There are two ways you can buy or sell a business – a share purchase or an asset purchase.

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If the business is incorporated, the shares can be purchased. This allows the buyer to gain full control of the business and assume all of its assets and liabilities.

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Alternatively, parties can do an asset purchase. This involves buying all the assets of the business, including tangible items like buildings and inventory and intangible items like copyrights and trademarks. Unlike a share purchase, an asset purchase lets parties exclude certain assets or liabilities.

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As a general rule of thumb, sellers of a business tend to prefer share sales because of the favourable tax consequences for sellers (e.g., capital gains exemptions) and the ability to offload all liabilities of the business to the buyer. Meanwhile, buyers of a business tend to prefer asset purchases because of the favourable tax implications for buyers (e.g., ability to write-off depreciation of certain assets like equipment from the buyer’s taxable income) and the ability to pick and choose which assets or liabilities the buyer will assume.

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If you have questions on this topic or any other legal matters, reach out to Aman Bindra

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To learn more about Disability Insurance Benefits eligibility, definition of "Totally Disabled", submitting a claim and claim denials, wrongful dismissals and cutting off benefits, please read our articles:

1. Overview of Disability Insurance Benefits and Eligibility
2. Applying for Long Term Disability and Denied Claims
3. Calculating Damages in a Wrongful Dismissal With a Disability Benefit Claim

Disability Insurance Appeals

Typically, disability insurance policies provide for an internal appeal process that an insured can try before commencing a civil action if their claim has been denied or terminated. There may be one or more than one round of internal appeal available under the policy.

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Although internal appeals are an option, they're not often the recommended route because unfortunately often times the Insurer maintains their original decision, it causes extra work (and potentially costs) and can lead to delays in filing of a lawsuit.

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The more common approach is to commence a civil action. An insured is not required to use the internal appeal process before commencing a civil action in respect of their benefits entitlement under a disability insurance policy.

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Understanding Your Disability Lawsuit

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Who Are the Defendants in a Civil Action?

The defendants in a civil action for LTD benefits are:

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1. the insurance company (where it underwrites and/or administers the policy);
2. a claims handling company ("third party"), if there is one involved; and
3. the employer (for group policies if the employer underwrites the insurance and/or improperly cancelled the benefits depriving the plan member of access to insurance when they needed it).

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There may be further defendants depending on the circumstances of each particular case.

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What Remedies Are Available in LTD Lawsuits

The most common outcome for a LTD case is a lump-sum settlement being reached at a mediation.

Here is a list of a number of common remedies sought in an action for LTD benefits, including:

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1. A declaration that the plaintiff is entitled to recover disability benefits for the extent and duration of their disability.
2. Payment of all disability benefits due and owing. The remedy in breach of contract is the payment of all disability benefits that the plaintiff would have received had their claim been approved. At the point in time of commencing a lawsuit, there will be a retroactive amount from the date benefits would have first been payable under the policy and, potentially, an ongoing amount in the future (possibly up to age of 65).
3. Future payments.
4. Relief from forfeiture. This is a remedy available to protect a person from a loss of interest or right because of imperfect compliance (not non-compliance) with a condition of a contract. For example, this may arise in disability benefit claims because the insured person may not have submitted their application or proof of claim within the prescribed time period set out in the policy.
5. Waiver and return of premiums. LTD policies typically include a provision for the waiver of premiums during a period of approved disability. Where there has been a dispute about entitlement to benefits, the insured will have continued to pay premiums but will not have received the benefit of the insurance. In an action for breach of contract then, the plaintiff should request a reimbursement for the premiums they have paid, but which they would not have had to pay had their claim been approved.
6. Payment of any income tax or income tax interest and penalties that might arise due to a delay in the payment of benefits, resulting in a lump sum award at trial. Disability benefits might be taxable or non-taxable depending on the policy and who pays the premiums. Typically, if premiums are paid entirely by an employee, then the benefits are non-taxable whereas, if some or all of the premium is paid by the employer, the benefits are taxable. Taxable benefits become taxable damages when awarded as a lump sum by a court. Thus, the plaintiff should seek an order that the defendant be liable to pay all extra income tax payments due, interest, and/or penalties resulting from the delay in benefits and resulting lump sum for arrears awarded at trial.
7. Damages. In a disability benefit action, there may be cause for general damages flowing from the breach of contract, mental distress damages (both arising out of a breach of contract and "true aggravated damages", and punitive damages). Typically, aggravated and punitive damages are pleaded in LTD cases.

