Publications

Packed with valuable information, our publications help you stay in touch with the latest developments in the fields of law affecting you, whatever your sector of activity. Our professionals are committed to keeping you informed of breaking legal news through their analysis of recent judgments, amendments, laws, and regulations.

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  • No municipal tax reductions for mining companies

    What is a mine’s equipment? What does it include? What is considered an access road to a mining operation? These are, you might think, simple, perhaps even banal questions.  Think again: the answer to these questions represents the difference between millions of dollars in property taxes pouring into the coffers of municipalities and mining companies across Québec holding on to them. The Administrative Tribunal of Québec (Immovable Property Division) (hereinafter “TAQ”) was confronted by these questions as part of an appeal lodged by Bloom Lake General Partner Limited against the City of Fermont1. The underlying principle is simple: municipal taxation is essentially applied as a function of the values entered on the property assessment roll. It is the responsibility of the assessor2 to determine the composition of each assessment unit, what immovables are to be entered on the property assessment role and what their value is. The law3 provides that certain immovables are not to be entered on the role.  Accordingly, their value has no impact on the taxes that can be collected by municipalities. Among the immovables excluded from the role:  “galleries, shafts, excavations, tunnels the equipment of underground or open mines”4 “an access road to forest or mining operations”5. Hence the importance of the questions asked above. With respect to a mine’s equipment, Bloom Lake argued that the equipment of a mine should be taken to refer to all the steps in the operation of a mine, from the extraction of the ore to its marketing and including its processing. Instead, the TAQ adopted a more limited interpretation of the concept of mine equipment that included only the equipment used to extract the ore. As for the concept of an access road to a mining operation, Bloom Lake claimed that it included all the roads located within the mining operation, i.e. all the roads used by vehicles in the mining operation.  Again here, the claim was not accepted by the TAQ, which instead circumscribed this concept to the road linking the public road to the entry gate of the mining operation. If the TAQ had accepted the Bloom Lake interpretation, it could have had a serious financial impact for mining companies, which would have had a large part of their immovables that are included in their mining operation excluded from the assessment role.6   2018 QCTAQ 04461 Also called Municipal Body Responsible for Assessment” or “MBRA”, sections 19 ff. of the Act respecting municipal taxation. Act respecting municipal taxation (AMT), ss. 63 to 68. In this case, the relevant paragraphs are 65 para 1 (4) and 65 para 1 (8). Section 65 para 1 (4) AMT. Section 65 para1 (8) AMT. It should however be noted that at the time of this writing, the time period for appealing the TAQ decision had not yet expired.      

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  • Bill 162: An Act to amend the Building Act and other legislative provisions mainly to give effect to certain Charbonneau Commission recommendations

    Tabled on December 1, 2017 by Lise Thériault, the Minister responsible for Consumer Protection and Housing, the main purpose of Bill 162 is to give effect to certain recommendations contained in the final report of the Commission of inquiry on the awarding and management of public contracts in the construction industry. Amendments to the Building Act Firstly, the Bill amends the definition of "officer" contained in the Building Act so as to include any shareholder of a partnership or corporation holding 10% or more of the voting rights attached to its shares, particularly for purposes of the assessment by the Régie du bâtiment du Québec (the "Board") of an undertaking’s integrity. The notion of "guarantor" is added to the Building Act to describe a natural person who, by applying for a licence on behalf of a partnership or legal person, or by holding such a licence himself or herself, becomes responsible for managing the activities for which the licence is being issued. In addition, the Board's powers of inquiry, verification and inspection are expanded. Finally, the Act provides for immunity from civil proceedings and protection from reprisals for any person who communicates information in good faith to the Board regarding any act or omission which he or she believes constitutes a violation or offence under the Building Act. Certain penal provisions have also been added for the purpose of sanctioning any person who takes reprisals in response to the disclosure of such information, or who submits false or misleading information to the Board. Additions to the Building Act Secondly, a conviction for certain offences, which already previously warranted restricted access to public contracts, will now lead to a refusal by the Board to issue a licence, and may result in the cancellation or suspension of an existing licence. Furthermore, where such a conviction leads to a person's imprisonment pursuant to a sentence, a licence can only be issued to the person once five years have passed following the end of the said term of imprisonment. The Board will be required to cancel a licence where the licence holder, or any officer of an undertaking holding a licence, is convicted of an offence or any indictable offence referred to in the Building Act, where the said person was already convicted of such an offence or indictable offence within the five preceding years. The Board is given new grounds pertaining to the integrity of undertakings to refuse to issue, suspend or cancel a licence, particularly where the corporate structure of the entity enables it to evade the application of the Building Act. In this regard, the Board is obliged, by regulation, to require any contractor to provide either a performance bond or security for wages, materials and services for the purpose of ensuring construction work continues, or the payment of creditors, in the event of the cancellation or suspension (in certain cases) of a licence. Lastly, a new penal offence for the use of "prête-noms" (nominees) is being added, and the prescription period in penal matters is being extended from one year to three years from the date on which the prosecutor had knowledge of the offence, without however exceeding seven years from the date of commission of the offence. Conclusion This Bill, which notably implements four recommendations of the Charbonneau Commission, will be worth watching when parliamentary proceedings resume in the National Assembly on February 6, 2018.

