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  • Builder’s risk insurance: Insurable interest and subrogation rights

    I. Intact, compagnie d’assurances v. Théberge & Belley (1985) inc. and l’Union canadienne compagnie d’assurance and EBC inc.1 In this case, the Court of Appeal held that an insurer who indemnified its insured pursuant to “contractors’ equipment” coverage cannot exercise its subrogation rights against the subcontractor who committed a fault. FACTS EBC was the general contractor for the construction of a deep water wharf. Théberge & Belley (hereinafter “T & B”) was the subcontractor chosen by EBC to carry out the electrical work. Two of the five construction trailers owned by EBC, as well as their contents, were damaged by fire. T & B admitted liability. It was also admitted that T & B’s work, which caused the fire, was not related to the construction of the wharf despite the fact that the trailers were located on or near the construction site. Intact had issued a commercial insurance policy offering several types of coverage, including “builder’s risk” and “contractors’ equipment” coverage, to the named insured, EBC, and to various additional named insureds. The relevant clauses of the builder’s risk insurance were as follows: [TRANSLATION] INSURED PROPERTY (...) 1.3 The constructions, scaffolding, stands, fences, temporary formwork, excavations, site preparation work and work of a similar nature, provided that the value thereof is included in the amount of coverage and then only to the extent that they must be repaired or replaced for carrying out the work. EXCLUDED PROPERTY (...) 1.6 Except pursuant to section 1.3 of the Insured Property, the tools, equipment, materials, replacement parts and accessories of contractors or subcontractors, whether or not owned by such contractors or subcontractors. Pursuant to the “contractors’ equipment” coverage, movable buildings (trailers) were expressly covered, provided they were related to the professional activities of the insured as described in the declarations. Superior Court The trial judge found that the trailers and their contents were included in the [TRANSLATION] “constructions (…) site preparation work and work of a similar nature” (Clause 1.3). However, while acknowledging that these items of property were not [TRANSLATION] “intended to be incorporated in the designated work”, he nonetheless concluded that they had to be repaired or replaced for the work to continue. The Court held that in light of the fact that Intact had indemnified EBC for its loss under the builder’s risk coverage, it could not exercise its subrogation rights against T & B. Court of Appeal The Court of Appeal found rather that these items of property were covered under the “contractors’ equipment” coverage. Accordingly, the issue raised on appeal was whether Intact could exercise its subrogation rights against the subcontractor, T & B, who was not a named insured under the “contractors’ equipment” coverage. In other words, under the principles applicable to the builder’s risk insurance, T & B ought to be considered an unnamed insured with respect to that coverage, which precluded Intact from instituting subrogation proceedings against it. The issue was whether Intact had retained a recourse against T & B after having indemnified its insured under the “contractors’ equipment” coverage. The Court noted that even if the coverage under review was different from the builder’s risk insurance, the “contractors’ equipment” coverage which EBC had purchased also constituted property insurance covering a risk related to the same type of activities, namely, construction activities in a general contractor capacity. The Court referred to the Alberta case of Medicine Hat College v. Starks Plumbing & Heating Ltd.2 In that case, the insurable interest of a gas and plumbing subcontractor was confirmed not only with respect to the ongoing construction project for the expansion of a building, but also for the existing building, pursuant to builder’s risk insurance obtained by the client, Medicine Hat College, in which only the client was a named insured. In its subrogation proceedings against the professionals, the general contractor and the subcontractor, the insurer argued that it was not precluded from exercising its recourse as a result of the fact that the indemnity claimed had been paid to Medicine Hat College under the property policy. According to Justice McDonald, it is logical to conclude, in the context of work being performed in connection with the expansion and modification of an existing structure or near such a structure, that subcontractors participating in the work have an insurable interest in all the interconnected structures and not just the new one. He ruled that the fact that the principal amount of coverage was less than the total value of the building taken as a whole was not sufficient to conclude that the policy covered nothing more than the damages to the new structure under construction. In order to reach such a conclusion, the terms of the policy ought to have provided for a clear exclusion of the adjoining structures. In the case under review, the Court of Appeal drew a parallel between the situation of the coverage of the