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General

Who needs to know about this law?

Anyone who makes use of commercial electronic messages, is involved with the alteration of transmission data, or produces or installs computer programs needs to be aware of this law.

Alteration of Transmission Data

What is an example of altering transmission data?

An example is when an individual causes an electronic message to be sent to a destination that is different from that which the sender intended.

What are the general requirements for altering transmission data?

Express consent will be necessary before transmission data in an electronic message can be altered. There are other requirements that will need to be met when requesting consent, such as clearly and simply describing why, and for what purpose, consent is being requested, as well as the identity of the requester.

These requirements will apply when the alteration of transmission data occurs in the course of a commercial activity.

Commercial Electronic Messages

What is a commercial electronic message?

A commercial electronic message is any electronic message that encourages participation in a commercial activity, regardless of whether there is an expectation of profit.

What are the general requirements concerning the sending of commercial electronic messages for which the CRTC is responsible?

Generally, the sender will need to obtain consent from the recipient before sending the message and will need to include information that identifies the sender and enables the recipient to withdraw consent.

When Canada’s anti-spam law comes into force, what law will govern consent with regard to commercial electronic messages: Canada’s anti-spam law or the Personal Information Protection and Electronic Documents Act?

Once in force, Canada’s anti-spam law will set out the rules regarding consent with respect to commercial electronic messages.

Enforcement Agencies Roles and Responsibilities

What are the activities that fall under the CRTC‘s mandate pursuant to Canada’s anti-spam law?

There are three broad activities that will engage the CRTC. They are:

• sending of commercial electronic messages without consent;
• alteration of transmission data in an electronic message without express consent; and
• installation of computer programs without express consent.

The underlying principle is that these activities can only be carried out with prior consent and that such consent may be withdrawn.

What compliance tools will be available to the CRTC?

The CRTC will have a number of compliance tools; one such being administrative monetary penalties (AMPs). The maximum AMP is $1 million per violation for an individual and $10 million per violation for entities, such as corporations.

Where can I get more information on my responsibilities with respect to the Competition Act?

For more information on ensuring compliance with the false or misleading representations provisions of the Competition Act, please consult the Competition Bureau’s website, at www.competitionbureau.gc.ca.

What is the Competition Bureau’s role with respect to Canada’s anti-spam law?

The Competition Bureau will investigate and take action where appropriate against false or misleading representations and deceptive marketing practices in the electronic marketplace, including false or misleading sender or subject information and web links, as well as website content. The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

What changes have been made to the Competition Act?

The new law amends the Competition Act in two key areas.

First, it modifies certain provisions in the Competition Act so that the Bureau can more effectively address false or misleading representations online and deceptive marketing practices, including false or misleading sender or subject information and web links, as well as website content.

Second, it includes technology-neutral language that catches emerging technologies. This will assist the Bureau in enforcing provisions in the Competition Act as technological threats evolve.

What is the Office of the Privacy Commissioner’s role with respect to Canada’s anti-spam law?

The Office of the Privacy Commissioner of Canada protects the personal information of Canadians. The new law will allow the Commissioner to enforce the legislation with respect to two types of conduct:

• the collection of personal information through access to computer systems contrary to an act of parliament;
• electronic address harvesting where bulk email lists are compiled through mechanisms; including the use of computer programs that automatically mine the Internet for addresses.

Installation of Computer Programs

What are the general requirements for the installation of computer programs?

Generally, computer programs may be installed only after express consent has been obtained. There are also requirements that will need to be met when requesting express consent, such as clearly and simply describing the function and purpose of the computer program, as well as information enabling consent to be withdrawn.

These requirements will apply when the computer program is to be installed in the course of a commercial activity.

Do these requirements have to be met every time a computer program is installed?

Not necessarily. For example, updates or upgrades will not trigger these requirements when express consent has already been obtained.

Does express consent need to be obtained in all cases?

Not necessarily. Express consent is considered to have been given in the case of computer programs such as cookies, HTML code and Java Scripts where it is reasonable to believe from their conduct that the person wants the program to run on their computer.