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  • A bid’s nonconformity to the eligibility criteria set out in a call for tenders, such as minimum experience, constitutes a major irregularity

    When it comes to presenting a bid in response to a call for tenders made by a public body, two major questions are of interest to businesses concerned, namely “What is the nature of the contract?” and “Does my business conform to the conditions of the call for tenders, for example, those concerning the experience required of tenderers?” Absent the necessary skills in the field contemplated by the call for tenders or the years of experience required to comply with the conditions set out in the invitation to tender, businesses will refrain, obviously, from devoting time to a tender process they know they have no chance of winning. But what happens when a public body fails to comply with the conditions it itself deemed “essential”, whether explicitly or implicitly? Traditionally, courts would analyze such situations by attempting to characterize the default of the bid impugned for not respecting all the tender conditions as a “minor” or a “major” irregularity. However, in two consecutive decisions handed down within three months of each other, the Québec Court of Appeal repositioned the debate on different elements that are to be considered when analyzing the conformity of a bid. In its most recent decision, it even innovated by adding a new dimension to the manner in which the concept of “fairness among tenderers” is to be considered when analyzing the conformity of tenders. This text proposes a combined analysis of the decisions in Ville de Matane c. Jean Dallaire, architectes & EBC inc. 1 and Tapitec inc. c. Ville de Blainville 2 rendered by the Court of Appeal on November 25, 2016 and February 24, 2017, respectively. Ville de Matane c. Jean Dallaire, architectes & EBC inc. The City of Matane invited tenders for the building of a sports complex. One of the fundamental conditions of the call for tenders was that tenderers have experience in connection with at least three projects of comparable scale and complexity. This condition was characterized as “essential” in the invitation to tender. Despite this requirement, the City awarded the contract to a business that did not possess the required experience and that, to the City’s knowledge, only had experience in small-scale residential and institutional projects. EBC Inc., another bidder, sought to have the resolution awarding the contract annulled on grounds of the successful bidder’s lack of experience vis-à-vis the condition set out in the invitation to tender. The City of Matane tried to persuade the Court that the default was a minor irregularity inasmuch as the winning bidder undertook, subsequently to the opening of tenders, to have personnel on its team with sufficient experience to meet the requirement relating to the three projects of comparable scale and complexity set out in the invitation to tender. The Court of Appeal rejected the City’s argument and confirmed that the winning bid’s default did constitute a major irregularity. Indeed, through its own characterization as essential of the condition relating to experience on three projects of comparable scale and complexity, the City of Matane created a mandatory requirement with which compliance had to be demonstrated at the time of tendering. Allowing the winning bidder to prove its experience differently after filing its bid would amount to circumventing the City’s own requirement and would be contrary to the contract as well as to the principle of fairness between bidders. The requirement relating to the experience of tenderers set out in an invitation to tender must therefore be complied with and applied straightforwardly. Once a requirement of an invitation to tender is characterized as “essential”, the public body may not consider a default in relation thereto a “minor irregularity”. On the contrary, such a default necessarily constitutes a major irregularity. Tapitec inc. c. Ville De Blainville In this case, the City of Blainville was looking to have a sports field built with a synthetic grass surface. As it wished to find a highly specialized contractor familiar with the laying of this type of surface, the City of Blainville decided to proceed by way of a qualitative assessment of tenders received rather than automatically awarding the contract to the lowest bidder. As one of its conditions, the City required that tenderers have had a place of business in Québec for at least the past five years. Despite this requirement, the City awarded the contract to a business that had opened a place of business in Québec only two years previously. The Court of Appeal quashed the City’s decision and confirmed that the failure to meet a condition relating to a bidder’s experience, even if such condition is not explicitly characterized as essential, will automatically disqualify a bid, when the circumstances so warrant. This was the case in the City of Blainville’s tender documents which, although they did not contain words such as “essential”, “automatic disqualification” or “fundamental”, set out a condition of having had a place of business in Québec for at least five years, which condition was, according to the Court of Appeal, essential in that it resulted in limiting the number of bidders by imposing mandatory experience or qualification criteria. The Court insists on the effect of such conditions on businesses in their decision of whether or not to tender. As a result, a public body cannot consider such a default as merely a minor irregularity. Hence, the Court of Appeal clearly states that the obligation to accept only a conforming bid is owed as much to parties participating in the tender process as to those who refrained from so doing because they did not conform to the requirements set out in the invitation to tender. By limiting the pool of tenderers through the imposition of an experience requirement, the public body must absolutely reject any bid that does not comply with such requirement. Otherwise, the public body will breach the principle of fairness between bidders, which constitutes a major irregularity and renders its decision challengeable. The requirement relating to the experience of tenderers set out in an invitation to tender is therefore, where the circumstances so warrant, an essential condition from which the public body may not depart. Obviously, each case turns on its facts and a detailed analysis of the tender specifications will be necessary to determine whether the experience requirement is an essential condition. What can be gathered from these two decisions? These two judgments forcefully assert the principle of equality between bidders and the idea that by limiting the number of persons allowed to tender a bid through the imposition of criteria relating to experience or professional qualifications, public bodies make it their duty to abide by such criteria. A requirement characterized as essential in an invitation to tender can never be circumvented and any default in conforming to any such requirement appearing in a bid must automatically result in the disqualification of same. Failing this, bidders who were wrongly passed over will be entitled to claim damages for any injury suffered. Although the question is one to be determined on a case-by-case basis of whether or not a requirement relating to the experience or professional qualifications of bidders is essential, we note that the Court of Appeal seems to be encouraging certain public bodies to reconsider their manner of analyzing the conformity of the bids they receive, taking into account both other bidders and those contractors who may have forgone participation in a process they believed they had no chance of winning. Matane (Ville de) c. Jean Dallaire, Architectes, 2016 QCCA 1912. Tapitec inc. c. Ville de Blainville, 2017 QCCA 317.