plumbing subcontractor in the Medicine Hat College case and the coverage of the respondent T & B. In the Albertan case, there was a prior policy covering the property of a named insured, the property policy, and a second policy, namely, the builder’s risk policy, which was superimposed over it. In the present case, there was only one insurance policy for the benefit of EBC, covering all of its construction activities. This situation further supported T & B’s argument that it was an unnamed insured under the coverage provided for the “contractors’ equipment”. According to the principles of interpretation of an insurance contract described by Justice McDonald in the Medicine Hat College case, if Intact had wished to retain its subrogation rights against a subcontractor in respect of property used on site by its insured, it should have clearly stated so.   II. Ville de Québec v. Génitech Entrepreneur général inc. et al.3 In this case, the Superior Court had to decide whether the coverage under a builder’s risk insurance policy extended to the damages caused by the work to the existing structure, or if it was only limited to the work. FACTS Quebec City (hereinafter “the City”) awarded a contract to Génitech as general contractor for the conversion of Palais Montcalm from an entertainment venue into a concert hall. The Lot no. 2 contract dealt with work that was to be done on the existing structure of Palais Montcalm. Under the terms of the contract, Génitech purchased a builder’s risk policy from Promutuel to cover the property contemplated by the work. Furthermore, as the project required significant demolition work, Génitech retained the services of CFG as a subcontractor. Génitech and the City were named as co-insureds under the builder’s risk policy and the protection thereunder was extended to subcontractors. The insured activities were described as follows [TRANSLATION]: “Transformation of Palais Montcalm into a house of music lot:2 structure and primary envelope”. Following the faulty performance of the demolition work, a fire caused significant damage to parts of the existing structures not included in Lot no. 2. Moreover, the smoke and the water sprayed on Palais Montcalm by the fire department damaged a recording studio and the refrigeration system of the Youville Square skating rink, which were manifestly not included in Lot no. 2. The City claimed the amount of $1,091,582.98 for the damages thus caused. The defendants filed three motions to dismiss the City’s action. They maintained (1) that the builder’s risk insurance applied not only to the items in Lot no. 2, but also to all the property damaged in relation to the work performed on Lot no. 2, including the damages to the existing structure of Palais Montcalm, (2) that the City no longer had a recourse against them because it had withdrawn from, and filed a declaration of settlement in, another matter relating to the same facts and claiming almost the identical damages against them, and (3) that the City could not sue them, due to its status as a co-insured under the builder’s risk insurance. While the City acknowledged that the general principles related to builder’s risk insurance were applicable, it argued that it had not lost its recourse because the damages to the existing structure were not covered by this builder’s risk insurance, since it specifically covered the damages to property located on the site of the work, i.e. on Lot no. 2 only. In support of its argument, it relied, among other things, on the amount of the builder’s risk insurance, which was obviously insufficient to cover the entire Palais Montcalm building and its contents. Superior Court Applying the same reasoning as the Alberta Court of Appeal in the case of Medicine Hat College, the Court concluded that all the trades and subcontractors have an insurable interest on a construction project in its entirety and, therefore, that the entire structure of Palais Montcalm was covered by the builder’s risk insurance. The action was therefore dismissed, since all the damages claimed were covered by the builder’s risk insurance. In addition, the Court held that, as a co-insured, the City could not sue the defendants. Having found that the builder’s risk insurance covered all the damages claimed by the City, the Court also ruled that the settlement that was reached in the other matter had the effect of res judicata and, noting that the City could not institute another action based on the same facts, also dismissed the action on this ground. The decision has been appealed. Conclusion The three judgments from Quebec and Alberta discussed in this text have held that a subcontractor’s insurable interest extends well beyond the property directly connected with the work alone to include the entire work site, thereby conferring the status of an insured on the subcontractor under the related insurance coverage. In light of these three decisions, insurers would be well advised to more clearly define the scope of the coverage they underwrite in the context of a construction site using specific exclusionary riders, as necessary if they see fit. _________________________________________ 1 2014 QCCA 787. 2 2007 ABQB 691. 3 2013 QCCS 5042, inscription in appeal 09/08-2013.