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Documentary Discovery and List of Documents

After commencing a civil action, the insured or their counsel can start building the file with a view to preparing the List of Documents. As with all civil litigation, documentary disclosure is an ongoing process.

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There tends to be a standard set of documents for disability benefit files. Typical documents include:

1. Insurance file. Insurance policy (with any amendments) and employee benefit handbook.
2. LTD claim file. Employee, attending physician (with medicals), and employer forms.
3. Appeal file. If the insured has appealed internally, there will be the appeal submission, medical documents, and the insurer's decision letter.
4. Correspondence file. All correspondence between insured and insurer (or claims handling company), including benefit denial or termination letters.
5. Medical file. All relevant clinical notes and records ("CNRs") covering the disability period, including medical reports, test results, imaging, etc.
6. Employment file. Employment contract (or collective agreement), group health benefit plan documents, T4s covering the disability period, termination letter (if applicable), workplace injury and WSIB forms (if applicable), human rights workplace accommodation documents (if applicable).
7. Income file. Other sources of relevant insurance or disability benefit income.

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Documents the insurer typically requests for the insured to obtain include:

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1. personal claims history for the time period of disability;
2. pharmacy prescription drug summaries;
3. income tax returns covering the disability period; and
4. CPP disability records.

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Our experienced Employment & Disability Group is ready to review your claim in a free consultation, and assist you. Get in touch today.

Typically, disability insurance is obtained through an employer's group health benefits, which are provided to an employee as part of their compensation and benefits package. To learn more about Disability Insurance Benefits eligibility, definition of "Totally Disabled", submitting a claim and claim denials, disputing claims and overview of legal process, please read our articles:

1. Overview of Disability Insurance Benefits and Eligibility
2. Applying for Long Term Disability and Denied Claims
3. Disputing Your Denied Disability Claim, Remedies and Overview of Legal Process

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An employment law issue may arise if an employer improperly cuts off access to group health benefits for a dismissed employee who becomes disabled during the common law reasonable notice period.

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Normally, upon a termination of employment without cause, an employer is required to provide notice of termination or pay in lieu of notice commensurate with the dismissed employee's total compensation for the full duration of the notice period, subject to any enforceable contractual limitations. This includes continued membership in a group health benefits plan. If the employer cuts off access to group health benefits (which is often done because of the terms as between the employer and insurer), it will step into the shoes of the insurer and be required to pay out benefits under the policy if the employee becomes disabled and entitled to LTD benefits during the notice period. Employers should therefore proceed with caution in such circumstances.

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Calculating Damages in a Wrongful Dismissal With a Disability Benefit Claim

Upon termination of employment without cause, an employer must provide notice or pay in lieu of notice and continue to make all benefit plan contributions, Employment Standards Act, RSBC 1996 c. 113 ("ESA"). At common law, reasonable notice (damages for wrongful dismissal) is calculated at total annual compensation including pay and benefits. However, a dismissed employee is generally not entitled to 'double recovery' of both reasonable notice and disability benefits (Sylvester v British Columbia, [1997] S.C.J. No. 58).

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An employer may also run into trouble if it substantially changes or cancels its group health benefits plan without notice or commensurate compensation and where an employee relies on those benefits. This may give rise to a claim for constructive dismissal, based on an alleged unilateral and fundamental change to the terms of employment that is not accepted by the employee.

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Can An Employee on Disability Leave be Fired Due to “Frustration of Contract?”

