BUSI 2601A BUSINESS LAW

ASSIGNMENT ONE

The Government of Canada enters 2024 with a list of economic woes. Inflation has hit 7.5%, and the Bank of Canada has increased the interest rate to 7.5%. Many consumers who bought houses at sky high prices in 2021 cannot afford to renew their mortgages at the higher rates and the price of real estate is collapsing.

The PM sees the poll numbers and they are brutal. His Liberal government has limped along as a minority government since its election in 2021 and, with NDP support, is proposing that the federal government adopt the "Mortgages Crisis Act" (Bill C-500) which would, among other things, require all mortgage lenders to provide 6 months notice before enforcing a mortgage. This is inconsistent with provincial mortgage laws where almost every province only requires a 35-day notice.

Bill C- 500 further provides that all the chartered banks will be nationalized and converted into a single Crown Corporation, with all shareholders to receive 50% of the fair market value of their shares valued as of January 31, 2024, in the form of tax credits. The Crown Corporation will be given "such prescribed regulatory powers as necessary to provide fair relief to mortgage borrowers facing eviction" according to the draft Bill.

The draft Bill expressly states that its objective is to remedy the interest rate induced national housing crisis which is pushing the middle class into the streets.

The draft Bill comes before the House of Commons and passes on the first two readings, but on the third and final vote, the NDP support splits, and the House of Commons votes against the Bill 164163, with 10 abstentions and with 5 Liberals failing to make it to the vote because of a freak ice storm in Atlantic Canada that day. The Opposition calls for an election, but the PM goes to the Governor General who signs the Bill at the PM's direction on the grounds that the 5 Liberals would have voted for the Bill but for the storm.

A group of bank shareholders retains legal counsel to challenge the new law and their lawyer issues a press release condemning the government and threatening litigation. In response, the PM and the cabinet adopt Regulation 141 under the new statute cancelling the tax credit for any shareholder who sues the government.

Some shareholders decide to proceed with the litigation in spite of Regulation 141.

QUESTION AND GUIDANCE

1Q. Describe the legal process they will follow and as well as some of their procedural requirements and options.

2Q. Identify the most significant legal issues in this fictitious scenario.