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  • A bid’s nonconformity to the eligibility criteria set out in a call for tenders, such as minimum experience, constitutes a major irregularity

    When it comes to presenting a bid in response to a call for tenders made by a public body, two major questions are of interest to businesses concerned, namely “What is the nature of the contract?” and “Does my business conform to the conditions of the call for tenders, for example, those concerning the experience required of tenderers?” Absent the necessary skills in the field contemplated by the call for tenders or the years of experience required to comply with the conditions set out in the invitation to tender, businesses will refrain, obviously, from devoting time to a tender process they know they have no chance of winning. But what happens when a public body fails to comply with the conditions it itself deemed “essential”, whether explicitly or implicitly? Traditionally, courts would analyze such situations by attempting to characterize the default of the bid impugned for not respecting all the tender conditions as a “minor” or a “major” irregularity. However, in two consecutive decisions handed down within three months of each other, the Québec Court of Appeal repositioned the debate on different elements that are to be considered when analyzing the conformity of a bid. In its most recent decision, it even innovated by adding a new dimension to the manner in which the concept of “fairness among tenderers” is to be considered when analyzing the conformity of tenders. This text proposes a combined analysis of the decisions in Ville de Matane c. Jean Dallaire, architectes & EBC inc. 1 and Tapitec inc. c. Ville de Blainville 2 rendered by the Court of Appeal on November 25, 2016 and February 24, 2017, respectively. Ville de Matane c. Jean Dallaire, architectes & EBC inc. The City of Matane invited tenders for the building of a sports complex. One of the fundamental conditions of the call for tenders was that tenderers have experience in connection with at least three projects of comparable scale and complexity. This condition was characterized as “essential” in the invitation to tender. Despite this requirement, the City awarded the contract to a business that did not possess the required experience and that, to the City’s knowledge, only had experience in small-scale residential and institutional projects. EBC Inc., another bidder, sought to have the resolution awarding the contract annulled on grounds of the successful bidder’s lack of experience vis-à-vis the condition set out in the invitation to tender. The City of Matane tried to persuade the Court that the default was a minor irregularity inasmuch as the winning bidder undertook, subsequently to the opening of tenders, to have personnel on its team with sufficient experience to meet the requirement relating to the three projects of comparable scale and complexity set out in the invitation to tender. The Court of Appeal rejected the City’s argument and confirmed that the winning bid’s default did constitute a major irregularity. Indeed, through its own characterization as essential of the condition relating to experience on three projects of comparable scale and complexity, the City of Matane created a mandatory requirement with which compliance had to be demonstrated at the time of tendering. Allowing the winning bidder to prove its experience differently after filing its bid would amount to circumventing the City’s own requirement and would be contrary to the contract as well as to the principle of fairness between bidders. The requirement relating to the experience of tenderers set out in an invitation to tender must therefore be complied with and applied straightforwardly. Once a requirement of an invitation to tender is characterized as “essential”, the public body may not consider a default in relation thereto a “minor irregularity”. On the contrary, such a default necessarily constitutes a major irregularity. Tapitec inc. c. Ville De Blainville In this case, the City of Blainville was looking to have a sports field built with a synthetic grass surface. As it wished to find a highly specialized contractor familiar with the laying of this type of surface, the City of Blainville decided to proceed by way of a qualitative assessment of tenders received rather than automatically awarding the contract to the lowest bidder. As one of its conditions, the City required that tenderers have had a place of business in Québec for at least the past five years. Despite this requirement, the City awarded the contract to a business that had opened a place of business in Québec only two years previously. The Court of Appeal quashed the City’s decision and confirmed that the failure to meet a condition relating to a bidder’s experience, even if such condition is not explicitly characterized as essential, will automatically disqualify a bid, when the circumstances so warrant. This was the case in the City of Blainville’s tender documents which, although they did not contain words such as “essential”, “automatic disqualification” or “fundamental”, set out a condition of having had a place of business in Québec for at least five years, which condition was, according to the Court of Appeal, essential in that it resulted in limiting the number of bidders by imposing mandatory experience or qualification criteria. The Court insists on the effect of such conditions on businesses in their decision of whether or not to tender. As a result, a public body cannot consider such a default as merely a minor irregularity. Hence, the Court of Appeal clearly states that the obligation to accept only a conforming bid is owed as much to parties participating in the tender process as to those who refrained from so doing because they did not conform to the requirements set out in the invitation to tender. By limiting the pool of tenderers through the imposition of an experience requirement, the public body must absolutely reject any bid that does not comply with such requirement. Otherwise, the public body will breach the principle of fairness between bidders, which constitutes a major irregularity and renders its decision challengeable. The requirement relating to the experience of tenderers set out in an invitation to tender is therefore, where the circumstances so warrant, an essential condition from which the public body may not depart. Obviously, each case turns on its facts and a detailed analysis of the tender specifications will be necessary to determine whether the experience requirement is an essential condition. What can be gathered from these two decisions? These two judgments forcefully assert the principle of equality between bidders and the idea that by limiting the number of persons allowed to tender a bid through the imposition of criteria relating to experience or professional qualifications, public bodies make it their duty to abide by such criteria. A requirement characterized as essential in an invitation to tender can never be circumvented and any default in conforming to any such requirement appearing in a bid must automatically result in the disqualification of same. Failing this, bidders who were wrongly passed over will be entitled to claim damages for any injury suffered. Although the question is one to be determined on a case-by-case basis of whether or not a requirement relating to the experience or professional qualifications of bidders is essential, we note that the Court of Appeal seems to be encouraging certain public bodies to reconsider their manner of analyzing the conformity of the bids they receive, taking into account both other bidders and those contractors who may have forgone participation in a process they believed they had no chance of winning. Matane (Ville de) c. Jean Dallaire, Architectes, 2016 QCCA 1912. Tapitec inc. c. Ville de Blainville, 2017 QCCA 317.

