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August 2013

ALBERTA EDITION

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L E GAL RES EA RCH Prepare to Win.

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We are pleased to be serving full afternoon tea at the Four Seasons during our afternoon session. Featured Cases: P9

Family Law; Parens Patriae Jurisdiction; Parentage; Guardianship

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Contract; Tort; Several Liability; Apportionment

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Labour Law; Collective Agreements; Interpretation; Limitation Period; Disciplinary Action

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Default; Praecipe; Renewal of Judgment; Limitation Period ~With Counsel Comments

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Insurance Coverage; Life Tenancy; Ownership; Definition of “owned or lived at” ~With Counsel

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D.W.H. v D.J.R., 2013 ABCA 240 Areas of Law: Family Law; Parens Patriae Jurisdiction; Parentage; Guardianship ~Court exercised parens patriae jurisdiction to grant same-sex ex-partner legal status as parent and guardian of child~ CLICK HERE TO ACCESS THE JUDGEMENT

BACKGROUND

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he respondent, Mr. H, was in a same-sex relationship with the appellant, Mr. R, when they decided to raise a child together. They engaged the help of Ms. D, who was also in a same-sex relationship, who orally agreed to become impregnated with Mr. R’s sperm and give the child to Mr. R and Mr. H upon the child’s birth. Both Mr. R and Mr. H were present at the birth in 2003 and took care of the child for the first three years of her life. The child grew up referring to Mr. R and Mr. H as “Daddy” and “Papa” respectively and Ms. D and her partner enjoyed regular visits with the child. In 2006, Mr. H and Mr. R. ended their relationship. Mr. H moved out of the family home while the child continued to live with Mr. R. Shortly after Mr. H and Mr. R’s relationship ended, Mr. R and Ms. D entered into a “parenting agreement” declaring themselves the guardians of the child, agreeing that neither of their partners would stand in loco parentis to the child. Mr. H had no knowledge of this agreement. In 2007, Mr. H was granted a contact order with respect Augusr 2013

to the child by the Court of Appeal after having been denied on the application. Of significance, the Court of Appeal determined that Mr. H did not require leave to bring an application for a contact order under s. 35 of the Family Law Act, S.A. 2003, c. F-4.5 (“FLA”) as a parent, or a person standing in place of a parent. In the years following that decision, much litigation transpired between Mr. H, Mr. R and Ms. D with respect to parentage, guardianship and custody of the child. This appeal arises from a decision of a chambers judge invoking the court’s parens patriae jurisdiction to grant Mr. H a declaration that he was a legal parent and guardian of the child. In that decision, amongst other things, the chambers judge found that the FLA violated the equality guarantee in s. 15 of the Charter and contained a wide legislative gap by failing to consider parenting situations involving same-sex couples and situations of reproductive technology.

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D.W.H. v D.J.R., (cont.) APPELLATE DECISION

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r. R and Ms. D appealed the decision on several grounds. The first ground of appeal raised the argument that because Mr. H had not expressly sought declarations of parentage and guardianship in his originating notice of motion, it was inappropriate for the chambers judge to grant such declarations. Generally, such is the case as unfairness could result and the court could have lacked information required to provide a fully informed decision. However, in the particular circumstances of this case, Mr. H’s Charter claim and other relief sought, as well as the evidence put forward, made it clear that he was seeking recognition of his status as a parent or a person standing in the place of parent. Further, the Court of Appeal agreed with the conclusion of the chambers judge that it was in the best

interests of the child to recognize Mr. H as the child’s legal parent and guardian. No immediate “risk” to the child’s welfare is necessary for the court to exercise its parens patriae jurisdiction and, whether Mr. H also receives a benefit, is irrelevant as it was clear that the chambers judge was considering the best interests of the child. The appeal was dismissed.

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Petersen Pontiac Buick GMC (Alta.) Ltd. v. Campbell, 2013 ABCA 251 Areas of Law: Contract; Tort; Several Liability; Apportionment ~Nothing in contract law to prevent apportioning liability between two parties who breached different contracts but caused same damages~

