Marinko Jelovic Presents at Canadian Bar Association (Sask) Mid-Winter Meeting

Join Marinko Jelovic at the CBA (Sask) Mid-Winter Meeting

Marinko Jelovic will be presenting at the Canadian Bar Association (Sask)’s Mid-Winter Meeting on January 25, 2024. As part of a panel entitled “Practice Management: How to Build and Maintain an Effective Corporate and Commercial Practice,” Marinko will be sharing his experience and insights on building a successful career in corporate and commercial law.

 

2024 Mid-Winter Meeting

Delta Regina | Regina, SK
 
To register, click here.

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Robertson Stromberg LLP listed as one of Canada’s Best Law Firms of 2024 by the Globe and Mail

Robertson Stromberg LLP has been listed as one of Canada’s Best Law Firms of 2024 by the Globe and Mail. The award list is based on over 10,000 recommendations collected from peers and clients. The final list recognizes only 200 firms in 31 different fields of law. The top law firms for each legal field were identified based on the number of recommendations they received from our survey participants.

Almost 25,000 lawyers, as well as in-house lawyers and legal executives working in legal departments of a company across Canada, were actively invited to take part in the survey, and Statista recorded more than 10,000 recommendations for law firms in the different fields of law.

Robertson Stromberg’s areas of distinction include Construction, Dispute Resolution (Litigation, Arbitration & Investigations), Restructuring & Insolvency.

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The Evolution of Contract Acceptance in the Digital Age

The recent Saskatchewan King’s Bench decision of South West Terminal Ltd. v Achter Land & Cattle Ltd., 2023 SKKB 116 has made national Canadian news, being the first of its kind regarding core contract interpretation principles – a thumbs-up emoji can signify acceptance of the terms of a contract and form a legally binding agreement.

In this case, the Plaintiff corporation, South West Terminal Limited, claimed it entered into a delivery purchase contract for flax with the Defendant, Achter Land & Cattle Limited. Achter never delivered up the flax and therefore South West claimed Achter breached the contract and then sued for damages.

The principal issue proposed by the Defendant is that there was no meeting of the minds respecting the foundation of the contract. A common principle in contract law is that a contract is only formed where there is an offer by one party that is accepted by the other with the intention of creating a legal relationship and supported by consideration.[1] “Consideration” is usually deemed as it sounds – the parties thought about, and understood, what the agreement meant.

A very common issue where there are allegations of a contract breach is that one party will state that terms within the contract are not what they agreed to. The legal test when a court decides whether an agreement did exist, is whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract.[2] This means the judge will review the evidence, as would an objective third party, and consider not only the terms, but other related factors. Courts are not restricted to the contract itself but can consider surrounding circumstances.

In this case, the Plaintiff and Defendant had discussions about the purchase price of flax for a deferred delivery contract. The Plaintiff drew up a contract, signed it, then sent a photo of the contract to the Defendant and said: “Please confirm flax contract”. The Defendant texted back a thumbs up emoji.

The Defendant claimed the thumbs-up emoji signified receipt of the contract, but not necessarily that there was an agreement to the terms. Justice Keene stated that the Defendant’s understanding is not the legal test, but instead, we must consider what the ‘informed objective bystander would understand’.

Justice Keene considered the dictionary.com definition of a thumbs up emoji, meaning that it “is used to express assent, approval or encouragement in digital communications…”. The Defendant could not claim that the thumbs-up had instead meant that he had received the contract, when the Plaintiff had specifically asked “Please confirm flax contract”. Perhaps an ‘informed objective bystander’ would accept the Defendant’s version had the Plaintiff asked, “Please confirm receipt of contract”. The signed contract was the offer, and the thumbs-up emoji response indicated an acceptance of that contract.

The Defendant argued that allowing a simple thumbs-up emoji to signify contract acceptance would “open up the flood gates to allow all sorts of cases coming forward asking for interpretations as to what various different emojis mean”, such as a handshake or fist-bump emoji. This ‘floodgates’ argument is not uncommon. Justice Keene noted that despite this finding being novel in Saskatchewan, the Court cannot and should not “attempt to step the tide of technology and common usage”.

