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Overholt Law - Spring 2016 Breakfast Seminar Presentation
1. 600 – 889 West Pender Street
Vancouver, BC V6C 3B2
Current Legal Issues and Trends in Human
Resources Management
Carman J. Overholt, QC
Preston I.A.D. Parsons
Jennifer S. Kwok
Cameron R. Wardell
Overholt Law Inaugural Firm
Seminar
Overholt Law Inaugural Firm Seminar
Terminal City Club, Vancouver, BC
April 20, 2016
Main: (604) 568-5464
trustedadvisors@overholtlawyers.com
2. Our Firm
• About Us
– Boutique Labour & Employment Law Firm:
• “Workplace Law” – Employment, Labour, OH&S, Privacy,
Human Rights, and so forth
– Founded by Carman Overholt, QC in June 2012
– 4 Lawyers
– 1 Articled Student
– 2 Paralegals
– 1 Legal Administrative Assistant
2
3. Our Firm
• Practice Areas:
– Employment Law
– Labour Relations Law
– Human Rights Law
– Corporate Governance, Fiduciary Duties & Shareholder
Disputes
– Workers Compensation / OH&S
– Disability Management & Duty to Accommodate
– Privacy and FOI
– Workplace Investigations
– Restrictive Covenants and Non-Competition Agreements
– Pension & Benefits
3
4. 600 – 889 West Pender Street
Vancouver, BC V6C 3B2
Three points to mind
Preston I.A.D. Parsons
Written Employment
Contracts
Overholt Law Inaugural Firm Seminar
Terminal City Club, Vancouver, BC
April 20, 2016
Direct: (604) 676-4197
preston@overholtlawyers.com
6. Overview
1. Introducing New Employment Contracts to
Existing Employees
2. Commissions and Bonuses Payable Upon
Termination of Employment
3. Employee’s obligation to give notice
6
8. Common Pitfalls
• When introducing new employment
agreements for existing employees:
1. carefully consider any carry-over of boilerplate
language; and
2. anything other than a pure codification of
existing terms requires fresh consideration.
8
9. Miller v. Convergys CMG Canada
Limited Partnership, 2014 BCCA 311
• Demonstrates the value in written
employment contracts that are well-drafted
• Demonstrates the risk employers have in using
boiler-plate terms in new written employment
agreements for existing employees
9
10. Miller v. Convergys CMG Canada
Limited Partnership, 2014 BCCA 311
• Facts:
o Mr. Miller began employment in September 2003
with a written agreement.
o He received two promotions in 2006.
o Each promotion required him to execute a new
written contract.
10
11. Miller v. Convergys CMG Canada
Limited Partnership, 2014 BCCA 311
• Facts:
o Newest contract had (all boilerplate):
a probationary term purporting to be able to
terminate Mr. Miller without notice during those 90
days;
a termination clause permitting the employer to
terminate providing notice under the ESA; and
a severability clause.
o Mr. Miller’s employment was terminated after the
“probationary period”
o He sued for wrongful dismissal 11
12. Miller v. Convergys CMG Canada
Limited Partnership, 2014 BCCA 311
• Mr. Miller’s Arguments:
1. Convergys meant for the probationary period to
apply to him;
2. Entitled to reasonable notice at common law as
contract breached the ESA:
a) the probation clause “wiped out” his 3 weeks’ accrued
notice under the ESA for the first 90 days of his
employment;
b) probation clause was tied to the termination clause;
c) this created ambiguity in the agreement;
d) probation clause could not be severed using the
severability clause without severing the termination clause
too; and
e) the breach of the ESA thus made the probationary clause
(and the termination clause) unenforceable at the outset.
12
13. Miller v. Convergys CMG Canada
Limited Partnership, 2014 BCCA 311
• Decision on Appeal:
o The contract was unambiguous and on its face,
merely outlined the same information as the ESA
o A reasonable person would be unlikely to
“conclude the parties intended to place Mr. Miller
in a worse… position for the first 90 days in his
new position.”
o Unambiguous severance clause exists and it is
appropriate to sever the probation clause without
severing the termination clause
o Mr. Miller’s notice limited to the ESA
13
16. Commission/Bonuses
• BC Employment Standards Act minimums
o Contemplate payment of “wages” under formula
in s. 63(4)
Wages includes commissions and money that is paid or
payable as an incentive and relates to hours of work,
production or efficiency
Does not include discretionary money not tied to hours
of work, production or efficiency
• Contract and common law often provide for
more than these minimums
16
17. Commission
• Claim may arise where employee claims:
1. in debt for outstanding commissions the
employee alleges were owed and not paid at the
time of termination; or
2. in breach of contract for failure to pay
commission the employee claims are due on an
ongoing basis following termination of the
contract
17
18. Payment of
Commissions “earned”
• At what point has the employee “earned”
the commission?
oconcluded a sale/deal before termination?
owas the “Effective cause” of a sale before
termination?