CLICK HERE TO ACCESS THE JUDGEMENT

BACKGROUND

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he Appellant, Pontiac, and the Plaintiffs owned adjoining lots, Lots 4A and 4B respectively. Lot 4A had an access easement over Lot 4B registered on both titles (the “Easement”) and the Plaintiffs had a right of first refusal to purchase Lot 4A from Pontiac that was protected by a caveat also registered on title. Pontiac leased Lot 4B from the Plaintiffs. The lease was due to expire so the parties entered into an agreement to renew the lease (“Lease Renewal Agreement”) stating that, amongst other things, the Plaintiffs gave up their right of first refusal over Lot 4A, the width of the Easement was considerably narrowed, and if Pontiac sold Lot 4A and the purchasers could obtain direct access from the front of the property, then Pontiac would discharge the Easement altogether. The Lease Renewal Agreement was executed and returned to the Plaintiffs’ counsel, Campbell, who subsequently discharged the Plaintiffs’ right of first refusal. However, the Lease Renewal Agreement was not accepted by the Land Titles Office to amend the

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Easement and the parties had to prepare a separate agreement to do so. Campbell prepared such an agreement (“Easement Amending Agreement”) but omitted to include the condition that the Easement would be discharged if a purchaser of Lot 4A was able to gain direct access. Pontiac knew of the omission and signed the agreement without bringing it to Campbell’s attention. Pontiac subsequently sold Lot 4A and failed to disclose to the purchasers and its counsel that it had contractual obligations with regards to the Easement under the Lease Renewal Agreement. Further, the Plaintiffs had not yet signed the Easement Amending Agreement. As a result, despite eventually obtaining direct access to Lot 4A, Lot 4B remained subject to the Easement with the new owners obtaining a permanent injunction preventing Lot 4B access from being blocked. The Plaintiffs suffered considerable damages and sued Pontiac and Campbell in contract and tort. In response, Campbell sued Pontiac for indemnification or contribution for failing to notify him or the Plaintiffs


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Petersen Pontiac Buick GMC (Alta.) Ltd. v. Campbell, (cont.) of the sale. The trial judge found Pontiac and Campbell liable in contract and Campbell only liable in tort. The trial judge determined that liability was several as the causes of action against Campbell and Pontiac were separate and distinct but that the damages suffered were identical. However, when it came to the obligation to pay damages, the trial judge considered Campbell’s liability “secondary” with the consequence that once Campbell paid the entire amount of the Plaintiffs’ damages, it could turn to Pontiac through an assignment of the judgment, which could result in Pontiac ultimately becoming responsible for 100% of the Plaintiffs’ damages.

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Left to Right: Vern Bla i r, Cheryl Shearer, Rober t D. Mackay, Kiu Ghanavizchian, Malcolm Ellison, Gary M. W. Mynett, Chris Halsey-Brandt, Andy Shaw, Jeff P. Matthews, Farida Sukhia

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Petersen Pontiac Buick GMC (Alta.) Ltd. v. Campbell, (cont.) APPELLATE DECISION

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fter agreeing with the trial judge’s determination that liability was several between Pontiac and Campbell, the main issue on appeal was whether that liability ought to be divided. The Court of Appeal was not persuaded that the term “fault” used in the Contributory Negligence Act, R.S.A. 2000, c. C-27 was broad enough to cover this case and thus could not form a basis for dividing liability in these circumstances. However, nothing in contract law prevented an apportionment of liability between two parties who

had breached two different contracts causing the same damages to a plaintiff. Further, under equitable principles, the conditions that a claimant must show for contribution were also met in this case. Since the trial judge had found that both parties contributed to the Plaintiffs’ damages and nothing in his reasons suggested that one was more or less blameworthy than the other, the Court of Appeal held that it was appropriate to apportion liability equally between the parties in this case.

OnPoint Success Story: Providing New Perspective We were asked to research whether a judge retains supervisory jurisdiction over a society after having delegated his supervisory authority to an officer of the society in an earlier order. Taking a broader view of the matter, we queried whether the matter might be more appropriately argued as res judicata, and found an old SCC case to support that position in nearly identical circumstances. This aspect of the case was decided in the client’s favour on this basis.

Augusr 2013

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Alberta Health Services v Alberta Union of Provincial Employees, 2013 ABCA 243 Areas of Law: Labour Law; Collective Agreements; Interpretation; Limitation Period; Disciplinary Action ~Limitation period for disciplinary action in collective agreement held mandatory~ CLICK HERE TO ACCESS THE JUDGEMENT