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Frustration of contract refers to an intervening event that makes performance of the contract impossible. In this situation, the parties can deem the contract at an end without obligation or liability to one another.

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In some rare circumstances, a prolonged disability without any prognosis of return to work within a reasonable time frame can result in a frustration of contract.

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Our experienced Employment & Disability Group is ready to assist you. Get in touch today.

When an employee has been absent from work during the past few months due to illness or injury, they may be eligible for benefits under the Long Term Disability Plan (LTD) if they are unable to return to full duties. To learn more about Disability Insurance Benefits eligibility and definitial of "Totally Disabled" please ready our article Overview of Disability Insurance Benefits and Eligibility. For more information on disputing denied insurance claims and overview of the legal process involved, please read Disputing Denied Disability Claims, Remedies and Overview of Legal Process.

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Submitting a Claim for Disability Benefits

The benefit booklet (and policy) will describe and set out the details for submitting a claim for disability benefits in the event of an illness or injury. Typically, the employee will notify the employer of the incident and need for a medical leave of absence from work. The employee should request the claim forms from the employer (human resources or plan administrator) or otherwise contact the insurer directly to request the application forms as directed in the handbook.

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Claim forms typically include three separate forms:

1. the employee or plan member form;
2. the employer form; and
3. the plan member's attending physician form.

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Our Disability Lawyers can assist you in completing the plan member form and facilitating the doctor to complete the attending physician form, if these forms have not already been completed and submitted. The benefit booklet and insurance policy will confirm the process for providing Notice or Proof of Claim and the deadlines for submitting a claim.

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What if My Disability Claim is Denied?

Disability insurance is based primarily on contract law principles. The insurance contract (i.e., the policy) sets out the applicable terms and conditions. Each policy is unique and it's important to have an experienced lawyer carefully and thoroughly review each policy for its specific details. If an insurer denies or terminates a claim for benefits or fails to adjudicate a claim in a timely and good faith manner, the insured may have a cause of action for breach of contract and/or breach of the duty of good faith.

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There is no requirement to participate in an insurer's internal appeal process before commencing an action, though it may be wise to do so depending on the circumstances (e.g., if the initial application did not accurately describe the disability and/or did not provide sufficient medical evidence in support of the application and appeal might be warranted). Damages for breach of contract in disability benefit cases is the same as any other breach of contract case: to put the plaintiff in the same position had the contract been performed.

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An action for breach of a disability insurance contract will focus on the denial of benefits or termination of benefits after one has been approved for a period of time. The related damages will center on the disability benefits that the plaintiff would have received had the claim been approved for the extent and duration of the entitlement under the policy.

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Disability Insurer's Duty of Good Faith

An insurer owes a duty of good faith to an insured. Insurance contracts are considered to be contracts of utmost good faith and, accordingly, there is an implied obligation in every insurance contract that the insurer will deal with claims from the insured in good faith. The duty of good faith requires the insurer to act both promptly and fairly when investigating, accessing, and attempting to resolve claims made by an insured person.

A breach of the duty of good faith by an insurer is an independent actionable wrong giving rise to damages.

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Wrongful Dismissals and Disability Benefits

An employment law issue may arise if an employer improperly cuts off access to group health benefits for a dismissed employee who becomes disabled during the common law reasonable notice period. More on this topic in our article Wrongful Dismissals and LTD (Disability) Benefits.

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Our experienced Employment & Disability Group is ready to review your claim in a free consultation, and assist you. Get in touch today.

Disability insurance (short-term and long-term) is designed to provide one with income replacement or supplement in the event one becomes disabled due to an injury, illness, or accident and cannot work. Typical disability insurance policies provide for monthly benefits of 60-85% of one's regular monthly earnings.

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Disability insurance is governed by the insurance policy, the Insurance Act, RSBC 2012, c 1, and common law principles.

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There are a variety of sources of disability income, LTD is one of them. Others include:

- employer sick pay,

- Employment Insurance sickness benefits,

- short-term disability insurance ("STD"),

- Canada Pension Plan disability pension ("CPPd"),

- Disability Tax Credit,

- Workers Compensation, and

- BC Disability Assistance.

