When Waivers Fail: The Impact of Imprecise Language and Resulting Liability
Jan 2018 Charity & NFP Law Update
On September 28, 2017, the Ontario Superior Court of Justice released its decision in Anderson v Confederation College. The decision involved a summary judgment motion by the defendant, a registered charity and a college of applied arts and technology, seeking an order to dismiss the claim by the plaintiff (“Anderson”) on the basis that Anderson had signed an “Informed Consent Form for Physical Activities” (the “Consent Form”) that barred his claim. In its decision, the court determined that the liability waiver wording in the Consent Form did not bar Anderson’s claim. This Bulletin reviews this decision, as well as the importance of properly drafted liability waivers and risk management practices for charities and not-for-profits.
For the balance of this Bulletin, please see Charity & NFP Law Bulletin No. 414.
Child, Youth and Family Services Act, 2017 Draft Privacy Regulations Posted
Jan 2018 Charity & NFP Law Update
As reported in the August 2017 Charity & NFP Law Update, Bill 89, Supporting Children, Youth and Families Act, 2017, which contains the Child, Youth and Family Services Act, 2017 (“CYFSA”) in Schedule 1, received Royal Assent on June 1, 2017. Part X of CYFSA establishes a new consent-based regime for the collection, use and disclosure of clients’ personal information by child, youth and family service providers. Although CYFSA is not expected to come into force until the spring of 2018 at the earliest, on December 4, 2017 the Ministry of Children and Youth Services (the “Ministry”) released a set of draft regulations under CYFSA concerning personal information (the “Draft Regulations”), which were open for comment until January 26, 2018.
The Draft Regulations address a number of matters that CYFSA had left to be prescribed by regulation and create a number of new obligations that will have to be satisfied by entities that meet the definition of “service provider” under CYFSA, including charities and not-for-profits. The definition of “service provider” under CYFSA includes the Minister of Children and Youth Services (the “Minister”), holders of adoption or residential licenses under CYFSA and persons or entities that provide a service funded under the Act (“Service Providers”). Some of the requirements set out in the Draft Regulations will require Service Providers to change or improve their day-to-day practices and to gather statistical information concerning their privacy practices and procedures.
Section 8 of the Draft Regulations provides details of what information Service Providers will be required to provide to clients whose privacy has been breached pursuant to section 308(2) of CYFSA, including plain language descriptions of what occurred and the steps taken by the Service Provider to mitigate the breach and prevent future losses. Section 9 of the Draft Regulations sets out the circumstances in which Service Providers must notify the Minister and the Ontario Information and Privacy Commissioner (the “Commissioner”) of a breach pursuant to s. 308(3) of CYFSA. These circumstances include the use or disclosure of personal information without authority, theft of personal information and significant breaches such as those involving highly sensitive personal information or large volumes of personal information.
Section 10 of the Draft Regulations sets out the details of the requirements for the secure retention, transfer and disposal of records of clients’ personal information (pursuant to s. 309(1)(b) of CYFSA). Service Providers must take reasonable steps to protect records containing clients’ personal information from theft, loss, or unauthorized use or disclosure, to ensure that the personal information in a record cannot be reconstructed or retrieved (this requirement would require Service Providers to, for example, permanently wipe or physically destroy hard drives and flash drives and not just erase them or delete files) and to document that a record has been disposed of in a manner that does not actually document any of the personal information it contained. Section 10 also requires Service Providers to put in place and comply with a detailed records retention policy and prohibits Service Providers from transferring a record containing a client’s personal information to a new Service Provider unless the new Service Provider has a records retention policy in place for the type of record being transferred.
Section 11 of the Draft Regulations will now require Service Providers to gather and file annually with the Commissioner specific data such as the number of requests received for access to or correction of records in the previous year, the number of times it granted or refused such request and within which time frames, and details concerning the number and type of privacy breaches (losses, thefts, unauthorized uses and disclosures and so on) that occurred in that year.
Charities and not-for-profits that are Service Providers under CYFSA should continue to monitor the status of CYFSA as well as the Draft Regulations. In particular, when CYFSA is proclaimed, and if Draft Regulations are enacted, Service Providers will have significant requirements to comply with under the new legislation.