Justice Keene did what all judges do when considering whether a contract was formed: he considered the contract itself and the factual circumstances surrounding its formation (called the “factual matrix”). The floodgates argument was not accepted. These parties in the past had previously created contracts between them in a similar fashion, the only difference for this contract was the use of an emoji response versus the use of an “okay”, “good”, or “accept”, all of which are arguably synonymous with an average individual’s interpretation of a thumbs-up emoji.

Though this case is the first of its kind, it does not mean that a thumbs-up emoji response to a contract will always mean that a valid legal obligation has been created – what the case tells us is that it could, in conjunction with the surrounding circumstances. Courts will always consider the factual matrix in determining the validity of a contract and whether it has been breached.

 

[1] Orthodox Tewahedo Church of Canada St. Mary Cathedral v Aga, 2021 SCC 222 at para 35 [Aga].

[2] Aga at para 37.

Contacting a Lawyer on this Subject

The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations. Contact Tessa Wall at 1-306-933-1368 or t.wall@rslaw.com

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Robertson Stromberg LLP listed as one of Canada’s Best Law Firms of 2023 by the Globe and Mail

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Almost 25,000 lawyers, as well as in-house lawyers and legal executives working in legal departments of a company across Canada, were actively invited to take part in the survey, and Statista recorded more than 10,000 recommendations for law firms in the different fields of law.

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Secured Lending in Aircraft Objects – Framework Overview of the International Registry of Mobile Assets

Lenders or creditors taking security in assets relating to Aircraft Objects (described further below) need to understand the framework of the International Registry of Mobile Assets (the “Registry”). Below is a brief outline of this framework and the security a lender may expect to receive in Aircraft Objects.

International Registry of Mobile Assets

The Registry is an asset-based international registry system that allows individuals and organizations to register and search financial interest in Aircraft Objects by their serial number. The IR operates under the legal framework of the November 16, 2001 Cape Town Convention and Protocol (the “Convention”). The Convention was adopted by Canada and a number its provinces, including Saskatchewan, and came into effect on April 1, 2013.  It is important to note that not all countries have signed onto the Convention and information contained in the Registry may be incomplete or non-existent when dealing with Aircraft Objects in a non-signatory state.

The main objective of the Convention is to facilitate the efficient financing and leasing of Aircraft Objects by creating a single international registry system whereby parties (current owners, perspective buyers, lenders, etc.) may confidently rely on the security interests registered against such Aircraft Objects. The international interests created by the IR are recognized by signatory states with respect to priority matters and such registrations in the Registry will have priority over similar registrations made in provincial registries, such as the Saskatchewan Personal Property Registry, even if such provincial registrations pre-date the date of registration in the Registry.  The Convention further provides secured lenders with a range of basic default remedies and speedy interim relief options in an effort to facilitate orderly and efficient enforcement of security.

Given the specific remedies offered by the Convention, lenders should consider tailoring security agreements, and potentially other security documents, to account for these enforcement remedies along with other matters specific to Aircraft Objects. It can also be helpful to explicitly provide for the Convention’s remedies in other agreements as well, such as a lease of Aircraft Objects, when such agreements may form part of the security to be granted by a debtor.

Not all assets used in the aviation industries are captured by the Convention. Aircraft Objects must meet certain size or power minimums. The following Aircraft Objects are captured by the Convention:

    1. Airframe means airframes (other than those used in military, customs or police services) that, when appropriate aircraft engines are installed thereon, are type certified by the competent aviation authority to transport:
    1. at least eight (8) persons including crew; or
    2. goods in excess of 2750 kilograms, together with all installed, incorporated or attached accessories, parts and equipment (other than aircraft engines), and all data, manuals and records relating thereto,
    1. Helicopters means heavier-than-air machines (other than those used in military, customs or police services) supported in flight chiefly by the reactions of the air on one or more power-driven rotors on substantially vertical axes and which are type certified by the competent aviation authority to transport:
    1. at least five (5) persons including crew; or
    2. goods in excess of 450 kilograms, together with all installed, incorporated or attached accessories, parts and equipment (including rotors), and all data, manuals and records relating thereto,
    1. Aircraft Engines means aircraft engines (other than those used in military, customs or police services) powered by jet propulsion or turbine or piston technology and:
    1. in the case of jet propulsion aircraft engines, have at least 1750 lb of thrust or its equivalent, and
    2. in the case of turbine-powered or piston-powered aircraft engines, have at least 550 rated take-off shaft horsepower or its equivalent, together with all modules and other installed, incorporated or attached accessories, parts and equipment and all data, manuals and records relating thereto.