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  • Artificial Intelligence and the 2017 Canadian Budget: is your business ready?

    The March 22, 2017 Budget of the Government of Canada, through its “Innovation and Skills Plan” (http://www.budget.gc.ca/2017/docs/plan/budget-2017-en.pdf) mentions that Canadian academic and research leadership in artificial intelligence will be translated into a more innovative economy and increased economic growth. The 2017 Budget proposes to provide renewed and enhanced funding of $35 million over five years, beginning in 2017–2018 to the Canadian Institute for Advanced Research (CIFAR) which connects Canadian researchers with collaborative research networks led by eminent Canadian and international researchers on topics including artificial intelligence and deep learning. These measures are in addition to a number of interesting tax measures that support the artificial intelligence sector at both the federal and provincial levels. In Canada and in Québec, the Scientific Research and Experimental Development (SR&ED) Program provides a twofold benefit: SR&ED expenses are deductible from income for tax purposes and a SR&ED investment tax credit (ITC) for SR&ED is available to reduce income tax. In some cases, the remaining ITC can be refunded. In Québec, a refundable tax credit is also available for the development of e-business, where a corporation mainly operates in the field of computer system design or that of software edition and its activities are carried out in an establishment located in Québec. This 2017 Budget aims to improve the competitive and strategic advantage of Canada in the field of artificial intelligence, and, therefore, that of Montréal, a city already enjoying an international reputation in this field. It recognises that artificial intelligence, despite the debates over ethical issues that currently stir up passions within the international community, could help generate strong economic growth, by improving the way in which we produce goods, deliver services and tackle all kinds of social challenges. The Budget also adds that artificial intelligence “opens up possibilities across many sectors, from agriculture to financial services, creating opportunities for companies of all sizes, whether technology start-ups or Canada’s largest financial institutions”. This influence of Canada on the international scene cannot be achieved without government supporting research programs and our universities contributing their expertise. This Budget is therefore a step in the right direction to ensure that all the activities related to artificial intelligence, from R&D to marketing, as well as design and distributions, remain here in Canada. The 2017 budget provides $125 million to launch a Pan-Canadian Artificial Intelligence Strategy for research and talent to promote collaboration between Canada’s main centres of expertise and reinforce Canada’s position as a leading destination for companies seeking to invest in artificial intelligence and innovation. Lavery Legal Lab on Artificial Intelligence (L3AI) We anticipate that within a few years, all companies, businesses and organizations, in every sector and industry, will use some form of artificial intelligence in their day-to-day operations to improve productivity or efficiency, ensure better quality control, conquer new markets and customers, implement new marketing strategies, as well as improve processes, automation and marketing or the profitability of operations. For this reason, Lavery created the Lavery Legal Lab on Artificial Intelligence (L3AI) to analyze and monitor recent and anticipated developments in artificial intelligence from a legal perspective. Our Lab is interested in all projects pertaining to artificial intelligence (AI) and their legal peculiarities, particularly the various branches and applications of artificial intelligence which will rapidly appear in companies and industries. The development of artificial intelligence, through a broad spectrum of branches and applications, will also have an impact on many legal sectors and practices, from intellectual property to protection of personal information, including corporate and business integrity and all fields of business law. In our following publications, the members of our Lavery Legal Lab on Artificial Intelligence (L3AI) will more specifically analyze certain applications of artificial intelligence in various sectors and industries.

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  • Drone operators, do you know the rules?