• Consider: Why is the employee being paid
the commission?
o Referring a sale?
o Closing a sale?
o Closing a sale and servicing the resulting client/customer
contract?
18
19. Determining Commissions
Payable
• Look at:
o any express contractual language or policies
regarding what happens to commissions where a
termination occurs; or
o if no express contractual language or policies,
examine:
past practices;
the sale process; and
any role the employee has played in securing the sale
19
20. Commission Calculation
Summary
• Different Approaches:
o Commissions payable for amounts “earned”
already prior to termination
o Averaging past earnings to determine lost
opportunity for commissions during notice period
o Clear, express contractual language which ousts
payment obligations during notice period at
common law (Sciancamerli v. Comtech (Communication
Technologies) Ltd., 2014 BCSC 2140)
20
21. Ongoing Commissions
• Claim in breach of contract for commissions
argued to be accruing over time
• Typically occurs where contracts are
ambiguous or poorly drafted and imply some
entitlement potentially beyond termination:
o ie. “you will be paid on a commission basis and
shall receive commissions as long as we continue
our supplier relationship that you secured during
your employment with us”
21
22. Ongoing Commissions Summary
• Need clear, express agreement to establish
employer liability for ongoing commissions
post-termination
• Default position = other than amounts owed
at the time of termination (“Earned
Commissions”) and those that may be payable
during the notice period (part of severance
pay), no obligation to pay beyond termination
absent express contractual term
22
23. Payment of Commissions
“earned” - continued
• Commission Contract Drafting Tips:
1. Clearly identify when the company considers
a commission to be “earned” and what the
employee’s responsibilities are
oDefine “Earned Commission”
23
24. Payment of Commissions
“earned” - continued
• Commission Contract Drafting Tips:
2. Clearly outline how commissions will be dealt
with upon termination of employment
3. Seek to eliminate ambiguity: if it’s not clear
to employees how their compensation is
calculated, the business is asking for trouble
o Goal: establish an understanding of how their
compensation is calculated early
o Warning: contra proferentem
24
25. Payment of Commissions
“earned” - continued
• Contracts Drafted:
o Seek legal advice on current contract terms and
consider any modifications for new employee
contracts
o Seek legal advice on proposed severance
arrangements to minimize risk from any
outstanding commissions that may be claimed
25
26. Bonuses
• Bonuses during notice period:
o If the employee would have worked throughout
the notice period, would they have received a
bonus payment?
• Employee must establish:
o they would have been entitled, by contract or past
conduct, to receive the bonus; and
o how to calculate the amount of it
26
28. Notice upon resignation
• Scenarios:
1. Written employment contract
• No term included regarding notice to be given by
employee upon resignation
2. Verbal employment contract
• No term discussed regarding notice to be given by
employee upon resignation
Q: In the scenarios above, can the employee
resign with no notice at all?
28
29. Notice upon resignation
• A: If the contract (written or oral) does not
expressly stipulate the amount of notice an
employee must give when resigning, the
employee is obliged to give reasonable notice.
29
30. Notice upon resignation
• Calculating “reasonable notice” of resignation
– Two Factors:
1. Nature of the employee’s position with the employer;
and
2. Length of time it would reasonably take the employer
to replace the employee or otherwise take steps to
adjust to the loss.
• Gagnon & Associates Inc. et. al. v Jesso et. al. 2016
ONSC 209 – EE failed to give any notice; damages to
ER set-off against amounts owing to EE.