    Individuals or organizations that wish to perform registrations, including lenders taking security against Aircraft Objects, in the IR will need to become Transaction User Entities (“TUE”). The TUE will need to further appoint an administrator that will be authorized to perform registrations on behalf of the TUE. While all registrations on behalf of the TUE will need to be performed by the administrator, an administrator can provide one-off authorizations to allow another entity to perform registrations on behalf of the TUE. This may be convenient in a transaction involving an owner of the Aircraft Objects, perspective purchaser of such objects and lender that are all represented by a different administrator.

    Personal Property Security Registries

    As stated above, registration in the Registry will defeat or have priority over registrations in provincial personal property registries where the Convention applies. However, it is common for lenders to continue to register security interests against debtors, including serial numbered goods such as Aircraft Objects, in provincial registries. While it can be somewhat cumbersome for a seller or vendor to deal with multiple jurisdictions for the same Aircraft Object, it is important to search all provincial registries in which these Aircrafts Objects are operating in as provincial registrations will govern priority in the absence of an international registration in the Registry.

    IDERAs

    An IDERA (Irrevocable De-Registration and Export Request Authorization) is another Convention based security mechanism that can provide additional security to a lender.  An IDERA can be filed with Transport Canada which will prevent anyone but the authorized holder (typically a lender) from deregistering the Aircraft (Airframes and Helicopters) with Transport Canada.  It provides lenders with the assurance that Transport Canada will cooperate with the holder if it requests the deregistration of the Aircraft.  In order the revoke the IDERA, the holder must provide written notice to Transport Canada of such revocation. To note, multiple IDERAs cannot be filed with Transport Canada on the same Aircraft.

    Conclusion

    The above is a very brief explanation on the framework of International Registry of Mobile Assets and the security a lender may expect to receive when taking a security interest in Aircraft Objects. Our legal team at Robertson Stromberg LLP would be happy to discuss these matters in further detail or any questions you may have with respect to secured lending involving Aircraft Objects.

    Marinko Jelovich is a partner with Robertson Stromberg. His areas of practice include Indigenous Law; Commercial Transactions and Real Estate; Natural Resources; Residential Real Estate; Small Business; and Wills, Estates, Trusts, Healthcare Directives and Powers of Attorney. Contact Marinko Jelovic at 1-306-933-1322 or [email protected]. The above is for general information only. Parties should always seek legal advice prior to taking action in specific situations. 

    Commercial Leases and the Impact of COVID-19

    The novel coronavirus (COVID-19) continues to affect the day-to-day lives of millions of Canadians. As a result, businesses continue to face issues regarding cash flow, which in turn forces those businesses into difficult decisions as to which obligations they will pay, and which obligations will need to be deferred.

    One of the consequences of these difficult decisions is that commercial landlords are now faced with tenants who either cannot pay their rent, do not wish to pay rent or have abandoned or are contemplating the abandonment of leased property. While COVID-19 gives rise to new business considerations, as will be seen below, the rights of the commercial landlord remain relatively unchanged.

    This article, originally posted to our website in May, 2020, was amended on June 15, 2020 to reflect the emergency order issued by the Government of Saskatchewan in relation to the eviction of commercial tenants. This moratorium was issued pursuant to the provisions of The Emergency Planning Act.

    It should be noted that the moratorium issued only applies to landlord who were eligible, but declined to apply, for the Canada Emergency Commercial Rent Assistance program (“CECRA”). This moratorium was issued in large part to assist new businesses in reopening during COVID-19.

    Your Tenant Cannot (or Will Not) Pay Rent

     

    As was the case before COVID-19, where a tenant fails to pay rent in a timely fashion the landlord, who has applied under the CECRA, is able to demand the rent and as permitted under the lease, takes steps to distrain or evict the tenant and take possession of the property. The Saskatchewan Legislature has, at this time, not taken any steps to alter the rights and remedies of the commercial landlord.