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Disability Insurance - Peace of Mind Contract

Disability insurance is a "peace of mind" contract. This means that disability insurance is meant to provide the insured with: (1) income replacement during a period of disability when they cannot work; and (2) the reassurance of financial security during such a period. The Supreme Court of Canada in Fidler v. Sun Life Assurance Co. of Canada, [2006] S.C.J. No. 30 at paras. 39 and 57 ("Fidler"), described disability insurance as "where the very object of [the]insurance contract is to provide… peace of mind…" and commented that "the intangible benefit provided by such a contract is the prospect of continued financial security when a person's disability makes working, and therefore receiving an income, no longer possible."

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Two Types of Disability Policies

There are two broad categories of disability insurance policies: group policies and individual policies. Individual policies are characterized by a one-to-one relationship between the insured and insurer. Group policies are a single insurance policy issued to a group or association (e.g., employer or union) to which all eligible members of that group may be insured under the policy. The employer may pay some or all of the premiums on behalf of the individual insureds. Employees become plan members, but do not have direct privity of contract.

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Eligibility for LTD Benefits: "Totally Disabled"?

The standard required in disability policies to be eligible for benefits is "totally disabled". Each insurance policy will have its own slightly different definition but, generally, it means that the insured person is unable to perform the essential duties or majority of their job due to an injury or illness.

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While the insurance policy generally governs the test for total disability, BC and Canadian courts have also weighed in on what "totally disabled" means:

An insured is considered to be totally disabled from performing her own occupation where she is unable to perform 'substantially all of the duties of that position.' Total disability does not mean absolute physical disability, but rather that the insured's injuries are such that common care and prudent require her to desist from her occupation in order to effectuate a cure: Paul Revere Life Insurance v. Sucharov, 1983 CanLII 168 (S.C.C.), [1983] 2 S.C.R. 541, at para. 546.

You may also be considered “totally disabled” if:

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1. You cannot work your regular job in the short-term.
2. You cannot work your regular job in the long-term.
3. You can currently work PART-TIME at your own job.
4. You can currently work PART-TIME at another job.
5. You can perform SOME tasks of a job, but not all.
6. Ceasing to work can improve your quality of life or prolong your life.

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Most disability policies have two different time periods during which the definition of "totally disabled" is applied differently:

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1. the "own occupation" period that refers to the insured's pre-disability job and that typically runs for the first 2 years of disability; and
2. the "any occupation" period that broadens the definition to include any occupation for which the insured is suitable by education, training, and skill.

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Disability Insurance Information

Continue learning about submitting a Long Term Disability Claim and claim denials, wrongful dismissals and cutting off benefits, disputing claims and overview of the legal process in our related Disability Articles:

1. Applying for Long Term Disability and Denied Claims
2. Calculating Damages in a Wrongful Dismissal With a Disability Benefit Claim
3. Disputing Denied Disability Claims, Remedies and Overview of Legal Process

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Our experienced Employment & Disability Group is ready to review your claim in a free consultation, and provide you with invaluable information and assistance. Get in touch today.

On December 1, 2022, federally regulated private sector employees will gain 10 days of sick leave per year with amendments to Part III of the Canada Labour Code. Here’s what you need to know.

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Since the beginning of the pandemic, employers have struggled to navigate perpetually changing Covid policies and procedures. Further, many employees simply cannot afford to stay home after testing positive for Covid, but are legally obligated to due to mandatory isolation periods. In response to these issues, governments across the country are implementing variations of paid sick day provisions.

The Government of Canada’s introduction of 10 paid sick days for federally regulated private sector employees will impact approximately 6% of Canadian workers employed by 18,500 employers (article here). On December 1, 2022, the new paid medical leave provisions will come into force. An Act to amend the Criminal Code and the Canada Labour Code (BillC-3), which received Royal Assent in December 2021, amends Part III, Division XIII (Medical Leave)of the Canada Labour Code, RSC, 1985, c L-2 (“the Code”).