30
32. 600 – 889 West Pender Street
Vancouver, BC V6C 3B2
An Overview of Investigation “Dos” and “Don’ts”
Jennifer S. Kwok
Complaint Investigations
Overholt Law Inaugural Firm Seminar
Terminal City Club, Vancouver, BC
April 20, 2016
Direct: (604) 676-4189
jennifer@overholtlawyers.com
33. Introduction
• The proper conduct of workplace investigations by
employers is coming under greater scrutiny by the
Courts, tribunals and labour arbitrators
• Employers and Human Resources personnel are
being held to a high standard of professionalism
and fairness in handling of complaints and
investigations
• The consequences of a flawed investigation may be
significant in terms of liability (e.g. Human Rights
Complaints) and employee morale
33
34. Overview
1. The Legal Framework
2. Policies and Effective Communications
3. Managing the process of employee
complaints and investigations
4. Conducting complaint investigations
34
39. Policies & Effective
Communications
• What policies does your organization have?
• Have employees been advised of the policies?
• Do they clearly set out the process whereby
employees can bring complaints of improper
conduct forward to management?
• Does management support and follow the
policies in practice?
39
41. Managing the Complaint
Process
• Is the complaint process fair?
oTimeliness
oWho receives the complaint? (In writing?)
oAbility and time for the respondent to
respond
41
42. Managing the Complaint
Process
oInformal dispute resolution (e.g. mediation)
process available?
oParties have access to independent legal
advice / legal (or union) representation?
oDistinction between confidentiality and
privacy
42
43. Managing the Investigation
Process
• Privacy issues:
o The complaint cannot be kept confidential once
formally submitted; duty to investigate and act
o Try to confine the investigation to only those
affected by it and those who have relevant evidence
o Create separate file for investigation apart from
employee personnel file
43
44. Managing the Investigation
Process
Other considerations:
• Determine whether the investigation should be conducted by
an internal or external party
• Suspension of respondent pending outcome of investigation?
(Threats of violence or harm to others?)
• Discipline post-investigation must be appropriate in the
context
• Has the complaint been addressed to the satisfaction of the
complainant?
44
46. The Case Law
• Provide illustrations of what “to do” and “not
to do”
• Case Types:
oFailure to Investigate
oNegligent Investigations
oUnfair Investigations
46
47. The Case Law:
Failure to Investigate #1
Chandran v. National Bank of Canada, 2011
ONSC 777, [appeal of damage award affirmed in
2012 ONCA 205]
oFailure to Investigate Case
o*Don’t Jump to Conclusions*
47
48. The Case Law:
Failure to Investigate #1
• 9 out of 11 employees interviewed made
“unsolicited” comments regarding Mr. Chandran
• Allegations: - condescending remarks
- volatile behaviour
- embarrassed employees
- bullying behaviour
• HR Manager reported to supervisor the
allegations but not the names of those who had
made the complaints
48
49. The Case Law:
Failure to Investigate #1
• Supervisor and HR director met with Mr.
Chandran
• Mr. Chandran denied allegations; asked
for more detail
• Bank refused further detail, conducted
no investigation, issued a disciplinary
letter and transferred Mr. Chandran to a
new position with no supervisory duties.
49
50. The Case Law:
Failure to Investigate #1
• Failure to investigate:
• Bank said “We had no obligation to investigate as
there was no formal complaint filed under our
Human Rights Policy.”
• Court found Mr. Chandran was not given an
opportunity to defend himself and that he had no
opportunity to present a possible “evidential
challenge to the complaint”
• The Bank did not engage in an inquiry to determine
if the allegations were true
50
51. The Case Law:
Negligent Investigations
Correia v. Canac Kitchens, 2008 ONCA 506
• Investigation of illegal activity in the
workplace
• Canac retained a private investigation firm
• Mr. Correia, 62 year old, long-term employee,
terminated and arrested as a result of the
investigation - theft
51
52. The Case Law:
Negligent Investigations
• After Mr. Correia was terminated and file
passed to the police = wrong employee
• Mr. Correia was confused for another
employee who was younger with a similar
name
• Criminal charges against Mr. Correia were
ultimately dropped
52
53. The Case Law:
Negligent Investigations
• Claims:
• Wrongful dismissal
• Negligent investigation
• Intentional infliction of mental distress
• Intentional interference with economic relations and
inducing breach of contract
• False arrest and false imprisonment
• Malicious prosecution
• Vicarious liability
53
54. The Case Law:
Unfair Investigation #2
Vernon v. BC Liquor Distribution Branch, 2012 BCSC 133,
add’nal reasons 2012 BCSC 445
• Ms. Vernon, a 49 year old employee with 30 years of
service and exemplary performance reviews was
terminated. Employer alleged cause
• A particularly sensitive employee made a complaint
against Ms. Vernon alleging various harassing behaviour
• Employer conducted investigation into the complaint
54
55. The Case Law:
Unfair Investigation #2
• Ms. Vernon told of the complaint:
onot told job in jeopardy
onot provided with a copy of the complaint
• Interview of Ms. Vernon was really an
interrogation, biased, one-sided
• Interviews of complainant, Ms. Vernon and
other employee witnesses were conducted by
different people and they did not all have the
complaint or other interview notes
55
56. The Case Law:
Unfair Investigation #2
•Ms. Vernon given copy of
complaint in an interview and
asked to immediately respond
• Investigation concluded gross
workplace misconduct –
recommended her termination
56
57. The Case Law:
Unfair Investigation #2
• Decision:
o Witnesses who spoke favorably of Ms.