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  • Cooling Towers and Asbestos: New Obligations for Owners, Tenants, Managers and Employers

    Over the last year and half, the legislator has addressed the building safety issues in order to ensure the safety of the occupants and visitors of these buildings, as well as the persons who may be exposed to hazards because of equipment attached to such buildings.On March 18, 2013, the Regulation to improve building safety, which became Chapter VIII entitled “Buildings” of the Safety Code adopted under the Building Act came into force.The “Buildings” chapter of the Safety Code (“SC”) provides for rules governing the maintenance of building façades and concrete multistorey garages, in addition to containing various fire safety rules which are slated to progressively come into force between March 18, 2013 and March 18, 2018.Additional fire safety provisions are in force since March 18, 2014 for sleeping rooms covered by the SC (namely, some hotels, motels, multiple-unit residential buildings, condominiums complexes, retirement homes and healthcare facilities). The provisions in force since March 18, 2014 particularly govern smoke alarms, carbon monoxide alarms and emergency lighting.The remainder of the provisions of the SC respecting fire safety will come into force on March 18, 2016 and March 18, 2018. These new provisions may involve significant modifications and costs for the owners of relevant buildings. The progressive coming into force of the provisions aims to allow the owners in question to prepare accordingly.WATER COOLING TOWERSOn May 12, 2013, the Regulation to amend the Safety Code containing provisions pertaining to water cooling towers came into force. These provisions have also been integrated in the SC.These provisions impose new obligations to owners of cooling towers, particularly the implementation of a preventative maintenance program developed by a professional, the maintenance of a register containing information pertaining to the towers and providing information to the Régie du bâtiment du Québec (“RBQ”). The coming into force of these provisions was further to the outbreak of Legionella during summer 2012. At the time, no regulatory framework was governing the maintenance of water cooling towers and no register was in existence to locate operating cooling towers.The provisions which came into force in May 2012 were succinct. They consisted in six sections and contained no details as to the standards and methods to be complied with respecting the maintenance of water towers.On May 28, 2014, an “update” of the Regulation to amend the Safety Code was published in the Gazette officielle du Québec. The new provisions will come into force on July 12, 2014. They specifically deal with the methods to be followed in maintaining cooling towers. They are, in a way, phase 2 of the provisions pertaining to water cooling towers maintenance. They contain additional specific measures concerning the procedure for maintaining water quality and the frequency of sampling. The most demanding provisions for tower owners relate to the obligation to have samples analyzed monthly by a laboratory which is accredited by the Centre d’expertise en analyse environnementale du Québec to determine their Legionella pneumophila concentration. The draft regulation announced that the new provisions would involve costs for enterprises which own the towers. The cost of an analysis by an accredited laboratory is approximately $250, for an annual cost of approximately $3,000.Most of the measures covered by the new provisions were already included in the guide for the maintenance of water cooling towers published in May 2013, which was posted on the RBQ’s website. Since they are now included in the Regulation to amend the Safety Code published on May 28, 2014, they are henceforth compulsory.Moreover, the new provisions specify that the owners of the towers are responsible for obtaining all the results of the analysis performed by the accredited laboratory. The owners of the towers must also make sure that the accredited laboratory sends to the RBQ all the results of the analysis performed within 30 days from the date the relevant sample was taken.The new provisions also impose on owners the obligation to obtain the results of the accredited laboratory forthwith or the business day following the result of the analysis where a result indicates a Legionella pneumophila concentration equal to or greater than 10,000 CFU/L and where it is impossible to quantify the Legionella pneumophila concentration.Lastly, the provisions provide for immediate measures to be taken by owners when