Additionally, there are proposed changes to the Canada Labour Standards Regulations, CRC, c 986 (the “Regulations”) which will provide detailed guidance on the operation of the new provisions. Currently, they are slated to come into force at the same time as the changes to the Code.

How It Will Work

Employees who are newly hired will not be entitled to the full ten sick days immediately. Once an employee has been employed for 30 continuous days, they will be eligible for three paid sick days. From thereon, employees will gain one additional sick day per month work, with a maximum of ten paid sick days per year. Additionally

[a]nydays of medical leave with pay that an employee does not take in a calendar year will carry forward to the next calendar year and each day carried over reduces the number of days that can be earned in that next year by one [Canada Gazette]

If an employer uses a different year, other than a calendar year, for calculating vacation pay, the Government of Canada currently directs these employers to “use that same year for the purposes of the paid medical leave provisions.”

Employees who take sick days will be paid their ‘regular rate of wages’. If an employee does not have a standard set of working hours each day, section 17 of the Regulations states that their regular rate of wages would be calculated as follows:

(a)  the average daily earnings of an employee (other than overtime pay) for the 20 days the employee worked immediately before the first day of the period of paid leave; or

(b)  an amount calculated by a method agreed on under or pursuant to a collective agreement that is binding on the employer and the employee.

The Regulations will mandate employers to keep records of the following:

1. The dates of commencement and termination of the leave;
2. The year of employment in respect of which the leave was earned;
3. The number of days of leave carried over from a previous year;
4. A copy of any written request for a medical certificate made by an employer; and
5. A copy of any medical certificate submitted by an employee

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Additionally, employers may instruct employees to take sick days “in periods of not less than one day” and may ask that employees provide a medical certificate if they go on sick leave for at least 5 consecutive days.

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Who is a Federally Regulated Private Sector Employee?

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The 10-day sick leave applies to workers employed at Federal Crown Corporations and Federally regulated private sector employees. This includes the following:

1. International and interprovincial transportation by land and sea, including railways, shipping, trucking and bus operations;
2. Airports and airlines;
3. Port operations;
4. Telecommunications and broadcasting;
5. Banks;
6. Industries declared by Parliament to be for the general advantage of Canada or for the advantage of two or more provinces, such as grain handling and uranium mining; and
7. First Nations Band Councils

Employees who are part of the Federally regulated public sector will not be eligible for the 10-day sick leave (such as the Federal Public Service and Parliament).

Part II (occupational health & safety) and Part III (standard hours, wages, vacations &holidays) of the Canada Labour Code only apply to the employee/employer relationship, and therefore does not apply to independent contractors. Accordingly, independent contractors will not be eligible for 10 days of paid sick leave either.

If you are unsure whether these changes impact your workplace, or if you have any questions about this topic, please do not hesitate to get in touch with our Employment & Labour Group.

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Note to Readers: This is not legal advice. If you are looking for legal advice in relation to a particular matter please contact one of our group members. We communicate all these updates to our clients and readers on our Employer Resources Portal and through monthly Newsletters.

On June 23, 2022, changes to the Competition Act were passed into law which criminalized wage-fixing and no-poach agreements between unaffiliated employers in Canada.

These changes will come into force on June 23, 2023. It is important for both employers and employees to understand how these provisions operate before that date, as these changes open employers found in breach to significant legal exposure.  

The most important changes from an employment perspective are the creation of two offenses which are new to Canadian law:

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1. It is an offense for unaffiliated employers to conspire, agree or arrange to fix, maintain, decrease or control salaries, wages or terms and conditions of employment; and
2. It is an offense for unaffiliated employers to conspire, agree or arrange to not solicit or hire each other’s employees.

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Penalties under Competition Act

The changes to the Competition Act also include significant penalties for wage-fixing and no-poach agreements, including imprisonment for up to 14 years and/or a fine in the discretion of the court.  Notably, the amendments to the Competition Act removed the previous ceiling on fines of $25 million, so the size of the financial penalty that an employer can face is now theoretically uncapped.