Vernon were accused of lying, chided and
yelled at by investigator
o 30 year employee with zero complaints
before this time and glowing reviews “should
have given them cause to stop and reflect”
o Suspension of 1.5 months while employer
delayed investigation was egregious 57
58. The Case Law:
Unfair Investigation #2
• The Court found that the investigation was “flawed from the
beginning to end”
• Investigation process was “neither objective nor fair”
• Award:
o 18 months notice
o damages for loss of pension
o $35,000.00 aggravated damages
o $50,000.00 punitive damages
58
59. Summary & Conclusions
• The legal standards for workplace investigations are not
easily satisfied
• Education and training of management is necessary to
meet the legal requirements for conducting
investigations
• The law is developing to make an employer liable for the
consequences of an investigation that is not properly
conducted
• It is important to seek assistance outside your
organization to ensure your investigation of workplace
matters satisfies the expected standards. 59
61. 600 – 889 West Pender Street
Vancouver, BC V6C 3B2
Common Trends and Organization Pitfalls
Cameron R. Wardell
Privacy & Technology in the
Workplace
Overholt Law Inaugural Firm Seminar
Terminal City Club, Vancouver, BC
April 20, 2016
Direct: (604) 676-4184
cameron@overholtlawyers.com
63. Privacy Laws in BC
• BC Privacy laws:
– Privacy Act, R.S.B.C. 1996, c 373
• Statute of general application, tort of breach of privacy
– Personal Information Protection Act, S.B.C. 2003, c.
63 (PIPA)
• Private sector businesses in the province
– Freedom of Information and Protection of Privacy
Act, R.S.B.C. 1996, c. 165 (FOIPPA)
• Public bodies in the province
63
64. Privacy Laws in Canada
• Federal privacy laws:
– Privacy Act, R.S.C. , 1985, c. P-21
• Public bodies as set out in Schedule
– Personal Information Protection and Electronic
Documents Act, S.C. 2000, c. 5 (PIPEDA)
• Private sector organizations
• Federal Works, Undertakings, and Businesses (FWUBs)
• Now includes “authorized foreign bank”
64
65. Collection/Use/Disclosure
• Common features of both federal and
provincial privacy laws concern the
collection, use and disclosure of personal
information
• Legislation provides the legal framework
for the gathering and handling of
personal information of individuals
– Context of Employment
65
66. Collection/Use/Disclosure
• Collection:
• How an employer/organization gathers
information on its employees/individuals
• Broadly defined
• Generally restricted by what is “reasonable”
• Statutes contain exemptions for when consent is
needed in a variety of situations
66
67. Collection/Use/Disclosure
• Use:
• Once information has been collected about an
individual, how is it being used?
• Typically, there must be a reasonable purpose for
the information that was collected; relates to
whether the collection is reasonable
67
68. Collection/Use/Disclosure
• Disclosure:
– Occurs where the employer/organization
disseminates the collected information, for a
reasonable use
– Where the largest liability may lie
– Mistakes can be aggravated by technology, leading
to mass disclosure
68
70. Privacy and Technology in the
Modern Workplace
• Topics
– Background Checks
– BYOD
– Technology
70
71. Background and Security Checks
of Potential Employees
• To consider:
– What are you collecting?
– Do you have consent?
– Is it public?
