Court pits two consumer protection features against each other

Court pits two consumer protection features against each other

December 31, 2007

Despite Ontario Premier Kathleen Wynne’s proroguing of the Ontario legislature, it’s fully expected the long-awaited repeal of the Bulk Sales Act (BSA) will get back on track, says Toronto corporate and commercial lawyer Marlin Horst.

Horst, a partner with Shibley Righton LLP, says the existing BSA is antiquated, redundant and has been superseded by up to six other pieces of legislation.

“It was originally passed about 100 years ago to prevent people from getting inventory and selling it off quickly without paying their suppliers,” he tells AdvocateDaily.com. “But there are several other statutes in place, such as the Personal Property Securities Act and the Fraudulent Conveyances Act, which allow the supplier to get their inventory back by reversing the transaction.”

Still, the legislation remains on the books and demands compliance, he says. As a result, commercial lawyers must filter every file through the lens of the BSA to ensure clients are protected.

“There are workarounds but it’s another step and that just makes things more complicated,” Horst says. “For every commercial transaction, whether you’re acting for the buyer or a seller, or even in an acquisition of a company, you always have to think, ‘Will this fall under the BSA?’ You can get exemptions but it means applying to the court, which you may not want to do every time.”

Bill 218 — the Burden Reduction Act, 2016 — was introduced to the legislature in June and carried on the first reading. In the normal course of events, it would make its way into law over the next few months.

However, after losing a Scarborough byelection in August in a long-time Liberal stronghold, Wynne suddenly announced she wanted to reset the government’s agenda. Byelections are often sounding boards for public opinion and voter displeasure at the government’s policies, especially around taxation and energy costs.

This would normally mean all pending bills would die on the order paper with the end of the current session of Parliament. However, Wynne pledged to resurrect all pending bills from the current session and restore them to the new session, among them the Burden Reduction Act that simplifies 51 other pieces of legislation and eliminates the BSA.

“It’s been a long time coming and we’d really like to see the BSA gone because it will make things much less complex going forward,” says Horst.