Personal Information

What is “address harvesting”?

This refers to the collection of email addresses through the use of things such as:

• “Web crawlers,” which are computer programs that scan websites, usenet groups and social networking sites, trolling for posted electronic addresses; and
• “Dictionary attacks,” in which a computer program guesses live email addresses by methodically trying multiple name variations within a particular group of common email domains, such as Hotmail or Gmail.

Once collected, email addresses are often sold to spammers as destinations for unsolicited electronic messages.

How can I know if my email address has been harvested?

It may be very hard for you to determine if your address has been harvested. However, you can still help in the effort to fight back against this activity by reporting suspicious electronic messages to the Spam Reporting Centre when it opens.

What is meant by “collection of personal information through access to computer systems contrary to an act of parliament”?

Generally, this refers to the collection of people’s personal information from a computer through illicit means such as criminal hacking or spyware.

How can I know if my computer has been infected with malware such as spyware which can collect my personal information? And if it has been, what should I do about it?

Here are a few common signs that your computer may be infected:

• It is functioning far more slowly than usual;
• Your Internet homepage has been reset without you having done anything;
• When examining your file system, you notice a program there which you have not installed yourself.

If you notice any of these signs, you should get in touch with an information technology expert for necessary cleaning or repairs.

Reporting Spam

What should I do with the spam I receive now?

At the present time, we recommend that you simply delete the spam messages you receive.

For information on how to protect yourself from spam and other electronic threats, visit How to Protect Yourself Online and While Mobile.

Does Canada’s anti-spam law deal only with spam?

No. It also deals with other electronic threats to commerce, such as the installation of computer programs and the alteration of transmission data, without express consent. These threats also include the installation of malware, such as computer viruses.

What does “spam and other electronic threats” mean?

Under Canada’s anti-spam legislation, there are various types of violations including the sending of unsolicited commercial electronic messages, the unauthorized alteration of transmission data, the installation of computer programs without consent, false and misleading electronic representations online (including websites), the unauthorized collection of electronic addresses and the collection of personal information by accessing a computer system in contravention of an Act of Parliament.

These violations include, but are not limited to, spam, malware, spyware, address harvesting and false and misleading representations involving the use of any means of telecommunications, Short Message Services (SMS), social networking, websites, URL’s and other locators, applications, blogs, Voice over Internet Protocol (VoIP), and any other current and future internet and wireless telecommunication threats prohibited by Canada’s anti-spam legislation.

Timing

When will the final regulations be posted?

Final regulations from the CRTC were posted on March 28, 2012 and can be found on the CRTC website.

The Governor in Council draft regulations were open for a 60 day consultation period that ended on September 7th, 2011. The Government of Canada is in the process of analyzing all submissions and developing options for consideration. Next steps will be determined in the near future.

The Governor in Council draft regulations can be found on the Canada Gazette website.

When does the law come into force?

Canada‘s new anti-spam law was passed in December 2010 and will enter into force following a Governor in Council order. A specific date for coming into force will be set in the coming months.

Regardless of the date set for coming into force, will there be a phase-in period for compliance to allow businesses and organizations time to implement the requirements within their systems in order to ensure they are compliant with the law? In other words, will the coming into force date and the compliance dates be different?

The coming into force date will be the date for compliance with the legislation. However, businesses subject to the Act should start reviewing their existing activities now to prepare for compliance and coming into force. Once the regulations are published in final form, there will be a period of time between that date and the coming into force of these provisions, which will enable businesses and organizations to have time to comply with the requirements set out in the regulations (such as what information needs to be included in a commercial electronic message).

There is also a 3-year transitional period that starts when the legislation enters into force during which consent to send commercial electronic messages is implied in the case of pre-existing business and non-business relationships. Similarly, consent is implied for the same period for the installation of updates and or upgrades to computer programs. Note, however, that this period will end if the recipient of the commercial electronic messages says that they don’t want to receive any more commercial messages or if the person on whose system the update or upgrade have been installed withdraw their consent to such installations (section 66 and 67).

