As many of you have already heard by now, in less than two weeks (October 26 to be exact) Ontario will put into force its ban on the use of cell phones, Blackberries, etc. while driving.  What does this mean for your business?  If you employ travelling salespeople or delivery people or even if you have a contracting company and your team uses something like the MIKE system, then you could have problems if your people are caught using hand-held devices while driving.  Similarly, I have received many an e-mail from a colleague or opposing lawyer that says something like “Got ur msg, on the road, will answr latr.”  The “simple” solution is to get hands-free technology to your employees – such as Blue Tooth headsets – right?  Maybe and maybe not. 

The key aspect of the legislation is that drivers should not be distracted.  While hands-free tools will help to reduce the distraction, it cannot erase the distraction altogether.  There was a case in the U.S. about five years ago where a law firm was found liable for one of its lawyers getting into an accident because she was talking on the cell phone with a client at the time and therefore wasn’t paying attention to her driving.  The Court reasoned that if the accident hadn’t occurred, then the firm would have billed out the lawyer’s time for that call (as it had done for many previous instances).  As such, it took the benefit of the call in terms of billings and, correspondingly, should have to take the liability for any damage caused by such a practice.  Since then I have been waiting for a similar lawsuit to occur in Canada but I haven’t seen one yet.  With the passage of the legislation banning the use of cell phones, etc. in Ontario, I can expect such a lawsuit to come much sooner rather than later.

So what is a business owner to do?  The answer - I’m not completely sure.  Why?  Because we don’t have the full rules yet to see what types of devices will be allowed and in what circumstances.  Can a business owner create a policy to protect itself?  At this point in time, absent a complete ban on the use of all such devices, the answer is no.  In some law firms, they have advised their lawyers to not use cell phones while driving.  In some industries, though, this may not be practical.  For the time being, we’ll have to wait and see what the regulations will permit and prohibit.  Until then, it might be a good idea to go around to your employees and ask them (a) what devices they are using; (b) whether they use them in the car for business purposes; and (c) if so, for what business purposes.  Once you have this information, you can then determine your level and types of use and whether there are either means to “work around” such use or you can specifically tailor a cell phone use policy for the company that addresses likely areas of potential problems.

Something to think about.

CALC

As those of you who follow the blog know, one of my areas of interest are the cases dealing with the charging of criminal rates of interest.  In particular, the question relates to whether additional “administrative fees”, “late fees”, etc. can be considered to be additional “interest” which, when added to the existing rate of interest, then takes the rate of interest over 60% per year.  This has resulted in numerous class action lawsuits where plaintiffs’ lawyers have become quite creative in their arguments.

The most recent decision came from the Ontario Court of Appeal earlier this month in DeWolf.  In that case, a class action was permitted at trial by all customers of Bell whose accounts were charged an administrative fee by Bell to collect on overdue accounts.  The plaintiff’s lawyers argued that the $25, when added to the amount actually owed, could constitute more than 60% in annual interest.  Based on some of the prior wording in the cases, this was not a necessarily wrong position.  (Minor disclosure time: one of the plaintiff’s lawyers is a friend of mine – although I didn’t know she was working on this case).

The Court of Appeal has provided some further clarification to the issue.  There are two questions which need to be asked: (1) Whether the fee or amount is charged “for the advancing of credit” to the customer; and (2) if yes, whether the credit is being advanced pursuant to an agreement or arrangement.

In looking at the first issue, the Court held that in most instances where you are dealing with financial institutions (in cases, for example, of fees or penalties for late payment on credit cards), then such fees will be considered to be “for the advancing of credit”.  However, for administrative fees by suppliers such as utility companies there is no such presumption.  In this case, Bell had established at trial that its administration fees were based upon the average cost of chasing down delinquent accounts and, as such, was a pre-estimate of such costs.  That being the case, the Court concluded that the first question had not been answered in the customer’s favour and there was no need to consider the second question.

Previously I had advised that you should be careful of charging administrative or late fees to clients out of a concern that your claim for interest might be disallowed by the courts as being above the criminal rate of interest.  With the decision in DeWolf, small businesses (that are not involved in money lending, pawn shops, mortgage companies, etc.) should be able to breathe a little easier that their administration fees will not create problems.  In the end, I think that this is a reasonable decision.  That said, given the amounts involved in this case, I would not be surprised to see the plaintiffs request leave to appeal to the Supreme Court of Canada (and I don’t know if they will as I haven’t asked my friend).  If this is sought, I’ll let you know how it turns out in a future post.

CALC

I’ve been thinking a lot about two sayings lately.  The first is “why do today what you can put off until tomorrow.”  The second is “an ounce of prevention is worth more than a pound of cure.”  I’ve been thinking of these sayings because of two clients I’ve been working for over the past few weeks.