    Drones, also known as “UAVs” (for Unmanned Aerial Vehicles) have become more popular in Quebec over the past few years. From the surveillance of quarries and gravel pits, industrial sites, pipelines, farmland, open air mines and construction sites to package delivery, the collecting of aerial images to promote municipalities, film-making and property sales, there are countless uses for drones. However, it should be kept in mind that the use of drones is regulated by the federal government, and certain uses are subject to special rules that may include obtaining a special flight operations certificate (“SFOC”). Legislative and regulatory framework The use of drones is governed by the Aeronautics Act1, and in particular the Canadian Aviation Regulations2. The applicable rules differ depending on whether the drone constitutes an “unmanned air vehicle” or a “model aircraft” within the meaning of the Regulations. The difference between these types of aircraft depends on how much they weigh (more or less than 35 kg) and the proposed use (whether recreational or non-recreational). A “model aircraft” is an aircraft weighing up to 35 kg that is used for recreational purposes and that is not designed to carry persons or other living creatures3. An “unmanned air vehicle” is a power-driven aircraft, other than a model aircraft, that is designed to fly without a human operator on board4. In other words, an unmanned air vehicle is a drone that weighs over 35 kg, or one that weighs less than 35 kg if it is used for nonrecreational purposes. Unmanned air vehicles: SFOC required unless exempted Section 602.41 of the Regulations5 prohibits the operation of an unmanned air vehicle in flight except in accordance with an SFOC or an air operator certificate6. Section 603.66 of the Regulations also prohibits the use of an unmanned air vehicle unless the terms of an SFOC issued by the Minister are complied with. An SFOC is issued by the Minister pursuant to section 603.67 of the Regulations. The applicant must demonstrate the ability to conduct the proposed flight operation in accordance with the Special Flight Operations Standards7, which also indicate the form and manner of submitting an application. In theory, an SFOC is therefore required to use an unmanned air vehicle. However, the Act8 allows the Minister or a Department of Transport official authorized for such purpose to exempt, on any terms and conditions that may be specified, any person, aeronautical product, aerodrome, facility or service, or any class of persons, aeronautical products, aerodromes, facilities or services, from the application of Regulations. Two exemptions are currently available for individuals operating unmanned air vehicles for non-recreational purposes. The first exemption covers the use of drones with a take-off weight of more than 2 kg but less than 25 kg, subject to compliance with several conditions, including the following: General conditions: have at least $100,000 of civil liability insurance and at least $100,000 of insurance covering the operation of a UAV, not operate a UAV within eight hours after consuming an alcoholic beverage, not operate a UAV if the pilot is likely to suffer from fatigue making him unfit to properly perform his duties, make operational and emergency equipment available to the flight crew, etc. Flight conditions: be able to see the UAV directly, not fly the UAV at an altitude of more than 300 feet, not fly in Class G airspace9, only operate the UAV from a single control station, not conduct a take-off if the UAV has frost, ice or snow on its critical surfaces, not operate a UAV over a built-up area or open-air assembly of persons, maintain unassisted visual contact with the UAV to be aware of its position and able to visually scan the airspace in which it is being used in order to identify and avoid air traffic or objects, etc. Conditions related to the crew (pilot): have successfully completed a ground training program for pilots and be trained on the UAV system and qualified for the area and type of flight, etc. The second exemption applies to drones weighing less than 2 kg that are used for non-recreational purposes, which involve similar conditions to the first exemption, although they are fewer in number. If these conditions are not met, an SFOC must be obtained, just as for the use of drones weighing more than 35 kg for recreational purposes. Model aircraft: safety first The use of a “model aircraft” (a drone weighing less than 35 kg used for recreational purposes) does not require a specific permit. However, such an aircraft must be flown safely. Section 602.45 of the Regulations prohibits any person from flying a model aircraft into a cloud or in a manner that is or is likely to be hazardous to aviation safety. In the absence of a definition