Note that some parts of the law have already come into force, particularly some provisions involving the Personal Information Protection and Electronic Documents Act (PIPEDA). For more information, please see the Office of the Privacy Commissioner of Canada.

HOME INSPECTIONS AND LICENSING/INSURANCE SCHEME

Janice Mucalov, LL.B.
Other

When representing home buyers, REALTORS® may well be asked about home inspections and perhaps also to recommend a home inspector. So REALTORS® should be aware of a 2009 court decision on home inspector liability and of the recent system for regulating home inspections in BC, which introduced licensing and insurance requirements to better protect buyers.

First, the court case. In November, 2009, a home inspector was found liable in negligence and ordered to pay substantial remedial costs to a couple who bought a home in North Vancouver.

The couple bought the house in 2006 for almost $1.1 million. The purchase was conditional on an inspection report. At the recommendation of their real estate agent, they hired an architect and his home inspection business to do an inspection and provide a report. He spent about 30 minutes inspecting the roof and exterior of the house in addition to inspecting the inside. He was paid $450 for his services.

 

The inspector filled in a good part of his printed report form before meeting with the buyers to discuss his findings. He noted some problems with two structural timber beams on the house’s west side and also some settlement of the house, but he didn’t inspect any other western beams or the eastern beams. He gave the buyers an estimate of about $20,000 to fix the rotten west side structural beams and stabilize the house. The buyers asked him whether they should go ahead with the purchase in light of his findings, and were told it was okay to do so.

After the couple moved in, they discovered that the structural and settlement problems were far worse than they thought and they hired an engineer. The actual restoration costs were tagged at almost $213,000. They sued the sellers, their real estate agent, the inspector and the District of North Vancouver. Before trial, they settled with the sellers and discontinued their lawsuit against everyone else except the home inspector.

 

In court, the inspector pointed out that his contract with the buyers wasn’t a guarantee and limited his liability to the $450 cost of the home inspection report. But the buyers didn’t read the contract before signing and he didn’t draw their attention to these clauses. Also, the main purpose of hiring the inspector was to rely on his advice, decided the court, and if the buyers couldn’t rely on his report and what he said, they wouldn’t have hired him.

 

The judge ultimately decided the home inspector was negligent for not inspecting all the structural beams, many of which were rotten, and because he didn’t tell the buyers they should hire a geotechnical engineer to examine the beams. His repair estimate was “woefully inadequate” and led the buyers to believe the house problems were relatively minor. He was liable to pay damages to the buyers of almost $193,000 (the agreed repair cost less his estimate).

 

Now, the new home inspection scheme. In March, 2009, BC home inspectors were mandated to undergo licensing and carry insurance in case of lawsuits from clients. It isn’t clear whether the home inspector in this court case was insured and whether the buyers there were able to recover on their judgment in full. But if buyers now hire a licensed and insured home inspector (which they should in most cases), they should now have the added protection of such insurance. This should help avoid the risk of a home inspector being unable to pay a judgment (making the decision a mere “paper judgment” without meaningful recovery) – at least for up to $1 million, which is the minimum insurance inspectors must maintain.

There are a couple of things worth highlighting for REALTORS® when acting for a buyer. You should make the buyers aware of the licensing and insurance scheme and recommend that they make sure any inspector they hire is properly licensed and insured. And if asked for a recommendation, REALTORS® should try to only recommend a reputable and experienced inspector (or inspectors), who REALTORS® know to be properly licensed and insured. These steps will help protect you if things go wrong (as happened in the 2009 court case) and there is a lawsuit, which could quite possibly include a claim against you as the buyers’ agent, suggesting negligence on the REALTORS® part.