The first client had a contract but it was a very basic contract.  The key terms were there and the intention was to then have a more detailed contract drafted a little later.  However, because everyone was getting along so well, and because they didn’t want to take the time to do a new contract and didn’t want to spend more money on legal fees they decided “What the heck, we don’t need to do it now, do we?”  So they never had the more fulsome agreement drafted and signed.  Now, surprise, surprise, it’s a few years later and they’re not getting along anymore and they’re fighting.  Either the fight would be solved or else greatly diminished if they had gone ahead and set out a procedure for ending their relationship in the full contract.  But they didn’t so now instead of fees of, say, $5,000 split between them to draft the contract, they’ll likely each end up paying 10 times that amount for litigation.

The second client was in a business relationship with a guy who was taking advantage of their relationship.  My client was also under a lot of pressures at home.  So, like Neville Chamberlain before World War II, my client did a lot to try and avoid problems with the business colleague and to appease his demands.  Unfortunately, to appease the other fellow, my client signed documents that were wrong.  My client’s view, though, was that documents would be signed today and then fixed up later on when there was time to show the other guy how, among other things, the numbers were wrong.  The only problem was that appeasement didn’t work for Chamberlain nor did it work here and now my client is stuck in the middle of very expensive litigation and is at a bit of a disadvantage because these documents were signed.  It’s not that my client cannot win at the end of the day, but in order to win it will be a long and expensive process to undo or negate what has been done.

The point of both examples is that by doing a little bit right away a lot of trouble could have been avoided in the future.  An ounce of prevention truly can be worth more than a pound of cure.

CALC

The National Post last Monday commenced the publication of a weekly focus on small business.  I was pleased and interested to see the first issue last week and it was not bad.  The second issue came out today and, not surprisingly, the content is much smaller.  There is a series of articles starting today to deal with succession planning for small businesses that will run for the next seven weeks.  So, we’re guaranteed that the small business section will go on for at least that long.  The big question is how long after that will it continue?

Don’t get me wrong, I hope that the National Post’s project goes on indefinitely.  I question, though, whether there is enough content to keep it going.  For example, Enterprise Magazine (formerly known as Small Business Canada Magazine) only publishes five times per year.  Similarly, SOHO is published quarterly.  It makes one wonder if there will be sufficient (and sufficiently good) content to keep a weekly section running.  I hope so.  Of course, if the editors want to ensure that have lots of content (some of it of even passably decent value), then they can always call me

With the launch of the new section, the National Post has also devoted a new page to small business and it can be found at:

http://www.nationalpost.com/smallbusiness 

A quick review of the site looked promising, so it’s probably something worthwhile spending a few minutes perusing when you get a chance.

CALC

I received my latest copy of Enterprise Magazine yesterday and it had its annual “SME Report Card” or, as I like to think of the “SME State of the Nation as Shown in Statistics Canada’s Data”.  The gist of the report is that thinks have slowed down for SME’s (Small and Medium Enterprises).  Of particular interest, though, is the fact that in 2006 Statistics Canada has shown for the first time negative growth in self-employment.

Last year’s SME Report Card had noted that self-employment and the number of small (10 to 99 employees) and micro (1 to 9 employees) business was decreasing.  The reason given at that time was that jobless rates were down, salaries were stable or improving and this made more people content to stay where they were as employees rather than starting new businesses.  While these reasons were not cited this time around, it appears that the trend has continued.

The view of the trend put forward this year, though, is that self-employment, for example, is increasing for women and people over age 55 – both demographics being more conservative.  The result, it is said, is that while less people are choosing self-employment and starting their own businesses, those who do are more mature and prepared in their ventures.  I think that this is a fair assessment and a welcome trend.  But, by the same token, it also means that the opportunities are growing for the true entrepreneur.  Seniors and women may make less mistakes and have more solid foundations when they start their businesses, but often the time it takes to create those solid foundations is paid for in lost opportunities.  Which means either there are opportunities which the bold and brash can seize in their startup businesses or else there are opportunities which can be acquired by already established businesses. 

Hmmm, more opportunities to be had and less competition compared to earlier years.  Sounds like it’s going to be an interesting time.  Meanwhile, as a quick warning mentioned in the SME Report Card, the worst businesses to run in 2006 were drinking establishments, scientific and technical consulting services and support activities for printing.  All of these industries had losses of over 1/3 of the number of businesses in that industry from the prior year.  Conversely, computer companies, the residential building construction industry and doctors offices all had large growth in their industries.  I guess if you don’t have that pub down the street to spend all your money on a pint or two each day after work, you can buy a new house, a new computer and get your liver checked out.

CALC