Insurance Coverage Considerations on Covid-19

by | Apr 3, 2020 | Articles & Research, Covid-19, Insurance, Jennifer D Pereira

As of March 30, 2020 the Saskatchewan government signed an order pursuant to the provincial State of Emergency directing that all orders of the government and Chief Medical Health Officer must be followed and that law enforcement agencies in Saskatchewan have the full authority to enforce those orders. As a result, gatherings of more than 10 people in one room are prohibited; and nightclubs, bars, lounges and similar facilities are closed.  As other businesses respond to COVID-19 their bottom lines are facing significant impact.

In this uncertain climate, businesses are attempting to manage this crisis and limit their continuing financial losses. One potential avenue for relief is insurance. All businesses should be seeking guidance as to whether their existing insurance coverage can respond to COVID-19 related financial losses.

This article outlines some key insurance coverage considerations to determine whether initiating an insurance claim may be a viable relief option for your business.

COMMERCIAL PROPERTY POLICIES

 

Most businesses’ first party property insurance policies include coverage not only for property damage but also for lost profits resulting from that damage.  The coverage for lost income often covers loss resulting from:

  1. Damage to the policyholder’s own property (business interruption);
  2. Damage to the property of a customer or supplier or a supplier’s supplier (contingent business interruption); or
  3. Government action (order of civil authority)

The event that triggers any of these coverages is property damage — without which there will be no coverage for lost profits under a first party property policy.

When purchasing your property policy for your business, it may have been referred to as “All Risk.” All risk doesn’t necessarily mean that you are entitled to coverage for all risks. These policies can sometimes exclude coverage for virus, contagious disease or bacteria. In that case, any COVID-19-related claims will likely be denied.

Business Interruption

With respect to your commercial property policy, the definition of physical damage found within the policy becomes crucial to determining whether coverage applies.

Contingent Business Interruption

Contingent business interruption is a coverage that allows a claim for lost income resulting from a covered loss to an insured’s customer or supplier (Indirect Loss). This type if coverage is typically triggered as a result of a physical damage to the customer or supplier listed as a reliant party, critical to the insured’s operations.

Government action/civil authority

Some property policies will responds to Interruption by Civil Authority, which is often defined as “actual loss as insured hereunder during the period of time, not exceeding two to four weeks, while access to the “premises” is prohibited by order of civil authority”

Given that the definition of this coverage may vary by policy, there is a possibility that if operations of a business are restricted due to an Order prohibiting access, then coverage may apply. The opposite would be true if the policy wording specifies the requirement for Physical Damage. Once again, the applicability of this coverage and length would be case specific.

NEXT STEPS

 

A determination of whether your business is entitled to coverage is wholly depends on your policy wording. Businesses should be evaluating their policies including any extensions and exclusions, with their insurance brokers and legal counsel to better understand terms and conditions. To get started request a complete copy of your insurance policy and review to determine whether coverage might apply to your business.

For more information, please contact:

 

Jennifer D. Pereira, QC

306.933.1320

Email: [email protected]

Importance of the Press

by | Mar 27, 2020 | Articles & Research, Covid-19, Media Law / Defamation, Sean M Sinclair

On March 26, 2020, the Government of Saskatchewan further limited the businesses that can continue to operate in the province as a result of COVID-19.  Among the “critical services” that are to be maintained are local and national media.

Journalists across our province are continuing to provide up-to-date and important information to citizens. They continue to attend press conferences, ask our leaders important questions, try to digest and disseminate important health-related information and disabuse individuals of potentially dangerous misinformation.

Having reliable and professional information broadcast to a wide audience (through newspapers, television and social media) is incredibly important for our public officials to provide updates on this crisis. Dr. Theresa Tam, Canada’s Chief Public Health Officer, and Dr. Saqib Shahab, Saskatchewan’s Chief Medical Health Officer, have, through the media, imparted daily updates on the medical risks and transmission of the virus. Our political leaders have warned residents through daily press briefings on the importance of social distancing to attempt to flatten the curve.

In addition to providing important health information, the media has provided messages of hope and resilience. Media organizations have covered:

  1. The outpouring of support for marginalized youth in Saskatoon: https://thestarphoenix.com/news/local-news/the-helpers-in-saskatoon-an-outpouring-of-support-for-youth/
  2. Families working out together at home while practicing social distancing: https://saskatoon.ctvnews.ca/more-saskatoon-families-working-out-together-at-home-during-isolation-physical-distancing-1.4870362 and
  3. Veterinarians assisting pets from outside of their clinics: https://www.cbc.ca/news/canada/saskatchewan/sask-curbside-veterinary-medicine-animal-health-covid-19-1.5511951.