in the Regulations of what constitutes the “safe” use of a model aircraft, Transport Canada has published a circular to inform operators of model aircraft and unmanned air vehicles of the general guidelines and safety practices. In the circular, Transport Canada recommends for example that certain safety considerations be followed, such as not using a drone: within 9 km of an aerodrome (ex. an airport); within 150 m of people, animals, buildings, structures or vehicles; in populated areas or over a crowd, such as during sporting events, concerts, festivals or fireworks; near moving vehicles, highways, bridges, busy streets or any other place where drivers could be endangered or distracted; in restricted airspace (over military bases, prisons or forest fire areas), etc.10 Penalties for not following the rules A person operating a flight without an SFOC when one is required is liable to a fine of up to $5,000 for an individual and $25,000 for a corporation, and a person who fails to comply with the conditions of an SFOC is liable to a fine of up to $3,000 for an individual and $15,000 for a corporation11. The Criminal Code12 also creates an offence for the unsafe operation of an aircraft that endangers the safety of other aircrafts,13 which could lead to a fine or imprisonment for life. Compliance with the Regulations does not release the drone operator from complying with applicable provincial (and municipal)14 or federal15 regulations. In conclusion, note that an SFOC is required in the following cases: The aircraft weighs more than 35 kg, regardless of the proposed use; The aircraft weighs less than 35 kg and the proposed use is nonrecreational. Where an aircraft weighing less than 25 kg is used for non-recreational purposes, the operator may be exempt from the requirement of obtaining an SFOC provided he meets several conditions. If the operator cannot comply with the conditions to be met for any of the applicable exemptions, he will have no choice but to apply for an SFOC. Lastly, no permit is required to use a drone weighing 35 kg or less for recreational purposes, although the drone must be operated safely. Since the current exemptions will expire on December 21, 2016, the rules could change. Aeronautics Act, R.S.C. 1985, c. A-2 (the “Act”). Aviation is considered by the courts to be a matter of national importance and it therefore falls under the federal government’s jurisdiction to make laws for the peace, order and good government of Canada; see in this regard Johannesson v. Municipality of West St. Paul, [1952] 1 S.C.R. 292; Air Canada v. Ontario (Liquor Control Board), [1997] 2 SCR 581; Quebec (Attorney General) v. Canadian Owners and Pilots Association [2010] 2 SCR 536. Canadian Aviation Regulations, 1996, SOR/96-433 (Can. Gaz. II) (the “Regulations”). Supra, footnote 2. S. 101.01 of the Regulations. Supra, footnote 2. We will not discuss this type of certificate, which applies to commercial air service operators. Special Flight Operations Standards, in the “General Operating and Flight Rules Standards”, Part VI, Standard 623 of the Regulations. Supra, footnote 1. Section 601.02 (1) of the Regulations states that “Class G” is uncontrolled airspace. General Safety Practices, in “Model Aircraft and Unmanned Air Vehicle Systems”, 2014, Advisory Circular (AC) No. 600-002. Section 103.08 (1) and (2). R.S.C. 1986, c. C-46. For example, section 77 of the Criminal Code, supra, footnote 12. For example, section 85 of the Municipal Powers Act, CQLR, c. C-47.1 (which allows municipalities to adopt a by-law to ensure peace, order, good government and the general welfare of its citizens) could give municipalities the authority to regulate drones. Would such a regulation be constitutional? According to the jurisprudence, the federal government’s jurisdiction over aviation is exclusive, which means, according to the doctrine of interjurisdictional immunity, that a province would not have the authority to regulate or prohibit the use of drones. However, if the effect of a valid provincial statute (adopted in accordance with a matter of provincial jurisdiction) is to govern the use of drones, the question is whether the courts would apply the doctrine of federal paramountcy, allowing the provincial legislation to apply concurrently in the absence of an actual conflict. See, among other things, the Canadian Charter of Rights and Freedoms, S.C. 1982, c. 11 (U.K.); the Criminal Code, R.S.C. 1986, c. C-46.; the Environment Quality Act, CQLR 1978, c. Q-2; the Privacy Act, R.S.C. 1985, c. P-21; the Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5; the Radiocommunication Act, R.S.C. 1985, c. R-2; the Transportation of Dangerous Goods Act, S.C. 1992, c. 34 and the National Parks of Canada Aircraft Access Regulations, 1997, SOR/97-150 (Can. Gaz. II).