BACKGROUND

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n July 31, 2008, an employee of Alberta Health Services (the “Employer”) working as a hospital housekeeper was fired after refusing to clean-up vomit from a patient in an x-ray room despite being the housekeeper on call at the time. The employee worked under a collective agreement between the Employer and her union, the Alberta Union of Provincial Employees. On August 14, 2008, the employee underwent a disciplinary interview and on August 28, 2008 was dismissed from her employment. The employee filed a grievance of her dismissal on several grounds, one being that the Employer had breached Article 11.01 of the collective agreement by failing to take disciplinary action within the timeline set by that provision. Article 11.01 specifically states that disciplinary action “will be taken within fifteen (15) days (excluding Saturday, Sundays and Named Holidays) of the date the Employer first became aware of, or reasonably should have become aware of the occurrence of the act”. The Employer became aware of the incident

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on August 6, 2008, which meant that it had until August 27, 2008 to take disciplinary action. However, it was a day late and thus failed to so within the requisite time period. The matter went before the Arbitration Board (the “Board”) where it was determined that the missed deadline contained in Article 11.01 was mandatory, as opposed to directory, and dismissed the matter without considering the case on its merits. On the Employer’s application for judicial review, the reviewing judge found in favour of the Employer, concluding that the Board’s decision was unreasonable as it was “not within the possible range of outcomes but leads to a result that is disproportionately inappropriate in the context of a labour relations framework”. Considering the language and construction of the collective agreement, the reviewing judge “preferred” an interpretation that Article 11.01 was directory rather than mandatory, finding that a mandatory deadline was “inconsistent with modern dispute resolution”.

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Alberta HS v Alberta UPE, (cont.) APPELLATE DECISION

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hile the reviewing judge correctly held that the applicable standard of review of the Board’s decision was reasonableness, it had failed to apply that standard. The Board gave clear and rational reasons for its decision and followed a line of analysis that reasonably led to their conclusion. Even though the reviewing judge had preferred a different interpretation of the collective agreement, he failed to provide the

Augusr 2013

requisite deference to the Board and to consider whether its interpretation was also reasonable. A statute or provision of a collective agreement can have multiple interpretations that are reasonable and an interpretation that differs from another that has received prior judicial approval can also be found reasonable. The decision of the Board met the requirements of “justification, transparency and intelligibility” and fell within “a range of possible, acceptable outcomes which are defensible in respect of the facts and law,” thereby being reasonable. The appeal was allowed and the Court of Appeal upheld the Board’s decision that the deadline in Article 11.01 was mandatory.

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Agriculture Financial Services Corporation v. Zaborski, 2013 ABCA 277 Areas of Law: Default; Praecipe; Renewal of Judgment; Limitation Period ~Praecipe to Note in Default does not amount to default judgment in which 10-year limitation period begins to run~ CLICK HERE TO ACCESS THE JUDGEMENT

BACKGROUND

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ver a decade ago, the Appellant was sued by the Respondent seeking damages for fraudulent misrepresentation relating to crop insurance claims made by the Appellant. The Appellant filed a defence and counterclaim against the Respondent. Months after pleadings closed, the Appellant’s affidavit of records remained outstanding. The Court ordered the Appellant to file his

affidavit of records or else be noted in default. The Appellant failed to comply with the Court’s order for production and on October 31, 2001 was noted in default by praecipe. The Respondent then served a notice of an assessment hearing on the Appellant of which the Appellant also failed to appear. The hearing resulted in a judgment in favour of the Respondent, in which the Respondent was granted general damages, punitive damages and pre-judgment interest. The judgment was pronounced and entered on January 10, 2002. The Appellant attempted to have the judgment set aside but was unsuccessful. Almost a decade had passed when the Respondent applied on December 7, 2011 to renew the judgment. The judgment was renewed on January 9, 2012 subject to the Appellant’s right to challenge the renewal on the basis that it had not been renewed within the 10-year limitation period

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Agriculture Financial Services Corporation v. Zaborski, (cont.) provided in s. 11 of the Limitations Act, R.S.A. 2000, c. L-12 (the “Limitations Act”). That section provides that a claimant has 10 years after the claim arose in which to seek a remedial order regarding a claim based on a judgment or order for payment of money. If the claimant fails to seek a remedial order within that time period, the judgment debtor may claim immunity from liability. The Appellant challenged the renewal of the judgment on the basis that it had been pronounced on or that the payment of money had been ordered on October 31, 2001 when he was noted in default, and therefore the 10-year time period had lapsed and he was immune from liability. APPELLATE DECISION