the Legionella pneumophila concentration is 1,000,000 CFU/L or more, particularly the obligation to ensure that the RBQ and the public health director of the region where the water cooling tower facility is located receive the result from the accredited laboratory without delay.The Building Act includes penalties and penal provisions for failure to comply with the measures applicable to cooling towers. It must be noted that the RBQ conducted over 1,900 inspections of water cooling towers since 2012 and that with the register it now has, it precisely knows where the cooling towers are. It is therefore essential to comply with the new measures to avoid sanctions.Beyond the measures that may be imposed by the RBQ (including a remedial notice and obtaining an order enjoining compliance with the Act and fixing a time limit for doing so), the RBQ may also order the shutdown of the cooling towers. Owners who refuse to comply with the Act and orders are liable to penalties ranging from $3,000 to $15,000. In the case of renewed breaches, the amount of the penalties may be multiplied by 10.ASBESTOSOn June 6, 2013, the Regulation to amend the Regulation respecting occupational health and safety and the Safety Code for the construction industry came into force. Most of the provisions of this Regulation are now integrated in Division IX.I of the Regulation respecting occupational health and safety entitled “Provisions on the safe management of asbestos”.This Regulation requires that all buildings built before February 15, 1990 be inspected to locate asbestos flocking and all buildings built before February 20, 1999 be inspected to locate heat insulating material containing asbestos. The first inspections to be made under the Regulations must be carried out no later than June 6, 2015. Thereafter, employers must verify every other year the asbestos flocking and insulating material containing asbestos, except if they are entirely enclosed in a permanent structure resistant to fibres and access to flocking and heat insulating material is only possible by a destructive operation of the structure.It is important to note that it is the employer’s responsibility to locate flocking and heat insulating material in respect of any building under the employer’s authority. The employer may obviously be the owner of the building but ownership is not necessary. The employer can be, for instance, the tenant or manager of the building, as long as the building is under his authority. The Regulation imposes other obligations on employers, including that of setting up and maintaining a register which must contain information concerning flocking and heat insulating materials. The result of the inspections conducted by the employer must also be entered in the register. The employer is required to make this register available to employees and their representatives who work in his establishment.The method for analysing samples and the frequency of inspections are also covered. The Regulation also provides for various measures to be taken in the event flocking and heat insulating materials are located. Under this Regulation, it is presumed that all flocking and heat insulating materials contain asbestos and only an analysis may demonstrate the contrary.The Regulation also requires any employer undertaking work that may generate dust by a direct or indirect action on or inside a building to check for the presence of asbestos in the materials and products likely to contain some. It must be noted that where asbestos is detected in materials and products, the employer must repair or remove them taking into account the degradation and dispersal factors.Once again, if these provisions necessarily apply to an owner carrying out work on his building, the Regulation may also apply to a tenant, manager or contractor having the authority to carry out work on a building, who will then be required to assume the resulting expenses.CONCLUSIONThe new provisions pertaining to water cooling towers and asbestos will have a financial impact for owners of towers and, in the case of asbestos, for many employers, whether they are owners, tenants, managers or contractors. One can well imagine that the new Regulation concerning asbestos will have an impact on the negotiation and drafting of construction contracts, property management agreements and commercial leases since the parties will want to allocate the risks and specify the responsibilities of each party as to compliance with the Regulation.

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  • Criminal negligence: The Court of Appeal of Ontario increases to $750 000 the fine imposed on Metron Construction Corp.