– Why are you collecting it?
– What will you do with it?
– Is there a risk you’ll collect something you don’t
want to?
71
72. Background and Security Checks
of Potential Employees
• Social media background checks
• Are you aware of extent of your online
presence?
• Google yourself!
72
75. Background and Security Checks
of Potential Employees
• Social media background checks
• Risks inherent to the internet:
– Accuracy
– The collection of irrelevant material
– Overreaching or unreasonably seeking
information
– Human rights protections
75
76. Social Media Background
Checks
• What if you discover:
– Pictures suggesting religious
faith?
– Pictures suggesting political
belief?
– Pictures depicting sexual
orientation?
– Pictures depicting a disability?
• Addictions!
– Pictures/information
depicting marital/family
status?
• Pregnant?
• Children!
76
77. Social Media Background Checks
• May need to preserve what you find
– Requirement to preserve records used to “make a
decision” or in custody of employer for one year
• May need to prove a negative
– If you didn’t rely on it in your decision, why did
you look for it?
77
78. Social Media Background Checks
• Tips to avoid risks:
– Find more reliable sources to gather info
– Verify troubling information through individual
– Do not use deception to gather
– Use a third party
– Carefully consider what you’ve found
– Be prepared to provide what you’ve found
78
79. Background and Security Checks
of Potential Employees
• Criminal record checks
• Not offered by municipal/RCM Police
• “Police Information Check” available:
– Vulnerable sector
– Non-vulnerable sector
• Changes in 2014:
– No mental health information
– “adverse contact” only reported to vulnerable
sector
79
80. Background and Security Checks
of Potential Employees
• Reference checks
– Consent usually required
– Listing references implies consent
– Listing previous employers does not imply consent
– Language of PIPA suggests that some reference
checks might be permitted without consent (but
still need notification)
– Breach of FIPPA where no consent obtained
80
81. Background and Security Checks
of Potential Employees
• Credit checks/other more extensive checks
– Generally not allowed
– Must be related to requirement of a position
– Rare
81
83. BYOD Policies
• Advantages to a BYOD Policy:
–Increased employee satisfaction and
productivity (they get to use the devices
they want, how they want to)
–Shifts the hardware cost burden from the
employer to employees
–Clarification of rules and expectations
where employees are already using their
own devices for business purposes
83
84. BYOD Policies
• Disadvantages to a BYOD Policy:
–Privacy law concerns
–Data security concerns
–Legal discovery concerns
–Privacy or Security Breach could be
immensely costly to an organization
84
85. Whose email is it anyway?
• With or without BYOD
– Legal questions of employee privacy in workplace
devices, phones and email
– Decision makers will do in depth analysis
85
92. Collection and (Mis)Use
• Employee metrics and monitoring:
– Need a (reasonable) purpose
– Notify
– Need a policy
– Need consent in most instances
– Re-evaluate
– Are there alternatives?
92
96. 600 – 889 West Pender Street
Vancouver, BC V6C 3B2
Three new decisions to note
Carman J. Overholt, Q.C.
Recent Trends in Terminations
& Case Law Update
Overholt Law Inaugural Firm Seminar
Terminal City Club, Vancouver, BC
April 20, 2016
Direct: (604) 676-4196
carman@overholtlawyers.com
97. Overview
Three 2015 decisions in BC that are significant for
employers:
• Roe v British Columbia Ferry Services Ltd.
– What conduct will warrant a just cause dismissal?
• Fredrickson v Newtech Dental Laboratory Inc.
– When has a terminated employee mitigated their damages
from their wrongful dismissal?
• Hall v Quicksilver Resources Canada Inc.
– How is notice affected when a company undergoes a sale?
97
98. Just Cause – McKinley v BC Tel
• An employee is entitled to reasonable notice or
pay in lieu of notice upon dismissal, unless just
cause existed for the termination of their
employment
• The test is whether the conduct is “behaviour
that, viewed in all the circumstances, is seriously
incompatible with the employee’s duties, conduct
which goes to the root of the contract, and
fundamentally strikes at the employment
relationship” – Adams v Fairmont Hotels &
Resorts
98
99. Roe v British Columbia Ferry
Services Ltd, 2015 BCCA 1
• A senior employee was caught violating company
policy by giving food vouchers to his daughter’s
volleyball team
• The employee was dismissed for cause
• At trial the judge found the behaviour was relatively
minor and did trifling
• The alleged misconduct did not constitute just cause
• The employer appealed
99
100. Roe v British Columbia Ferry
Services Ltd, 2015 BCCA 1
“BCF [the Employer] personnel have the responsibility to
understand and conduct themselves in accordance with this
code, and to report conduct or proposed conduct that is in
violation of this code.
