gamble that businesses that undertake the necessary adjustments will profit from this new emissions trading system while reducing their environmental footprint.

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