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The Appellant failed to obtain immunity from liability under the Limitations Act. A Praecipe to Note in Default does not amount to a judgment or an order for the payment of money. It is merely a direction to the clerk, signed by a party or his lawyer, requesting that a notation be made on the court file that the defendant is delinquent in some respect. In this case, that delinquency was the Appellant’s failure to file his affidavit of records upon order of the court, and not a failure to defend. In this case, the Praecipe to Note in Default merely noted the default and did not guarantee that a judgment or order for the payment of money would be made as that required a further application by the Respondent in this case as the Respondent’s claim was neither for a debt nor a liquidated demand. A court can only order a judgment for general damages and punitive damages following an assessment, particularly where the damages claimed were not exactly as set out in the Statement of Claim. Such an application might never be made in the case where the parties reach an agreement outside of court. Further, at that point the Appellant still had the opportunity to cure the default by an application to explain why he had been unable to file his affidavit of records in accordance with the court’s order before a judgment or order for the payment of money would be made. In this case, the noting in default cannot be enforced as it was not a judgment or an order for the payment of money. The application for judgment was made on January 10, 2002 and the judgment was pronounced and entered on that date. This was the date on which the 10-year limitation period provided in s. 11 of the Limitations Act began to run.

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COUNSEL COMMENTS Agriculture Financial Services Corporation v. Zaborski Comments provided by Michael McCabe, Q.C., Counsel for the Appellant, David J. Zaborski

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o one can argue that the result is not a pragmatic one, but how the Court got there is troubling to me. The way the Statement of Claim was pled claimed a debt. The effect of a Noting in Default is an admission of liability and at that time you can no longer deny the admitted matters. So, a substantial portion of the claim was an admitted debt. The Court offers no authority. It cites none of the cases that were before it dealing with this. While it is difficult to argue that the result is not a reasonable one, the way they got there is not particularly helpful.�

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Carscallen v. Chubb Insurance Company of Canada, 2013 ABCA 263 Areas of Law: Insurance Coverage; Life Tenancy; Ownership; Definition of “owned or lived at” ~Despite many ownership attributes, life tenant not considered owner of, or to have lived at, property~ CLICK HERE TO ACCESS THE JUDGEMENT

BACKGROUND

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he Appellant owns a home for his family in Elbow Park, Calgary (“Elbow Park”) and is a life tenant of a cottage and 80 acre parcel in which he and his family are granted access to on weekends and holidays (“Loon Lake”). The Appellant used to own Loon Lake, but in 2009 sold it to Loon Lake Holdings Inc. (“Holdings”) and entered into a life tenancy agreement for the exclusive use and occupation during his lifetime. The Appellant owns preferred shares in Holdings which the trial judge found could be redeemed for the value of the property. The Appellant had separate insurance policies with the Respondent for Elbow Park and Loon Lake. He had requested contents coverage for both properties, but no separate

Augusr 2013

contents coverage was provided under the Loon Lake policy. Instead, contents coverage for Elbow Park was extended to cover Look Lake as well. Unfortunately, Loon Lake burned down. The Respondent took the position that the Appellant owned and lived at Loon Lake and limited their coverage to 20 percent based on a limiting provision in the contents coverage that applied to losses “at a residence you own or live at” that were not residences listed in the policy. This left the Appellant with a shortfall of $180,961.71 compared to the actual loss of contents at Loon Lake. The trial judge had found that something less than a fee simple interest could constitute ownership and aspects such as the Appellant’s preferred shares in Holdings and Holdings’ rights of ownership over Loon Lake meant that the Appellant’s life interest appeared more in the nature of ownership. He also held that the contra proferentum rule did not apply as there was no ambiguity in the relevant provisions of the policy. He held that the Appellant was both an owner of, and lived at, Loon Lake and therefore the Respondent was only obligated to provide 20 percent coverage for the loss of contents.

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Carscallen v. Chubb Insurance Company of Canada, (cont.) APPELLATE DECISION

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he only issue on appeal was the interpretation of the words “at a residence you own or live at�. The Court of Appeal found that the trial judge had erred in his interpretation of those words and the appeal was allowed in favour of the Appellant. Occasional visits to Loon Lake, a recreational property, does not equate to a place in which one lives. When answering the question of where one lives, the Court of Appeal easily found that the response for the Appellant would be Elbow Park and not Loon Lake. Further, the right of alienation, one of the fundamental rights of ownership, was relinquished when the Appellant sold the property

to Holdings and became a life tenant instead. The Respondent could have included life tenancies in drafting the limitation provision, but did not. The trial judge had also erred in failing to consider the reasonable expectations contemplated between the parties at the time the Appellant requested contents coverage for both properties. Based on the considerable excess of contents coverage for Elbow Park compared with what was required of that property, the Court of Appeal made a reasonable inference that the excess coverage was intended to fully cover the contents at Loon Lake.