    On September 4, 2013, the Ontario Court of Appeal ordered Metron Construction Corporation (“Metron”) to pay a fine in the amount of $750 000 for criminal negligence causing death.1 After Metron pled guilty to the offence, the trial judge ordered the company to pay a fine of $200 000. This case was the result of the collapse of a swing stage from the 14th floor of a building on December 24, 2009 which resulted in the death of a supervisor and three employees.According to the Ontario Court of Appeal, the fine which Metron was ordered to pay by the trial judge was manifestly unfit. We are of the opinion that the following aspects of the decision are particularly noteworthy. The Use of Health and Safety Case LawAccording to the Court of Appeal, the trial judge placed too much emphasis on the case law dealing with fines in the context of occupational health and safety offences (penal provisions). In so doing, the trial judge failed to consider the higher degree of moral blameworthiness associated with a criminal conviction. In addition, the intrinsic seriousness of the offence of criminal negligence causing death must be considered. Lastly, since Metron pled guilty to this offence, it could not subsequently try to diminish its liability and distance itself from the actions of the supervisor, its representative, by relying on his corporate rank or his level of management responsibility. The Company’s Ability to PayThe section of the Criminal Code related to fines for organizations does not impose any maximum amount and does not require the court to consider the company’s ability to pay.2 The ability to pay may be considered in determining the punishment but does not constitute a prerequisite for the imposition of a fine. In Metron’s case, the economic viability of the enterprise was not a determining factor necessary to establish the appropriate fine and too much emphasis had been placed on Metron’s ability to pay.The Court of Appeal concluded that a $200 000 fine did not reflect the gravity of a guilty verdict for criminal negligence causing death, the particular circumstances of the case, or the serious consequences for the victims and their families. The negligence of the supervisor, and thus Metron’s criminal responsibility, was “extreme”. A fine in the amount of $750 000 was more appropriate.This judgment of the Ontario Court of Appeal is the first of an appellate court on the subject. It is particularly enlightening as to the criteria which must guide the courts in determining the appropriate punishment for criminal negligence in the context of an occupational accident. It is also the highest fine imposed on an enterprise guilty of criminal negligence causing death, the previous record being $100 000.3For more details on the trial level judgment, please see our publication by clicking here._________________________________________  1 R. v. Metron Construction Corporation, 2013 ONCA 541. 2 Criminal Code, R.S.C. 1985, c. C-46, section 735. 3 R. v. Transpavé inc., 2008 QCCQ 1598.

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  • Building Safety – New Onerous Obligations for Owners

    On March 18, 2013, the Règlement visant à améliorer la sécurité dans le bâtiment, adopted pursuant to the Building Act, came into force. The new Regulation, which became chapter VIII of the Safety Code entitled “Building”, contains rules on fire safety and on maintenance of building facades and multi-level concrete parking structures. The fire safety rules will come into force progressively between now and 2018, most likely to allow owners to plan any code compliance work and associated costs.On May 12, 2013, the Regulation to amend the Safety Code will come into force and will add provisions to Chapter VIII - Building - that will impose upon owners new obligations pertaining to the maintenance of water cooling towers.This bulletin provides a summary of the new provisions of the Safety Code pertaining to building facades, parking structures and water cooling towers.THE NEW REGIME FOR INSPECTION AND MAINTENANCE OF FACADESThe new safety norms apply to all facades of five stories or more above ground. The facades of a building must be maintained so as to ensure safety and avoid the development of dangerous conditions. A dangerous condition exists when the component of one of the facades of a building can, imminently, detach itself from the building or collapse and cause bodily injuries.Every five years, the owner of a public building of five stories or more must obtain an assessment report from an engineer or an architect indicating that the facades of the building do not present any dangerous conditions and, if applicable, that recommendations intended to correct defects that may contribute to the creation of dangerous conditions have been made.When a dangerous condition is detected, whether it be during an inspection or otherwise, the owner must respect certain obligations. He must, without delay, put in place emergency measures to ensure the safety of the occupants and of the public and he must advise the Régie du bâtiment; he must also provide to the Régie, within thirty days, a description prepared by an engineer or an architect, of the corrective measures that must be implemented and a work schedule that must be approved by the Régie; afterwards, he must ensure that the work is performed in accordance with the documents provided to the Régie and he must obtain, when the work is completed, an assessment report confirming that the facades of the building are safe. At the end of this process, the owner must provide to the Régie a letter signed by the engineer or the architect confirming that all of the corrective measures were completed to his/her satisfaction and that there no longer exists a dangerous condition.The government has in a way delegated to the professionals, engineers and architects, a supervisory role with respect to the application of some of the