Thursday, 16 May 2013

Contractual Unconscionability - You Get What You Pay For

Service contracts often include liability exclusion clauses which limit liability for breach of contract and for negligence in performing the contracted service to the amount actually paid under the contract.  Naturally, if the contract is not properly performed and the recipient of the service suffers damages, they may attempt to convince a court that the exclusion clause is either not applicable to the particular negligence or breach, or should not be enforced because it is unconscionable or contrary to public policy.  

In considering whether a contractual term is unconscionable, courts look at two factors:
(a) inequality in the position of the parties arising from the ignorance, need or distress of the weaker, which left him in the power of the stronger; and
(b) proof of substantial unfairness in the bargain.
(see for example Loychuk v. Cougar Mountain Adventures Ltd., 2012 BCCA 122 at paras. 29-31 and McNeill v.Vandenberg, 2010 BCCA 583 at para. 15)

As shown by the recent decision in Gordon v. Krieg, 2013 BCSC 842, in considering whether a particular bargain is unfair, courts apply a common sense approach whereby they consider the service that was provided, how much was paid for the service, and the potential damages that could result from an improper performance.  In this particular decision, the court concluded that it was not an unfair bargain to limit damages arising from a visual only, three-hour home inspection - which damages could be in tens, if not hundreds of thousands of dollars - to the $400 paid for the inspection.

Thursday, 9 May 2013

Interpretation of a Precedent is a Question of Law

Under section 31 of the Arbitration Act, an appeal from an arbitrator's decision (other than in family matters) can only be taken on a pure question of law with leave of the court.  Issues of fact or mixed fact and law are not appealable.  The distinction between different types of issues was explained by the SCC in Canada(Director of Investigation and Research) v. Southam Inc.:
35 ... Briefly stated, questions of law are questions about what the correct legal test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests.
Despite the definition, determining whether a particular issue is a pure question of law is often a difficult task and counsel, as well as the courts, have often struggled trying to categorize particular issues.  Adding to the case law dealing with categorization of issues is the recent decision in Teal Cedar Products Ltd. v. British Columbia (Ministry of Forests), 2013 BCSC 788, where the court held that a proper interpretation of a legal precedent, such as a decision of the Court of Appeal, is a question of law for which leave to appeal may be granted:
[43] It is my conclusion that the application does raise a question of law, namely, the proper interpretation of the decision of the Court of Appeal in MacMillan Bloedel. The Arbitrator decided that MacMillan Bloedel stands for two propositions that are relevant to Teal’s claim to a gross-up award:
  1. In the absence of evidence that tax will be payable on the award, and where there is positive evidence of tax losses available to be applied by the awardee, there is no entitlement to a gross-up; and
  2. The use of existing tax loss credits to offset the income effect of the award does not constitute improperly requiring an awardee to use or expend an asset unrelated to the award.
[44] He applied those principles to the facts at hand and concluded that Teal did not require a tax gross-up.

[45] Accordingly, I find the petition raises a question of law and, if other relevant considerations are satisfied, leave should be granted.

Thursday, 2 May 2013

Freeing Up Masters' Chambers (Yes, We Are Back)!

After an all too long hiatus spent, among other things, studying for and writing patent agent exams, we are back and will strive for weekly posts!

Quietly announced on April 30, 2013, was a much-awaited change to the Masters' Chambers that should, hopefully, reduce wait times and increase the likelihood of actually being heard. 

Long overdue, effective May 27, 2013, ordinary (non-urgent) foreclosure matters will only be heard in Masters’ chambers on Mondays and Thursdays, and there will be an additional Master on those days assigned to the foreclosure list.  This should effectively add 60-90 minutes of daily capacity to Masters' Chambers, which were previously spent on uncontested foreclosure applications.