Government announces new HST/PST housing transitional rules

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A recent case confirms that when listing a commercial property, a licensee should break down the rentable area of each floor.1 The property was a building in Kamloops consisting of a main floor and mezzanine.2 On April 16, 2004 the licensee’s brokerage listed the property for sale. The buyer was a corporation in the business of purchasing and leasing commercial properties. The licensee acted as dual agent, representing both seller and buyer. When the President of the corporation asked about the square footage of the main floor, the licensee said it was 20,000 square feet. The President understood that figure to refer only to the main floor, and not to include the mezzanine and storage areas. During negotiations, the licensee gave the President an excerpt from a recent appraisal which indicated the building area was approximately 19,543 square feet. On approximately April 21, the parties entered a Contract of Purchase and Sale for the property for $1.1 million in which the premises were described as having approximately 19,544 square feet of rental space. The deal was subject to the buyer completing a feasibility study. Before removing subjects, the buyer received the complete construction plans for the building and a building inspection report stating the building was approximately 20,000 square feet, with 16,000 square feet of production floor and 3,000 square feet of office space. Meanwhile, the buyer found a tenant for the space and, apparently relying on the licensee’s earlier remarks, told the tenant there were 20,000 square feet on the main floor. On June 8, subject to completing the purchase, the buyer entered an agreement to lease to a tenant who understood that the building contained 19,543 square feet on one level. The sale completed on July 16 and the licensee ultimately received $38,500 in commission. The evidence revealed that as of September 2004, the fair market value of the building was $1.4 million. When the tenant moved into the building, the tenant discovered that the main floor was only about 17,400 square feet.The buyer, as landlord, agreed to renegotiate the lease and, in the end, spent roughly $216,924 to build the tenant an addition. The buyer sued the seller, the listing brokerage and its licensee, claiming approximately $307,914 in damages, being the present value of lost revenue over the 20-year term of the lease to the tenant. The lost revenue flowed from the difference between the property’s actual rentable area versus the rentable area promised during negotiations, plus the cost of the addition to the building. The seller claimed the REALTOR® negligently misrepresented the rentable area and failed to determine the building’s rentable area. The court dismissed the negligent misrepresentation claim. Despite the licensee’s negligent remarks, the buyer’s President could not reasonably rely on them in the face of the building plans, the appraisal and the inspection report, all of which indicated the main floor did not contain all the rentable area. On the other hand, the court allowed the negligence claim, saying:3 I find that (the listing licensee) was negligent in this matter. I accept the evidence that a realtor has an obligation to determine the rentable area of the building and to so inform the purchaser. (The listing licensee) should have broken down the rental space of every floor and recognized that it is not acceptable practice to inform the purchaser of the total rentable area if the total rentable area is made up of a floor and mezzanine. That negligence claim failed, however, for lack of damages. The buyer’s reliance on the licensee’s remarks did not cause a loss because it bought a building worth far more than the purchase price. The court did award $1,000 in nominal damages against the licensee and his brokerage for breach of his agency contract. As the buyer’s agent, he failed to ensure the completeness and accuracy of his information. The Real Estate Council stresses caution and consistency when measuring any property. In a commercial property, the Council recommends that a licensee use the Standard Method of Floor Measurement for Office Buildings used by members of the Building Owners and Managers Association of British Columbia (BOMA BC).4 Mike Mangan B.A., LL.B. 1. San-Co Holdings Ltd. v. Kerr, 2009 BCSC 1747. 2. A mezzanine is a low storey between two others in a building, usually between the ground floor and the floor above: The Shorter Oxford English Dictionary, 5th ed., s.v. “mezzanine.” 3. San-Co Holdings Ltd. v. Kerr, 2009 BCSC 1747 at paras. 48. 4. Professional Standards Manual, 7th ed. (Vancouver, Real Estate Council of British Columbia, 2010) http://www.recbc.ca/licensee/PSM/PSM2-2.htm#jump124 Copyright © British Columbia Real Estate Association 1420 – 701 Georgia Street West PO Box 10123, Pacific Centre Vancouver, BC V7Y 1C6 Phone 604.683.7702 Fax 604.683.8601 www.bcrea.bc.ca [email protected]

