News & Views
Ontario Court of Appeal: Solar Power Network Inc. v. ClearFlow Energy Finance Corp.
Written by Amanda Maio
On September 4, 2018, the Court of Appeal released its decision in Solar Power Network Inc. v. ClearFlow Energy Finance Corp., 2018 ONCA 727. At the core of the dispute was a term in the loan agreement between the two parties that required Solar Power to pay a “discount fee” of .003% of the outstanding loans on the repayment date, and for every day thereafter, while the loan remained outstanding. Solar Power contended that the agreement was in contravention of Section 4 of the Interest Act which requires that “if an agreement provides for interest at a rate for any period less than one year, the agreement must include an express statement providing an equivalent annual rate.” In the event this requirement is not complied with, the interest in the loan is capped at 5%. Justice Thomas McEwan of the Superior Court of Justice held that the agreement did not meet the requirements as set out in Section 4 and ClearFlow was only entitled to interest at a rate of 5% per annum. The Court of Appeal determined that Justice McEwan erred in his finding.
An important aspect of this decision is embedded in the Courts discussion on the use of formulas and Section 4, in which the Court of Appeal affirmed that the use of an annualizing formula in loan agreements can satisfy the requirements as set out by Section 4 of the Interest Act.I It is likely that this decision will, if it has not already, disseminate a feeling of relief among the lending community as widespread practices used in lending documentation have now been recognized by the Courts.
This decision is an essential reference for lawyers handling complex and sophisticated loan transactions going forward.
*Ontario Court of Appeal Releases its Decision in Solar Power Network Inc. v. ClearFlow Energy Finance Corp. by Practical Law Canada Finance (Thomson Reuters - Practical Law; September 10, 2018).
*Interest Act R.S.C., 1985
*The material provided in this article is for general information purposes only. It is not intended to provide legal advice or opinions of any kind.
About the Author:
Amanda Maio, focuses primarily in the area of commercial litigation. Through the continued mentorship and guidance of the experienced litigation lawyers at FIJ, Amanda works with both large financial institutions and individual clients to support their litigation needs.
BILL 148 - New Vacation and Personal Leave, Updating Your Employment Contracts
Written by Ryan Hanna
Bill 148 or otherwise the Fair Workplaces, Better Jobs Act 2017, came into force on November 22, 2017. That Act has brought with it significant changes to employment law in Ontario.
If you are a business owner with employees, an HR Manager or even an employee, you are likely already dealing with some of these changes on a day to day basis; however, have you updated your employment contract(s)? If not, you should definitely be considering the important ramifications of Bill 148 on those agreements. This is particularly important when it comes to the application of the Employment Standards Act, 2000 (The “ESA”). Some of the changes imposed by Bill 148 could cause existing employment contracts to suddenly be unenforceable due to non-compliance with the ESA, potentially exposing an employer to liability and costly disputes.
One item worth reviewing and changing where necessary is the vacation clause. Many standard contracts in Ontario, in order to comply with the ESA, provide for 2 weeks of vacation in a 12 month period; however, Bill 148 has now expanded that to add a third week of vacation entitlement in a 12 month period to any employee who has worked continuously for an employer for more than 5 years. That vacation time is accrued at a rate of 1.25 days per month and at a rate of 6% on eligible wages. It is important to keep in mind that a “period of employment” of 5 years is calculated taking into consideration active and inactive employment (thus including things such as pregnancy and parental leave).
To address the vacation changes, a highly recommended modification to any employment agreement which currently only provides for 2 weeks of vacation is to insert language indicating that the 2 week period is an “initial vacation entitlement” and that the employee’s entitlement will be subject to and in compliance with the ESA. This kind of clause ensures that the contract is flexible going forward and that it can adapt to an employee reaching the 5 year threshold. It also preserves the contract in the event other changes arise in the future.
Where the employer provides more vacation than the statutory entitlement, the contract should also reference the fact that any vacation taken will count first in respect of statutory entitlements.
Over and above vacation entitlement, Bill 148 has expanded the types of personal leave available to employees (i.e. Domestic or Sexual Violence Leave) or has otherwise increased leave in other areas (i.e. Child Death and Disappearance Leave). These changes and additions do not need to be spelled out in the employment contract. Employee handbooks or policy manuals are usually better suited for this purpose. However, in order to ensure there are no problems in the future, such as doubling up on leave, where the employment contract stipulates specific sick or personal days the contract should also indicate if an employee’s statutory entitlements are included or not included in the leave the employer has set out in the contract.
Finally, although such sweeping changes as those arising from Bill 148 are not a common occurrence, they demonstrate the need to keep the language in contracts flexible. Wherever specific ESA minimum standards exist, a statement that the clause is subject to compliance with those minimum standards continues to be one of the best ways to protect that clause or contract from invalidity. You never know when smaller, less noticeable, legislative changes could affect a contract. For employers that use templates, we generally recommend that the terms are reviewed every two to three years to ensure compliance with new or changing rules.
* The material provided in this article is for general information purposes only. It is not intended to provide legal advice or opinions of any kind
About the Author:
Ryan Hanna, regularly acts on a range of legal matters where he maintains a business oriented focus to his litigation practice, assisting clients with commercial disputes ranging from shareholder actions and wrongful dismissal claims to secured and unsecured debt enforcement, residential tenancy disputes, commercial leasing matters, and trademark infringement.