measures provided for in the Regulation. For example, the Regulation specifies that the choice of inspection methods for the report that must be provided every five years belongs to the professional who must recommend any tests, examinations or trials he deems necessary. The engineer or the architect must, in his report, identify the defects and their causes that may contribute to the development of dangerous conditions including, for example, infiltrations, rust stains, signs of efflorescence, scaling, etc. He must also describe the corrective measures to be undertaken and the work schedule, and confirm that the facades are exempt from any dangerous condition. If applicable, he must also confirm that recommendations were addressed to the owner in order to correct the defects observed that may contribute to the development of dangerous conditions.This report must be produced every five years and the necessary inspections to issue such a report must be performed within six months preceding the production of the report. The first inspection report of the facades must be produced by the owner no later than on the day of the tenth anniversary of the construction of the building. However, if on March 18, 2013, the building is more than ten years old, the first report must be produced on the date determined by the Regulation on the basis of the age of the building. In such a case, the timetable is as follows: if the building is more than 45 years old, before March 18, 2015; between 25 and 45 years old, before March 18, 2016; between 15 and 25 years old, before March 18, 2017; and between 10 and 15 years old, before March 18, 2018.THE NEW REGIME FOR THE INSPECTION OF PARKING STRUCTURESThe Regulation also provides for new obligations for owners of underground or aboveground parking structures with a cement slab having a rolling surface that does not rest on the ground. In the case of parking structures, the five-year report may only be prepared by an engineer and the first report must be produced between 12 and 18 months following the end of the construction of the building. However, if the parking structure is between 1 and 5 years old, the report must be produced before March 18, 2014, and if it is more than 5 years old, before March 18, 2016.If an incident occurs that may have an impact on the soundness of the parking structure, the owner must have an engineer conduct and in-depth inspection. An owner will want to establish a protocol identifying the types of incidents that require such an in-depth assessment. A structural engineer should be able to assist the owner in establishing such a protocol.A parking structure must also be inspected annually and the first annual inspection must take place before March 18, 2014 for all parking structures subject to the Regulation. The Regulation provides a detailed inspection checklist that must be completed by the owner during the annual inspection. The contents of the checklist suggest that the owner may rely on a visual inspection.MAINTAINING A REGISTRYAll the reports that we have referred to, both for facades and parking structures, must be kept by the owner on site in a registry with other information required by the Regulation, including copies of plans, photographs, a description of the repair, modification and maintenance work, and a description of repeated repairs pertaining to a recurring problem.THE MAINTENANCE OF WATER COOLING TOWERSThe provisions of the Regulation to amend the Safety Code that come into force on May 12, 2013, enact the obligation of the owner to maintain the facilities and equipment of water cooling towers in accordance with a maintenance program. They also provide for the obligation to keep a register on the premises for consultation by the Régie, which must contain, among other things, the maintenance program(s) of the towers.The maintenance program must be drawn up and signed by one or more members of a professional order whose activities are related to the field of water cooling towers. The Regulation does not specify in any greater detail the qualifications of these professionals. Section 402 provides a list of eight elements which must form part of the maintenance program. These include the procedures for winterizing, re-starting, decontaminating and maintaining the quality of the water in order to minimize the growth of bacteria, including bacteria of the Legionella species. The program must also contain measures for reducing corrosion, scaling and the accumulation of organic matter, as well as measures for verifying the mechanical components of the facility and equipment of water cooling towers. Finally, the program must take into account certain documents, including the manufacturers operation and maintenance manual and certain guides published by specialized organizations such as the Cooling Technology Institute (CTI), the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) and the Association of Water Technologies (AWT).Within thirty days following the initial start-up of a water cooling tower, the owner must send to the Régie the address of the facility, the name and contact information of the owner, the names of the professionals that have prepared the maintenance program and a brief description of the type of facility. The owner must advise the Régie without delay of any change to the foregoing information. For water cooling towers already in operation when the Regulation comes into force, such information must be sent to the Régie by May 12, 2013.The register that must be maintained by the owner must contain the name and contact information of the latter, the plans for the design and installation of the water cooling towers, if they are available, the manufacturer’s operation and maintenance manual, the results of the water analysis for the past two years, the history and description of the maintenance, repairs, replacements and alterations made, and the names of the person