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It’s trite law that a seller and a listing REALTOR® have a duty to disclose known material latent defects, but not patent defects. Sometimes the distinction as to what constitutes a patent defect or a latent defect isn’t clear. Take a sump pump in the crawl space, for instance. Is it a latent defect warranting disclosure by a listing REALTOR®? The BC Supreme Court has held that it isn’t, overturning, on appeal, the Provincial Court’s decision finding a seller and her agent liable for failing to disclose to the buyers the existence of a sump pump in the crawl space of the property they purchased. After briefly viewing the property, and without going into the crawl space, the buyers chose to make a subject-free offer. The buyers had reviewed the Property Disclosure Statement (PDS), which indicated the seller wasn’t aware of any water problems in the crawl space. Shortly before completion, the buyers learned the property may have had water ingress issues in the past. The buyers sought to inspect the property before completion, but the seller refused access. After seeking legal advice, the buyers completed the purchase and, upon gaining access several days later, found water standing in the crawl space. The buyers sued their agent, the seller and the seller’s agent. The Provincial Court found the seller and her agent liable for negligent misrepresentation and negligence, after concluding that the presence of the sump pump signified a structural defect that should have been disclosed on the PDS. The seller’s agent denied any knowledge of a sump pump. However, the Provincial Court accepted the seller’s evidence that she had disclosed the existence of the sump pump to her agent, and that he had advised it need not be disclosed if the seller hadn’t had any water problems. The seller admitted at trial that the previous owners had disclosed the sump pump and past water issues to her when she purchased the property, but she didn’t convey her knowledge of the previous owners’ water issues to her agent. The Provincial Court held that the manner in which the seller completed the PDS constituted a negligent misrepresentation, which misled the buyers and justified their decision not to carry out a further inspection of the property. The Provincial Court found the seller’s agent a party to the misrepresentation, and negligent for failing to make reasonable enquiries. The Provincial Court’s finding against the seller’s agent was successfully appealed to the BC Supreme Court, which held that the existence of a sump pump wasn’t a material defect. Even if it was, it was a patent defect, discoverable upon reasonable inspection, and therefore didn’t require disclosure. The Supreme Court reiterated the principles set out in Cardwell v. Perthen: that the onus rests upon a buyer to carry out a reasonable inspection of the property and that, for those defects or conditions discoverable upon a reasonable inspection, the doctrine of caveat emptor strictly applies. The court held that the manner in which the PDS was completed didn’t eliminate the buyers’ obligation to carry out a reasonable inspection of the property, and the lack of an inspection didn’t obviate the doctrine of caveat emptor or make the distinction between patent or latent defects irrelevant. Where there’s confusion about whether a particular condition may be categorized as patent or latent, full disclosure is recommended to avoid a lawsuit. Also, as discussed in Legally Speaking 415,buyers should be warned to carefully inspect the property they propose to purchase and, if they aren’t qualified to do so, to engage qualified professionals to do so on their behalf. Jennifer Clee Real Estate Errors and Omissions Insurance Corporation Vancouver, BC Papoutsis v. Lacroix et al, Unreported, April 21, 2008, Provincial Court of British Columbia, Action No. 05-2239, Sechelt Registry. McIntosh et al v. Papoutsis, 2009 BCSC 174. Cardwell et al. v. Perthen et al., 2006 BCSC 333; 2007 BCCA 313. Back issues of Legally Speaking are available to REALTORS® on BCREA’s REALTOR Link® homepage. Subscribers who are not REALTORS®, and who wish to see back issues, should contact BCREA by email at [email protected], or by phone at 604.742.2784. Legally Speakingis published eight times a year by email and quarterly in print by the British Columbia Real Estate Association, and funded in part by The Real Estate Foundation of British Columbia. Real estate boards, real estate associations and REALTORS® may reprint this content, provided that credit is given to BCREA by including the following statement: “Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA makes no guarantees as to the accuracy or completeness of this information. Copyright © British Columbia Real Estate Association 1420 – 701 Georgia Street West PO Box 10123, Pacific Centre Vancouver, BC V7Y 1C6 Phone 604.683.7702 Fax 604.683.8601 www.bcrea.bc.ca [email protected]

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