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  • Contracts by public entities: stay tuned on June 1, 2016

    The regulation governing contracts of public bodies leaps into the digital age. The amendments, passed on April 13, 2016, and coming into force June 1, 2016, aim to clarify the rules pertaining to the results evaluation.1 Five key changes Tenders in electronic form are mandatory if so required in the tender documents —> change of computer systems will be needed to ensure the integrity of the signatures and tenders. Minor modifications to the conditions for compliance —> still not possible for the public body to specify what constitutes a minor irregularity in the tender documents. Qualitative evaluation of tenders —> it is possible to ask for the details of the evaluation in case of refusal. For supply contracts, the concept of “total acquisition cost” is introduced —> to determine the lowest price or the adjusted price, the public body may take into consideration the additional costs related to the useful life of the goods which are not included in the tenders. Adoption of a new regulation respecting information technology contracts2 —> these contracts are removed from the ordinary framework of supply and services contracts Electronic transmission of tenders Public bodies may henceforth require tenderers to transmit their tenders only through the electronic tendering system approved by the government (ETS).3 Failing to do so will then constitute a ground for automatic rejection, as well as the fact that the electronic tender “is unintelligible, infected or otherwise illegible once its integrity has been established by the electronic tendering system.”4 Moreover, only tenders whose integrity has been ascertained,5 meaning that it is possible to verify that the information which the document contains has not been altered, that the medium used provides stability and perennity to the information and that the security measures necessary to its preservation exist6may be accepted. If it is not possible to ascertain the integrity of a document at the opening of tenders, the public body must not disclose the prices, but rather send a default notice to the tenderer in question, who will then have two business days to remedy the situation, failing which the tender will be rejected.7 If integrity can be ascertained, the public body shall publish the result of the opening in the ETS within four business days.8. The public body may of course continue to accept the filing of paper tenders, exclusively or in addition to electronic tenders. In this last case, effective from May 31, 2019, in the event that a same tender is both sent electronically and on paper form, it will be deemed to constitute two separate tenders for the purpose of compliance analysis.9 Prior to May 31, 2019, it may be considered that the paper form version prevails. Evaluation of the tenders Conditions for compliance If, effective from June 1, 2016, the erasure of or correction to the tendered price which is not initialled will no longer constitute a ground for automatic rejection, grounds such as a conditional or restrictive tender, a security which does not comply with the form and conditions required, lateness in submitting a tender and non-compliance with a condition stipulated to be essential remain.10 In this respect, the regulation is more timid than the draft regulation published on November 11, 2015, which, for example, would have given the public body the authority to establish which conditions could be the subject of a correction by tenderers in the event of an irregularity. This proposed faculty was finally not retained. Results of the evaluation Regarding contracts to be awarded following a quality evaluation, whereas the public body was previously required to inform each tenderer only of the overall results of the evaluation. From June 1st, 2016, they will also be required, upon the written request to the tenderer sent within 30 days of the quality evaluation results, provide the tenderer with the results in respect of each criterion used, as well as briefly set out the reasons justifying the fact that a tender was not accepted, if such was the case. The public body is required to provide its response to the tenderer within 30 days from the date it received the tenderer’s request.11 Changes specific to supply contracts Supply contracts are the subject of particular amendments, the most important of which apply to the adjustments to be made to the tender price to determine the lowest price. The concept of “impact cost”12 disappears, to be replaced with that of “total acquisition cost,” which allows the public body to take into account the “additional costs related to the acquisition of the goods”. These costs must be identified in the tender documents. They represent quantifiable and measurable elements non included in the tendered price, the cost of which will be borne by the public body during the useful life of the goods acquired. They may include installation, maintenance, support and training costs.13 Their value must be communicated to tenderers within 15 days of the contract awarding.14 The amendments to the regulation also specify the procedure applicable for calls for tenders in two stages15 as well as the procedure pertaining to compliance tests: the public body must first test the goods proposed by successful tenderer according to the terms provided for in the call for tenders and can only resort to the other tenderers if the goods proposed by the successful tenderer fail to pass the compliance test.16 New regulation applicable to contracting in the field of information technologies In addition to the above amendments, a new regulatory framework is adopted in respect of information technologies contracts which, effective June 1, 2016, will cease to be covered by the ordinary regime regulating services and supply contracts. We simply note that if the structure of the Regulation respecting contracting by public bodies in the field of information technologies, O.C. 295 2016 generally retains that of the current regulations, it also innovates, the government seeking to reflect certain issues specific to the “acquisition of goods or the provision of services in the field of information technologies […] [which] seek[s] predominantly to ensure or enable functions of information processing and communication by electronic means, including the collection, transmission, display and storage of information”. The new regulation provides specific rules pertaining to intellectual property or cloud computing and the possibility to use a new method for awarding contracts, “competitive dialogue”. Conclusion These regulatory amendments reflect the government’s wish to make electronic tenders the norm in the medium term. They also reflect some teachings of the courts, particularly as to the importance of precise tender documentation. Lastly, particularly with respect to supply, they aim to give more flexibility to the public body in order to ensure the best possible value to the taxpayer. O.C. 292-2016, 293-2016, 294-2016 and 295-2016 dated April 13, 2016, GOQ.II.1803-1826 (April 13, 2016), respectively amending the Regulation respecting supply contracts of public bodies, CQLR c. C-65.1, r. 2 (Rrscpb), the Regulation respecting service contracts of public bodies, CQLR c. C-65.1, r. 4 (Rscpb) and the Regulation respecting construction contracts of public bodies, CQLR c. C-65.1, r. 5 (Rccpb), all three adopted under the Act Respecting Contracting By Public Bodies, CQLR c. C-65.1. Regulation respecting contracting by public bodies in the field of information technologies, O.C. 295 2016. Sec. 4(5.2.), 9.2 Rccpb, Rscpb, Rrscpb; an exception applies to supply contracts referred to in section 183 of the Act respecting health services and social services, CQLR, c. S 4.2 where the documents related to the tendered price are in the form of a price list whose scope or layout does not make it possible to identify a total price (sec. 46.2 Rrscpb). Sec. 7 para 1 (5) Rccpb, sec. 7 para 1 (4) Rscpb, sec. 7 para 1 (4) Rrscpb. Sec. 13.1 Rccpb, sec. 10.1 Rscpb, sec. 10.1 Rrscpb. An Act to Establish a Legal Framework for Information Technology, CQLR c. C-1.1, sec. 6. Sec. 7.0.1 para 1 Rccpb, Rscpb, Rrscpb. Sec. 14 para 4 Rccpb, sec. 11 para 4 Rscpb, sec. 11 para 4 Rrscpb. Sec. 7 para 3 Rccpb, Rscpb, Rrscpb. Sec. 7 para 1 Rccpb, Rscpb, Rrscpb. Sec. 32 para 5 Rccpb, sec. 28 para 4 Rscpb, sec. 26.3 para 3. Sec. 13 al. 2 Rrscpb (2008-2016). Sec. 15.1.1 and 15.1.2. Rrscpb. Sec. 15.1.2 Rrscpb. Sec. 26.1-26.3 Rrscpb. Sec. 7 para 1(5), 12 para 2 Rrscpb.