We are pleased to welcome a new research lawyer to OnPoint, Melania Cannon, B.A. (Hons.), M.A., J.D. After completing her M.A. in History and her J.D. at UBC, Melania further developed her research and writing skills while serving as a clerk to the Supreme Court of British Columbia. Melania then completed her articles at Young, Anderson. She went on to practice at the firm as an associate where she was involved with a variety of litigation and research projects, including drafting submissions for the Court of Appeal of British Columbia and the Supreme Court of Canada.

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COUNSEL COMMENTS Carscallen v. Chubb Insurance Company of Canada Comments provided by Doreen Saunderson, Counsel for the Respondent, Chubb Insurance Company of Canada

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he decision, while disappointing to the insurer, was not a great surprise, despite our success at the Queen’s Bench level.   With a policy expressly to be interpreted based on plain English meaning of the words, the court had the opportunity to avoid detailed analysis of the legal interpretation of the words in similar or other contexts.  This appears to be a very result-oriented decision, compared to the decision of the chambers judge, who embarked upon Doreen Saunderson a much more legal analysis and approach, providing more extensive reasoning.   In the end, with a policy to be interpreted on its plain English meaning, the decision is defensible, as well as the approach of the court, although it is unsatisfying, particularly in contrast to the chamber’s judge’s decision.     There was room for the court to find in favour of either party on either the issue of “live at” or “own”.  In a plain English meaning the Court of Appeal’s basic reasoning on “live at” has some simple appeal.  This reasoning implies that insureds will almost never have more than one residence that they live at, which was not the intention of the insurer.   The decision provides no assistance on when insureds may be found to live at more than one home.   The decision and lack of legal analysis or reasoning on whether Carscallen “owned” the cottage was more disappointing.   The court’s comments about the reasonable expectations of the parties seems to  only focus  on Carscallen’s expectation.   The result is not consistent with the intention of the insurer here.  It never intended to provide contents insurance to the level claimed as an additional benefit with no additional premium on a policy on a different property altogether.  With such significant and valuable contents of the insured at the cottage, the insurer reasonably expect them to be specifically insured on the relevant policy.  This decision demonstrates the need for underwriters to engage in training of brokers selling their policies.  In this case the broker assured Carscallen that he would have

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COUNSEL COMMENTS coverage on the cottage contents because Chubb always covers the contents of both residences on one policy, despite having separate policies on the properties.  The broker gave that information apparently without being aware of the 20% limitation on contents coverage at a second residence.   The broker and insured did not appear to have turned their minds to the interpretation of that provision in the policy.  There may be many analogous situations where an insured has effective control over a second residence and insures both with an insurer under a similar policy.  This can be problematic for insurers when they have very valuable contents, but do not “own” or “ live at” the second residence based on this interpretation.  This could include cases of life tenancies, long term leases (such as on aboriginal land), ownership by holding companies, family trusts or other personal estate planning arrangements and other situations.  Insurers might want to obtain more information in the underwriting process about the identity of all those with an interest in the property , the relationship to the insured and the actual nature of the interest of the insured in his residences.  This will allow them to ensure that they are rating the risks properly, placing appropriate contents coverage and obtaining the necessary premiums in light of this decision.  As counsel, when dealing with this type of policy interpretation, we need to not lose sight of the possible simple and immediate interpretation that a lay person would bring to the question.  That is the approach the court took.  Their questions during oral argument related to how Mr. Carscallen, or less sophisticated persons in his circumstances, would have answered questions such as “where do you live?” and “who owns the cottage?”.  They had little interest in the cases interpreting the words “own”  and “live”  more broadly in insurance and other contexts.  That is apparent from their failure to mention any of the law that was presented to them by either party on these issues.  Of course this could also be another case of the court’s general tendency to interpret insurance policies in the manner most favourable to the insured.    Although the court said that it found no ambiguity and was not resorting to any rules of interpretation to that effect, it came to a result favourable to the insured nonetheless.”

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Who is OnPoint Legal Research?

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e are a firm of legal research lawyers. For over 14 years, we have completed research and writing projects for lawyers in the private and public sectors in B.C. and Alberta. Many of our clients consider using our services as equivalent to relying upon work completed by in-house associates, and add a measure of profit accordingly when billing their own clients.

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