Friday News Finds – November 20, 2020

By Thien Hoang

Welcome back to Friday Finds! This week, we will be discussing updates to proposed construction law changes in Alberta, a case on duty of care for commercial intermediaries, updates on the Cogeco takeover bid, and highly anticipated revamps to Canada’s privacy laws.

The CBLB recently covered the proposed changes to Alberta’s construction laws under Bill 37, the Builders’ Lien (Prompt Payment) Amendment Act, 2020, which was introduced on October 21, 2020. On November 4, 2020, the Government of Alberta, with input from industry stakeholders, approved significant amendments to Bill 37. The revisions include: (1) the mandatory (rather than permissive) progressive release of holdbacks, (2) requiring a “proper invoice” to start the 28 day payment period for contractors and owners, and (3) introducing a 7-day payment requirement to subcontractors to be extended down the construction chain. In light of the listed changes, as well as the obligation to pay an undisputed invoice within a set period of time, the Government of Alberta removed the previous prohibition of “pay-when-paid” clauses (with respect to subcontractors) from Bill 37, considering it superfluous. Bill 37 is reflective of similar legislation being enacted across Canada, with the hopes of alleviating perceived payment delays for construction businesses and workers.

On November 6, 2020, in the case of 1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2020 SCC 35, the Supreme Court of Canada (SCC) ruled that the duty of care between manufacturers and consumers does not extend to commercial intermediaries in the context of “pure economic loss”. Back in 2008, Maple Leaf Foods recalled meat products across Canada following a listeria outbreak in one of its factories. At the time, Maple Leaf Foods was party to an exclusive agreement with Mr. Submarine Limited (Mr. Sub), which in turn contracted with Mr. Sub’s franchisees. Under this agreement, Maple Leaf Foods was the exclusive supplier of ready-to-eat meats to all Mr. Sub restaurants. The recall caused a shortage of product for six to eight weeks and the franchisees advanced a claim in tort law, seeking compensation for lost revenue, capital value, and goodwill. In dismissing the franchisees’ appeal, Justices Brown and Martin, writing for the majority, clarified that the imposition of a duty of care to enable such recovery will be predicated largely on proximity. For commercial intermediaries, the SCC clarified that “where the parties are linked by way of contracts with a middle party that, taken together, reflect a multipartite allocation of risk, courts must be cautious about allowing parties to circumvent that allocation by way of tort claims” (para 73).

There is a new update to the Cogeco takeover bid covered in the October 23, 2020 edition of Friday Finds. The CEO of Rogers Communications Inc. (Rogers) recently expressed his disappointment that the Audet family, which retains control over the Quebec-based cable operator Cogeco Communications Inc. and its parent company Cogeco Inc. (both collectively known as “Cogeco”), was unwilling to discuss a proposed takeover offer of $11.1 billion. The unsolicited bid, which expired this past Wednesday, would have resulted in Rogers taking over Cogeco’s Canadian operations while New York-based Altice USA Inc. would have purchased Cogeco’s U.S. subsidiary, Atlantic Broadband. While Rogers had hoped to increase its grip on the Quebec telecommunications market, the takeover deal had hinged on the support of the Audet family which has previously accused the joint bidders of engaging in “bad faith tactics” during the bidding process. The Audet family continues to maintain control of Cogeco through a dual-class share structure, and it remains to be seen what Rogers’ next steps will be after this failed takeover bid.

On November 17, 2020, the Government of Canada introduced substantial changes to Canadian privacy law in Bill C-11, also known as the Digital Charter Implementation Act, 2020. The Bill aims to modernize the framework for the protection of personal information in the private sector and provide individuals with greater control over their personal information. It proposes to create a new privacy statute, the Consumer Privacy Protection Act (CPPA) as well as a new administrative tribunal, the Personal Information and Data Protection Tribunal (Tribunal). Although the requirement and exemptions for consent are in line with the Personal Information Protection and Electronic Documents Act (PIPEDA), the Bill would repeal certain parts of PIPEDA and allow the CPPA to introduce new obligations for businesses and new rights for consumers. Some notable changes that businesses should be aware of include individual rights to data portability, individual rights to deletion, algorithmic transparency requirements, and a prohibition on routinely updating personal information. Proposed penalties are similar to the European Union’s General Data Protection Regulation and include a fine of the higher of $10 million or 3% of the organization’s annual gross global revenue for failure to comply with certain requirements. The Bill also introduces a private right of action for individuals in the Federal Court or Superior Court as long as the Office of the Privacy Commissioner of Canada or the Tribunal has issued findings of non-compliance and the claimant proves loss or injury. As the Bill is expected to have a substantial impact on how organizations conduct business, the CBLB will continue to provide updates as it moves through committee review and consultation.

That wraps up this week’s Friday Finds! Please note, the CBLB will be taking a brief break until the new year. Be sure to check back in January for more business law news stories! Happy Holidays!