…
Employees who breach the code may be subject to disciplinary
action, up to and including dismissal. If a violation of law is
involved, the matter may also be referred to the appropriate law
enforcement agency. Any Supervisor or Manager who directs or
approves of conduct in violation of this code, or who fails to
report a violation of which he or she has knowledge, is also in
violation of the code and subject to disciplinary action”
100
101. Roe v British Columbia Ferry
Services Ltd, 2015 BCCA 1
• On appeal: it wasn’t the dollar value of the
vouchers that indicated serious or significant
misconduct
• The judge erred by not looking at all the
circumstances of the incident before determining
the behaviour was “bordering on trifling”
• A new trial was ordered
101
102. Roe v British Columbia Ferry
Services Ltd, 2015 BCCA 1
• The significance of the Roe decision is that it
highlights the need for clear policies and
training in the workplace
• Given that the Court upheld the policy of the
Employer, consideration needs to be given to
any representations
102
103. Employee Mitigation
• Employees who have been wrongfully
dismissed are entitled to notice of their
termination or payment in lieu.
• An employee must, however, take steps to
mitigate any loss arising from their
termination of employment
103
104. Fredrickson v Newtech Dental
Laboratory Inc., 2015 BCCA 357
• Employee was dismissed after 8.5 years and launched a
claim for damages for wrongful dismissal
• Employer gave her several offers of reemployment,
which she declined
• At trial the judge found that the employee failed to
mitigate her damages by not accepting these offers
• The employee appealed
104
105. Fredrickson v Newtech Dental
Laboratory Inc., 2015 BCCA 357
• The Court of Appeal reviewed the law of
reemployment offers as set out in Evans v
Teamsters Local Union No. 31
• The Court in Fredrickson made two findings:
– The return to work offers were “incomplete”
– There was a breakdown of trust in the working
relationship such that it would be unreasonable for
the employee to have returned to her old job
105
106. Fredrickson v Newtech Dental
Laboratory Inc., 2015 BCCA 357
• It’s not enough that an offer of reemployment
be similar in character to the original
employment contract
• There must be a preservation of trust between
the employee and employer in order to
maintain the integrity of the employment
relationship
106
107. Notice and Length of Service
• An employee dismissed without cause is entitled
to notice of their termination
• Absent a contractual or statutory clause, the
employee is entitled to reasonable notice
• Reasonable notice is assessed based on the
employee’s age, length of service, character of
employment, and availability of similar
employment
107
108. Hall v Quicksilver Resources
Canada Inc., 2015 BCCA 291
• An employee was dismissed without cause
and given pay in lieu of one week’s notice
• The employee argued he was entitled to
notice based on 24 years of service
• At issue was whether the employee was
entitled to notice based on his service with his
previous employer
108
109. Hall v Quicksilver Resources
Canada Inc., 2015 BCCA 291
• The employee began work with Company A in
1989
• Company A was purchased by Company B in
2013, at which point Company A paid the
employee $125,345
• The employee argued this was recognition of
his service, not severance pay
109
110. Hall v Quicksilver Resources
Canada Inc., 2015 BCCA 291
• The Court of Appeal found that the substance
of the agreement and the surrounding
circumstances indicated the lump sum was in
fact a severance payment
• The trial judge erred in giving notice based on
continuous employment since 1989. The
employee was only entitled to notice from
2013 onward
110
111. Hall v Quicksilver Resources
Canada Inc., 2015 BCCA 291
• The question of successorship and prior
service being considered in determining
severance was considered by the Court of
Appeal in Sorel v Tomenson Saunders
Whitehead Ltd.
• This decision demonstrated the importance of
defining the terms of employment in the
event of a sale or a transfer
111
112. QUESTIONS?
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Carman J. Overholt, QC Preston I.A.D. Parsons
Jennifer S. Kwok Cameron R. Wardell
112
Main: (604) 568-5464
trustedadvisors@overholtlawyers.com