responsible for and the personnel assigned to the maintenance and their telephone numbers.SEVERE PENALTIESThe Regulation provides that a violation of any of its provisions constitutes an offence. The Building Act provides the penalties for such offences. The fines imposed for violations of provisions intended to promote public safety are severe.For example, fines vary from $5,241 to $26,204 for individuals and from $15,723 to $78,612 for corporations. It is important to mention that in case of repeated offences, fines can double and even triple in certain cases.The Building Act also provides that when a violation of a provision intended to protect the public lasts more than one day, each day constitutes a separate offence. For example, this means that if a notice must be provided to the Régie within thirty days following the finding of a dangerous condition and if said notice is transmitted 45 days after such finding, the fine could be multiplied by 15.The importance of public safety is such that not only the offender may be fined, but also any person who by act or omission helps another person to commit an offence.IMPORTANT CONSEQUENCESThe new provisions of the Safety Code will have important consequences in many respects.First of all, in terms of the civil liability of the owner, they create new safety norms which, if not respected, may facilitate certain civil liability recourses if an accident where to occur. These provisions will also have an impact on professional liability since they contain new obligations for the professionals while giving them considerable latitude in terms of the measures that need to be taken to discharge their obligations. Hopefully, jurisprudence will, in the future, clarify the conduct to be followed by the professionals in the performance of their obligations.The new safety norms will also have consequences on the relationship between landlords and tenants. Since an owner will have to perform more regular and in-depth inspections to comply with the new safety norms, and since the owner will have to perform certain maintenance and repairs recommended by the engineer or the architect, will he be able to add his expenses to the operating costs that are payable by the tenants as additional rent? Since expenses related to structural repairs are often excluded from operating costs that may be charged to the tenants of a building, the drafting of the lease will determine how this question may be answered and each case will have to be reviewed on its merits.The buyer of a building subject to the provisions of the Safety Code pertaining to facades, parking structures and water cooling towers will want to have access to the registry maintained by the owner, including any inspection report prepared by an engineer, an architect or another professional. The buyer will also want a confirmation that all recommendations made by the professional have been followed and that there are no dangerous conditions. An informed buyer will most likely want to obtain from the vendor appropriate representations and warranties. It remains to be seen whether the vendor will agree to provide such representations and warranties. The outcome may vary from one case to another depending on the circumstances.A lender financing a property will also want to ensure that the property is in compliance with the provisions of the Safety Code and that the borrower has not committed an offence. If a professional has recommended that certain repairs be carried out, the lender may be reticent to advance funds if there are serious defects or, if the defects are not so serious, the lender may wish to obtain a holdback designed to ensure that the recommended work is performed.In residential buildings subject to the new provisions, we can expect that there will be debates between owners and tenants pertaining to rent increases that the owner may want to justify on the basis of increased costs for inspections and maintenance required by the coming into force of the new provisions. In condominium projects, syndicates of co-owners will want to add to their budgets the costs for inspections, maintenance and repairs required by the new norms and they will want to determine if the contributions to the contingency fund must be revised accordingly.

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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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  • The Metron Construction Corp. Case: Another conviction for criminal negligence in the area of occupational health and safety

    Since the adoption of Bill C-45 amending certain provisions of the Criminal Code in March of 2004, employers have had to take on increased responsibility in the area of occupational health and safety. Indeed, the effect of sections 22.1 and 217.1 of the Criminal Code is to facilitate the laying of criminal negligence charges in cases involving the health and safety of workers.

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  • Changes to the obligations of a surety in the context of the restructuring of an insolvent construction company

    In 2002, the Québec Court of Appeal acknowledged the importance of sureties in a dispute between a construction company and a supplier. The Court noted that the construction company's losses had been exacerbated by the withdrawal of its surety facility.More recently, the Québec Superior Court established that the active participation of a surety in the restructuring of a company under the Canadian Companies’ Creditors Arrangement Act was critical to determining whether a surety’s obligations could be reduced under the terms of an arrangement. Accordingly, in Charles-Auguste Fortier inc. (Arrangement relatif à), the Court approved an arrangement under the CCAA, which provided for a partial release of claims against the surety of the debtor company.

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