In recent years, the media has been vilified in some corners.  However, it is at times like these, that the importance of the press is highlighted.  We see journalists, every day, digesting quickly changing information, trying to weed out “fake news” and doing so at potential personal peril as they attend briefings and track down stories.  The media has proven itself to be a “critical service” to the public.

For more information, please contact:

 

Sean M. Sinclair

306.933.1367

Email: s.sinclair

Cash Flow Concerns: How to Collect Payment in the Midst of COVID-19

by | Mar 19, 2020 | Articles & Research, Construction, Covid-19, Jared D Epp, Misty S Alexandre

Introduction

Over the past year much of the focus of the Saskatchewan construction industry has been on the impact that new prompt payment legislation will have on the timeliness of payment on construction projects. Cash flow is never far from the mind of any prudent business owner. However, a focus and concern with cash flow is perhaps never more evident than now, given the global, and increasingly local, rescheduling and shutdown of various construction projects.

In considering your ability to collect on outstanding invoices, it is critical that the payment terms of your contract be reviewed. Although contract terms, like force majeure, may justify a suspension of work or an adjustment to schedule, they do not necessarily suspend or modify a party’s payment obligations. Rather, the exact contract language needs to be reviewed. Absent specific contractual language excusing a party’s payment obligations, payments are still required to be made.

However, what is legally required, and what will, in practice, actually happen are, of course, two different things. A contractual right to be paid, though important, may not change the fact that certain companies will either not be able to pay or will, in an act of self-preservation, simply choose not to pay. In these types of circumstances, a few different collection options should be considered:

  1. Register a lien. Although a lien may not result in immediate payment, it provides security, in the event the project fails or is not completed, for future payment. It also ensures, in the event a future progress draw is made, that enough funds are withheld to satisfy the lien claim in the future. Although it is best practice to ensure a lien is registered in Saskatchewan within 40 days of substantial completion, liens can still be registered after this date and, in many circumstances, will remain enforceable.
  2. Determine whether or not a project is secured by a labour and material bond. Labour and material bonds are secured by insurance companies. As companies cease meeting their obligations, the ability to receive payment from an insurance company under a bond may, in certain cases, represent the best option available to collect payment. As labour and material bonds have predetermined pay-out amounts, it is important to submit your claim for payment as soon as possible. All L&M bonds have cap limits, and after the insurance company has paid out the amount of the bond, additional claims cannot be processed.
  3. Determine whether or not the project is secured by a performance bond. Although a performance bond is often put in place for the benefit of the owner, in the event a general contractor defaults, the ability of an owner to rely upon insurance to complete a project may be beneficial, given the possibility of the insurer using existing subcontractors to complete the work.

  4. File a lawsuit. Although lawsuits typically do not lead to quick payment, if your claim for payment is not defended, you may have the ability to register and then enforce a judgment. As judgments, once registered, exist for 10 years, this also may give your company a long-term option to satisfy a debt.

  5. Be mindful of trust obligations in the lien legislation. Saskatchewan’s lien legislation imposes trust obligations on project financing, and on funds paid between the owner, contractor and subcontractors. During times of cash flow crisis, it may be tempting for parties to pay money out of the project chain. This may result in a breach of trust obligations under the lien legislation, and could lead to personal liability for directors and officers as well. The lien legislation provides lien claimants a right to certain information from the owner, so use these tools to find out what’s happening in the project payment chain.

Like any situation, the best approach depends on your particular circumstance. However, all options should be explored given the uncertainty that is COVID-19.

For more information, please contact:

Misty M. Alexandre

306.933.1352

Email: [email protected]

Jared Epp

306.933.1326

Email: [email protected]

Judicial technological innovations

by | Mar 19, 2020 | Articles & Research, Covid-19, James D Steele

Closings of courthouses should be a wake-up call to adopt 21st century technology

The COVID-19 pandemic has caused unprecedented disruption to daily norms in Canada. Lawyers are not exempt, and many courts in Canada have either severely reduced their case hearing schedule, or paused activity altogether. This will have a huge impact on day to day Canadians, whose lives may be waiting for decisions in family custody disputes, criminal hearings, or lawsuit seeking compensation, etc.