    Before concluding that the tenant is offside their obligations by way of non-payment of rent, consideration should be given to whether the lease has a force majeure clause and if so, what effect that clause may have on the tenant’s position. For more information on this subject, Marinko Jelovic has prepared an article, Force Majeure and the Doctrine of Frustration – COVID-19, which addresses this issue with more specificity. https://www.rslaw.com/2020/03/18/force-majeure-doctrine-of-frustration-covid-19/

    Before deciding on a course of action, a landlord may wish to give consideration to their existing relationship with the tenant and the current economic climate. A tenant who has occupied the same property for an extended period of time or is in the midst of a long-term lease, and who has not voluntarily defaulted on payment may still be better than the alternative. When the time arises for the preventative restrictions imposed by the Government of Saskatchewan to be lifted, prospective new tenants may be a rare commodity. If you consider the business foundation for a long-term tenant to be sound you may prefer having your existing tenant when business resumes, rather looking for a new occupant. Short term pain may be balanced by long term gain.

    On the other hand, if the tenant is in default and the history of the landlord-tenant relationship is not happy one, this may be an opportunity to end the relationship, with a view to attracting a more desirable tenant.

    Much will turn on the landlord’s view of the value of its relationship with the tenant.

    To the contrary, where a landlord has failed or otherwise declined to take part on the CECRA program, the landlord is now prevented from re-entering the property, terminating the lease or exercising the right of distraint. The Government of Saskatchewan has, at this time, limited the remedies available to a commercial landlord who has elected not to participate in CECRA.

    Your Tenant Abandons Their Lease

     

    In Saskatchewan the legislature has declined to, at this time, amend or enact new legislation that would affect a commercial landlord’s rights. As such, the provisions of The Landlord and Tenant Act continue to apply, as do the provisions of the lease itself.

    Under The Landlord and Tenant Act, if the tenant abandons their lease leaving rent unpaid a landlord may exercise its right of distress. In doing so, the landlord is permitted to retain and sell personal property left on the premises by the tenant. However, given the current economic climate a landlord may wish to consider whether or not exercising their right of distress makes financial sense.

    While The Landlord and Tenant Act permits the landlord to recover the costs of the seizure and sale of abandoned or seized property, the practical reality is that the property may not be worth the cost and effort of sale. Much will turn on the nature of the tenant’s business and the type of property present in the leased space. As businesses continue to attempt to cut down and reduce overhead costs, depending on the nature of the tenant’s business there may be a reduced, or non-existent, resale market for the goods due to COVID-19. Attempting to seize and sell the property may result in substantial costs being incurred, with little net recovery, if any, toward the unpaid rent.

    However, if the decision is to move to terminate, or to accept abandonment, the landlord can proceed in the usual way. The landlord’s rights are largely governed by the lease. Most provide that the landlord may bring action to recover unpaid rent, as well as rent for the remainder of the term of the lease, should a tenant abandon its lease (subject of course to the duty to mitigate and find a new tenant as soon as reasonably possible, though depending on the short and mid-term commercial leasing market it may be of little moment). For more information on the subject, please see the following article on enforcing the landlord’s rights: https://www.rslaw.com/wp-content/uploads/2011/12/1226000394Enforcement-of-Commercial-Leases-A-Practical-Guide.pdf

    It should be noted that nothing in the in the June 5 moratorium impacts the landlords rights in the event the tenant has abandon their lease. Similarly, the landlords right remain unaffected if the lease expired on or before June 4, 2020.

    Where the lease expires after June 4, 2020, and the landlord has elected not to sign up for or participated in the CECRA

    Conclusion

     

    As the consequences of COVID-19 continue to be felt in the business community, and with no timeline as to when the government imposed restrictions will be softened or lifted, landlords will continue to face business decisions on how to deal with tenants who do not pay their rent. Consideration must be given to the risk of evicting a tenant and attempting to recover unpaid rent versus the cost and time spent attracting a new tenant. Landlords will know that when the Government of Saskatchewan lifts social distancing restrictions, it may still be several months before new tenants can be found, as the economy slowly recovers from the economic downturn. As such, maintaining strong business relationships during this pandemic may best serve to provide a practical benefit down the road. Where the relationship is not so strong, different considerations may apply, and ending the landlord-tenant relationship may be the best outcome.

    For more information, please contact:

     

    M Kim Anderson, Q.C.

    306.933.1344

    Email: [email protected]

     

    Travis K. Kusch

    306.933.1373

    Email: [email protected]

    Area of ExpertiseCommercial Transactions and Real Estate