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Why?

The motivation behind the changes to the Competition Act was to address a gap in the law in Canada which was driven into sharp relief during the Covid-2019 pandemic.  In March 2020, various food retailers in Canada introduced a wage premium to, among other reasons, reward employees who continued to provide essential services during the early lockdowns.  Three food retailers subsequently simultaneously terminated this wage premium in June 2020.

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The House of Commons Standing Committee on Industry, Science and Technology conducted hearings to look into the matter in July 2020.  The testimony of the representatives of the food retailers before the Committee confirmed that communication had taken place at the executive level regarding the termination of the wage premiums, but all of the representatives denied any coordination, and maintained that their decisions had been made separately.  Notably, under the Competition Act at the time this communication occurred, coordination for the purposes of suppressing wages (had it in fact occurred) was entirely legal.

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Proving wage-fixing and no-poach agreements

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Notably, the Competition Act allows a conspiracy, agreement or arrangement to be proven through circumstantial evidence.  Accordingly, while the existence of the conspiracy, agreement or arrangement must be established beyond a reasonable doubt to make out the offense, it is impossible to infer the existence of such a conspiracy without direct evidence.  

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There is an interesting exception to the wage-fixing and no-poach agreements, in that if it can be shown that the wage-fixing or no-poach agreement is ancillary to a broader or separate agreement or arrangement involving the same parties, and if it can be shown it is directly related to and reasonably necessary to give effect to the objective of the broader agreement, there can be no conviction under the Competition Act.  What this means, in effect, is that employers who enter into a no-poach agreement in certain contexts, such as the purchase and sale of a business or a joint venture, which may reasonably require such a clause in certain circumstances, are likely not in breach of the new provisions to the Competition Act.  Any employer contemplating such an agreement should approach it with extreme caution, and seek legal advice before doing so.

TAKEAWAYS

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Employers should consult with legal counsel to review any agreements they have entered into with other unaffiliated employers to ensure that they are in compliance with the new provisions of the Competition Act well in advance of the amendments coming into force in June 2023.  

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From the employee perspective, employees who believe that they have been subject to a wage-fixing or no-poach scheme should seek legal advice, as it is possible to ground private civil actions on violations of certain sections of the Competition Act.

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Note to Readers: This is not legal advice. If you are looking for legal advice in relation to a particular matter please contact one of our group members. We communicate all these updates to our clients and readers on our Employer Resources Portal and through monthly Newsletters.

Most Wills remain effective if you move. However, updates are required when a Will gives a spouse or child a right to live at or keep a certain address and that address has changed. 

Moves are also a great time to review documents. Is your new location still convenient for your executors or should you choose new ones? Have you appointed a Power of Attorney in case you lose capacity? Etc. 

Consideration should also be given if you’ve moved between provinces. Each province has their own version of a Power of Attorney and Medical Agreement so it advisable to have one in any jurisdiction where you own property. 

If your Will needs to change, give Dan Grice and his team at KSW Lawyers a call. We can manage all your estate and tax planning needs, business services, disputes and more.

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If so, you may have received a letter from the B.C. Government stating the need to file a report with the Land Owner Transparency Registry (LOTR) by November 30, 2022. The filing’s purpose is to disclose the true owners, or “interest holders”, of land in B.C. If the deadline is missed, there are significant penalties that can result in fines of up to $50,000 or 15% of the property’s assessed value.

The Government requires a legal professional to file the report on your behalf because legal professionals are experts in land and title matters. They can advise on issues with respect to land ownership that may have far reaching effects on estate planning, taxation and other legal matters. The Government is relying on lawyers to protect the integrity and accuracy of the information in the registry, since they will complete the required identity verification.

If you received this letter from the Government or think you may own land in B.C. through a company, a partnership, or a trust, please reach out to us at 604-591-7321 or [email protected]. We can assist with your filing before the November 30, 2022 deadline and help you avoid any penalties.

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