Canadian court systems may face a difficult time in attempting remote work. Despite the rise of the personal computer decades ago, it remains impossible in many Canadian court systems to file many court documents online, hold video hearings.

The current closure of courts reminds us that technology has the potential to revolutionize the process of serving documents, and placing them before the court.  If proper investments are made, basic technology can allow future court matters to continue remotely, and save ordinary Canadians significant time, and therefore, legal fees.

To name only two potential innovations, Canadian courts should consider the following:

  1. Allowing the majority of civil Chambers hearings (not involving live witnesses) to go forward via either telephone conference, or video conference. Massive business deals are now routinely negotiated via video, and there seems little reason why in person attendance should always be required for all court hearing;
  2. Allowing documents to be filed online, instead of requiring paper copies in physical form to be sent to the courthouse.

The Canadian legal system is not a mere luxury that Canadians can suspend for months at a time. The issue of judicial adoption of twenty-first century technology is more timely than ever, and has the potential to benefit all who seek justice.

For more information, please contact:

 

James D. Steele

306.933.1338

Email: [email protected]

COVID 19 and Co-Parenting

by | Mar 19, 2020 | Articles & Research, Covid-19, Family Law, Kirsten M Hnatuk

Introduction

COVID-19 is creating uncertainty across the world and in our homes. Amid school and daycare cancelations, altered work schedules, self-isolation and growing health concerns, parents have been especially impacted by the pandemic. Separated and divorced parents are faced with the additional challenge of parenting their children between households during this time. The following is intended to provide information and considerations for separated and divorced parents. This information is not intended as legal advice. Should you have any questions respecting family law related matters we recommend that you consult with a lawyer.

Parenting Orders and Agreements

Parenting arrangements that are set out in Agreements or Court Orders should continue despite the pandemic. While the Courts in Saskatchewan have not yet had the opportunity to address this issue, it is expected that parties to an Agreement or Court Order will abide by the terms of the Agreement or Order. In a recent ruling in the United States it was determined that Court Orders for parenting time are not impacted by COVID-19; it is expected that our courts would take the same position. It is important for children to continue to have consistency and ongoing relationships with each of their parents, especially in times such as these when children may be especially anxious. Relying on the pandemic as reason to deny parenting time is not reasonable; it is not an opportunity to “cut out” the other parent. What the Courts will want to see is parents coming together during a time of uncertainty to act in their children’s best interests.

In extraordinary cases where there may be imminent risks to the children, parenting arrangements may need to be altered. Examples of which might include, where a parent has recently travelled to a high risk area, where a child has compromised immunity, where a parent or child has been in close contact with someone diagnosed with COVID-19, or if the parent or child has COVID-19 symptoms or has been diagnosed with COVID-19. If one of these exceptions exists, it is important that you communicate with the other parent and attempt to reach a resolution that safeguards the health of all involved. If you are unable to reach a resolution, or have questions about what constitutes an extraordinary circumstance, you should contact a lawyer.

Communication

With the closure of schools and daycares, the reality is that many parents will have to alter their parenting arrangements. This is a time for co-operation and flexibility to ensure that your children’s needs are being met. Important discussions should also be had between parents. Such discussions might include how to talk to your children about the pandemic, ensuring proper hygiene and handwashing in both households, whether to self-isolate the children, whether to avoid playdates, and what the plan will be if a child exhibits symptoms of COVID-19. The implementation of consistent COVID-19 precautions in both households will not only maintain stability for the children but will ensure that their health is foremost.

Self-Isolation

In the event parents determine that children or themselves should self-isolate, there are many ways in which children can communicate with the parent whom they are not with. In addition to texting and phone calls, electronic communication such as FaceTime and Skype allow children to maintain contact with their parents. Be creative and read books over the phone, play games such as “I spy” on FaceTime, or watch shows together on Youtube.

Conclusion

Children are looking to their parents for hope, safety and security during this time. Now more than ever it is important for parents to be civil and respectful to each other. Communicating with the other parent to ensure the well-being and stability of the children is vital. If this cannot be done, it is important to communicate through a third party to work out a sensible solution.