CRA News
Jan 2018 Charity & NFP Law Update
Updates to T4063, Registering a Charity for Income Tax Purposes
The Canada Revenue Agency (“CRA”) updated its T4063, Registering a Charity for Income Tax Purposes on January 12, 2018. While many of the changes are administrative, the CRA has updated its answer to the “Will the Charities Directorate accept draft governing documents” section. While the T4063 had previously stated that the Charities Directorate would review draft governing documents on a one-time basis, it has been amended to state that the Charities Directorate will not review applications submitted with draft governing documents, and that the CRA will treat such applications as incomplete and will return them to the applicant. The amendments also clarify that for an application to be considered complete, certified governing documents must be included with the submission. These changes conform with the CRA’s amended policy that it will no longer review applications submitted with draft governing documents as of July 1, 2017, as outlined in our June 2017 Charity & NFP Law Update.
Implementation of Proposed Changes to VDP
In our August 2017 Charity & NFP Law Update, it was reported that the Ministry of National Revenue announced changes to the CRA’s Voluntary Disclosures Program (“VDP”) to take effect as of January 1, 2018. These changes, which narrow the eligibility criteria for the VDP, were outlined in two proposals, Draft Information Circular – IC00-1R6 – Voluntary Disclosures Program and Draft GST/HST Memorandum 16.5 – Voluntary Disclosures Program (the “Proposals”). On December 15, 2017, the CRA published an announcement indicating that changes to the VDP would be effective March 1, 2018 rather than January 1, and that to be considered under the current VDP program, the CRA must receive applications on or before February 28, 2018. The announcement includes links to revised versions of the Proposals for IC00-1R6 and Memorandum 16.5. The VDP has application to non-profit organizations (“NPOs”). However, it has only limited application to registered charities in the context of employee source deductions and Harmonized Sales Tax (“HST”).
New Video – Who is the True Donor of this Gift?
On December 4, 2017, the CRA published a new video, Who is the True Donor of this Gift?. As charities cannot issue official donation receipts unless they know who is the true donor, the video discusses how to determine the true donor in order to issue the corresponding donation receipt. In this regard, the video discusses various methods to identify individual and corporate donors, and briefly outlines issues that may arise when trying to identify the true donors. For example, the video explains when receiving a cheque from a joint account showing the name of two individuals, the receipt can be in one name or both names regardless of who signed the cheque. Another example provided is that of a corporation collecting funds from its employees and making a donation to a charity; in that case, the charity may not issue a donation receipt to the corporation, but may issue individual donation receipts to each of the employees who donated the funds for the corresponding amount of each employee donation, provided the charity is provided with that information, including each employee’s address. Other examples include anonymous donations and cash donations.
Delaying the Enforcement of Your Copyright May Cost You
Jan 2018 Charity & NFP Law Update
On October 31, 2017, the Federal Court released its decision in 907687 Ontario Inc. (International Institute of Travel) v 1472359 Ontario Ltd (IBT College of Business Travel & Tourism Technology). In this case, International Institute of Travel (“IIT”), a private career college, alleged that IBT College of Business Travel & Tourism Technology (“IBT”), another private career college, had improperly used its course material. As a result, on January 15, 2013, IIT commenced a copyright infringement action against IBT.
Although the Federal Court held that IIT had not met its burden of proving that IBT had infringed its copyright, the court held that the infringement action was time-barred as it was not commenced within the three year limitation period provided for in the Copyright Act. In this regard, s. 43.1(1) of the Copyright Act provides that a copyright infringement action must be commenced within three years. However, there are subtle important nuances to when this three year period begins. If the copyright owner knew or could reasonably have been expected to know of the infringement, then the three year limitation period begins from the time at which the copyright owner knew or was reasonably expected to have known of the infringement. On the other hand, in situations where the copyright owner did not know and could not be reasonably expected to know, then the three year limitation period begins at the time when the copyright owner first knew or could have been reasonably expected to know of the infringement.
In this case, the court held that although IIT did not have actual knowledge of the alleged infringement until 2011, a demand letter sent by IIT’s legal counsel to IBT in 2002 established that the infringement was discoverable with reasonable diligence in 2002, and as a result, the action was statute-barred.
Charities and not-for-profits should beware that where a limitations defence in a copyright infringement action is raised, the copyright owner is required to prove that the three year limitation period has not lapsed. Charities and not-for-profits must therefore take reasonable steps to determine if copyright is being infringed and be vigilant in policing unlawful use of their copyright to ensure a copyright infringement action is not time-barred. Further, a demand or cease and desist letter sent can be deemed by courts as evidence that an infringement was known by the copyright owner and would therefore mark the beginning of the three year period, unless there is evidence that the copyright owner had earlier knowledge of the infringement. As such, charities and not-for-profits that know of or even suspect copyright infringement should act immediately to enforce their rights before the limitation period expires.