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  • Legal newsletter for business entrepreneurs and executives, Number 23

    SUMMARY MUNICIPAL TAXES: IS IT POSSIBLE TO REDUCE THE BILL? PATENTS ON INFORMATION TECHNOLOGY: NEW BENCHMARKS   MUNICIPAL TAXES: IS IT POSSIBLE TO REDUCE THE BILL? Audrey-Julie Dallaire The tax pressure stemming from municipal taxes certainly constitutes an irritant for businesses. It was recently described as “unjustified” and “unfair for SMEs” by the Canadian Federation of Independent Business (CFIB), which made the following observation: [TRANSLATION] “(…) in 2013, for real-estate assets of equal value, Quebec SME owners pay on average 2.22 times the taxes charged to owners of residential properties”1. In a context where the payment of municipal taxes constitutes a significant expense for SMEs, it seems appropriate to review the means and programs that are available to SMEs and may have a favourable impact on their municipal tax burden. CONTESTATION OF THE MUNICIPAL ASSESSMENT The property tax bill which the owner of a property must pay is the result of the following mathematical operation: the assessment of the property multiplied by the tax rate applicable to its category. Thus, the establishment of the municipal property taxes which a business owes is based on the value of its property as determined by the municipal assessor and entered on the property assessment roll of the municipality. The value of the property entered on the property assessment roll must be equal to its actual value, that is, “its exchange value in the free and open market”2. What can be done if the commercial or industrial property is overvalued? Any person having an interest has recourses available for contesting the correctness, existence or absence of an entry on the property assessment roll. This recourse is exercised by filing an application for review with the municipal body which is responsible for the assessment before May 1 following the coming into force of the triennial assessment roll. Failing an agreement with the municipal assessor, the person who made the complaint may exercise a recourse before the immovable property division of the Tribunal administratif du Québec (TAQ) within the time prescribed by law. NON-TAXABLE EQUIPMENT When dealing with contestations pertaining to industrial properties, the TAQ must rule on, among other things, the taxability of some items of equipment. In fact, the Act Respecting Municipal Taxation provides that equipment used or intended to be used for industrial production purposes is not to be entered on the roll3. In another recent decision, the TAQ ruled that silos, robots, palletizers and coating machines used for industrial production purposes must be excluded from the value of the property4. In the same way, only the electrical or mechanical systems or portion thereof which are necessary for lighting, heating, air conditioning, ventilation, drinking water supply or water evacuation for a building must be included in the municipal assessment while any other element must be excluded. Furthermore, a machine, device and their accessories intended to abate or control pollution must be excluded from the property value. TAX CREDIT AND ASSISTANCE PROGRAMS FOR ENTERPRISES Non-litigious solutions are also available to business seeking to lighten their municipal tax burden. They may avail themselves of tax credits and assistance to businesses under municipal programs, where available. Since 2006, municipalities have new powers in respect of support to economic development. A municipality may grant assistance to any person that operates a private-sector enterprise already present on its territory and is the owner or occupant of an immovable other than a residence. It is to be noted that the value of the assistance that may be granted to the beneficiaries as a whole in this way may not exceed $100,000 per fiscal year5. Municipalities may also grant assistance for relocating on their territories a commercial or industrial enterprise which is already established on their territory, the amount of such assistance being limited to the actual cost of the relocation. Lastly, municipalities may adopt a tax credit program intended for persons that operate a private-sector enterprise for profit and cooperatives that are the owners or occupants of an industrial immovable or conduct certain types of commercial activities6. It must be noted however that although such programs constitute an interesting tool for local economic development, not all municipalities have implemented them. CONCLUSION A major obstacle to the growth and development of SMEs, property taxes constitute a recurring expense which is often neglected by businesses. In a highly competitive economy, SMEs would be well-advised to more carefully review solutions for reducing this form of taxation which is unrelated to their economic performance. ________________________________ 1 « PME et bungalow : deux poids, deux mesures dans la taxation municipale », October 2013, http://www.cfib-fcei.ca/cfib-documents/rr3304f.pdf (French only). 2 Sec. 42 and 43 of the Act Respecting Municipal Taxation, C.Q.L.R. c. F-2.1. 3 Sec. 65 of the Act Respecting Municipal Taxation. 4 9008-5747 Québec inc. v. Ville de Boucherville et al., 2014 QCTAQ 09135. 5 Sec. 92.1 of the Municipal Powers Act, C.Q.L.R. c. C-47.1. 6 Sec. 92.1 and 92.2 of the Municipal Powers Act.     PATENTS ON INFORMATION TECHNOLOGY: NEW BENCHMARKS Éric Lavallée Businesses often develop and try to protect intellectual property related to computer-based business methods, which may consist, among other things, of websites through which a business can be operated in an innovative manner. In 2011, in the case of Canada (Attorney General) v. Amazon.com, Inc.1, The Canadian Federal Court of Appeal invited the commissioner of patents to determine the patentability of a one-click shopping process on the Internet, keeping in mind that new business method may constitute an essential element of a valid patent claim. However, the Court repeated that a claim of this nature cannot be allowed where the only inventive aspect of the claim is an algorithm programmed in a computer. A parallel may be drawn between the above decision and another decision issued last June by the U.S. Supreme Court in the case of Alice Corporation PTY. Ltd. v. CLS Bank International et al.2 (hereinafter, “Alice”). In this case, CLS Bank was requesting the invalidation of patents held by Alice Corporation, which were related to a method for mitigating financial risk. The claims in support of this patent application related to a method of exchanging financial obligations, as well as a computer system and a computer-readable medium containing the source code enabling an individual to implement the method. The U.S. Supreme Court determined that the patents were invalid on the ground that they related to abstract ideas which were not patentable. The fact that the underlying business method has been declared non-patentable is in line with the prior decisions of this same court. However, the Alice decision institutes several additional benchmarks as to the inventions implemented by computer. Among other things, the highest U.S. court is of the view that the generic computer implementation of a method does not have the effect of rendering patentable an abstract idea which would not otherwise qualify to a patent. These decisions highlight the difficulty of obtaining valid patents for inventions implemented by computer and will henceforth have to be taken into account when drafting patent applications related to inventions of that nature. Developers often wish to obtain patents on software. However, in the light of recent case law, this is not possible for simple generic implementations of computer algorithms. Therefore, in many cases, the best protection will no longer be afforded by the monopoly which may stem from a patent, but rather by alliances forged with major players of the industry or the notoriety acquired by a business based on the fact that it was the first to occupy a specific niche. Furthermore, for businesses wishing to acquire rights on patents pertaining to computer-implemented inventions, it will certainly be relevant to first assess the validity of these patents. It must be noted that in the last few months, U.S. lower courts invalidated many patents granted prior to the Alice case. Acquiring rights on patents of that nature may thus reveal to be a very bad investment. Lastly, one must not overlook the importance of carefully documenting the source code pertaining to the computer-implemented business methods since such source code is usually protected by copyright. Copyrights confer in many cases a complementary protection to that which may result from a patent. Although it is sometimes relatively easy to circumvent copyrights by developing source code with a different structure but yielding equivalent results, it nonetheless remains that situations often occur where source codes which required extensive developing efforts from a business are simply copied by unscrupulous ex-employees or business partners. In these situations, it is crucial to be in a position to prove to the satisfaction of the courts what was developed by the business in order to enforce copyrights on the relevant source code. In concluding, a strategy must be established in matters pertaining to the computer-related intellectual property of a business, covering commercial secrets, patents and copyrights and taking into account the recent benchmarks established by case law in the area of computer-related patents. ________________________________ 1 2011 CAF 328, [2012] 2 RCF 459. 2 (2014) (Docket No. 13-298).

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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 Superior Court rules – The immunity is upsheld – to be continued...

    The Fire Safety Act came into force on September 1, 2000. Its purpose is to implement organizational arrangements pertaining to fire safety within the regional county municipalities and major urban centres in Quebec. Section 8 of the Act requires them to establish a fire safety cover plan which must then be approved by the Minister of Public Security.

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