For more information, please contact:

 

Kirsten M. Hnatuk

306.933.1351

Email: [email protected]

Force Majeure Doctrine of Frustration – COVID-19

by | Mar 18, 2020 | Articles & Research, Covid-19, Lawyers, Marinko J Jelovic

Introduction

The novel coronavirus (COVID-19) continues to impact the lives of millions of Canadians and millions more around the world. Governments and communities worldwide have responded to this global health emergency by restricting travel and large public gatherings. Schools, restaurants and other businesses have been shutting their doors in response to contain the spread of the virus. In an effort to further curb the spread of COVID-19, many employees have been asked to work from home, further compounding the operations of businesses worldwide. Businesses and contractors may find themselves in a position where their ability to fulfill or perform a contract is hindered or rendered out right impossible due to the growing concerns and instability caused by COVID-19.

Force Majeure

In these uncertain economic times, it is important that business owners and contractors understand their contractual rights and obligations especially if they find themselves in a situation where fulfilling a contract becomes difficult or impossible. Business owners and contractors should carefully review their contracts to determine whether any relief is available under the contract, such as relying on a force majeure clause, or whether any other relief from the performance of their contractual obligations is available.   

A force majeure clause is often included in a contract to excuse performance by one or more parties to that contract on the occurrence of an event that is outside the contracting party’s control. Invoking the force majeure clause can potentially absolve a party from liability from performance of at least some of its contractual obligations under the agreement. A force majeure event typically refers to a circumstance beyond the control of one or more parties to a contract that causes performance of the contract to be frustrated or impossible to perform.  Such clauses can specify any number of these types of events and can include acts of God, riots, civil strife, acts of terrorism, labour strikes, natural disasters and epidemics.

Whether a party can claim relief from contractual performance will depend on the wording of the force majeure clause as courts are known to interpret these clauses narrowly. A force majeure clause may not expressly cover the events unfolding due to COVID-19, and it is important that the wording of the provision be carefully reviewed. Additionally, a party cannot rely on a force majeure clause to excuse its own conduct and may have an obligation to find alternative means to fulfill its contractual obligations even if it would cause delays or economic hardship to do so.

The Doctrine of Frustration

While it goes without saying that a party cannot rely on a force majeure clause if the contract does not contain one, this does not mean that a contracting party is without options in the event they find themselves unable to fulfill their contractual obligations and a force majeure clause is absent from the contract. A party to a contract may be relieved of its obligations and corresponding liability by relying on the common law doctrine of frustration. In order to rely on the doctrine of frustration, a party must show that an unforeseen event occurred that caused a material or radical change in performance of a party’s ability to fulfill its contractual obligations through no fault of either party to the contract. As with a force majeure event, the material or radical change is generally one that makes performance under existing circumstances impossible, impractical or frustrates the original purpose of the contract.

In Saskatchewan, the doctrine of frustration has been codified under The Frustrated Contracts Act.  In order to invoke the legislation a party must either show that the common law doctrine of frustration applies or the contract is one for the sale of specific goods and the goods under the sales contract have perished through no fault of the buyer or seller prior to risk being transferred to the buyer. In these circumstances parties may be relived from fulfilling their obligations under the contract.

The Frustrated Contracts Act will not apply to all types of contracts. Contracts of insurance, certain contracts for the carriage of goods by sea, and contracts entered into prior to March 28, 1994 are not covered under The Frustrated Contracts Act. These excluded contracts may be covered under separate legislation or the general principles surrounding the doctrine of frustration.  

Conclusion

The reliance on force majeure clauses or the doctrine of frustration will become much more prevalent while we navigate our way through the effects the global health emergency caused by COVID-19 will bear on our lives, our communities and the world. Each situation will need to be independently reviewed to assess whether a force majeure provision can be relied upon, provided the contract contains such a provision, or if a party can claim a remedy under the more general doctrine of frustration. It is important to note that not all situations will arise to a level where a contract has been frustrated or impossible to perform. Lengthy delays or incurring unforeseen economic hardships may not be a cause to claim frustration or rely on a force majeure provision. It is strongly encouraged that you seek legal advice to assess whether invoking a force majeure clause or the doctrine of frustration is an available remedy in the event you find yourself in a situation where you are unable to complete or perform a contract due to events outside of your control, including the impact COVID-19 is having on the global economy.

For more information, please contact:

 

Marinko J. Jelovic

Direct: 306.933.1322

Email: [email protected]

Lawyers