Law Times

Law Times • JuLy 9, 2018 Page 15 www.lawtimesnews.com that successful councillor M vi- olated Rules by suggesting dur- ing nomination meeting that S failed to pay amounts owed to First Nation. Appeal board dismissed appeals finding that no corrupt violation of Code or Rule occurred in first appeal, and that M had not engaged in corrupt practice and had not af- fected final outcome of election in second appeal. Applicants ap- plied for relief, including judicial review of board's decisions. Ap- plication dismissed. Section 12.3 of Code, which required appeal board to be appointed 40 days prior to election, was directory, not mandatory, and noncompli- ance with provision did not in- validate board's actions. Appeal board was properly constituted even though it was appointed after election. There was no evi- dence that board member was biased in that he approached ap- peals with closed mind or that reasonable person would rea- sonably fear that he had. Mem- bers' employment at organiza- tions affiliated with First Nation was insufficient, on its own, to give rise to reasonable apprehen- sion of bias. Applicants failed to provide evidence that pointed to actual conf lict of interest between employment of mem- bers of board and S's appeals, or evidence that would cause in- formed person, viewing matter realistically and practically and having thought matter through, to conclude that it was more likely than not that board mem- bers would not decide fairly. There were no issues in relation to composition of board that vi- tiated its decisions or resulted in breach of procedural fairness. Commanda v. Algonquins of Pikwakanagan First Nation (2018), 2018 CarswellNat 2837, 2018 FC 616, Michael L. Phelan J. (F.C.). Commercial Law TRADE AND COMMERCE Competition and combines legislation Party not permitted to use court's judicial review process to do "end run" around limited right of review of consent agreements Jurisdiction. K Inc. was retailer of electronic books and had agreements with authors, pub- lishers and distributors that granted it rights to sell e-books in Canada. Respondents were three of five major publishers of general interest fiction and non- fiction books. Commissioner of Competition entered into three consent agreements with respondents. Consent agree- ments addressed restrictions on price competition in sale of e-books that commissioner as- serted resulted from change by respondents from wholesale distribution model to agency distribution model. To address those alleged anticompetitive ef- fects of collective shift to agency agreements, consent agreements prohibited respondent publish- ers from directly or indirectly restricting, limiting or imped- ing e-book retailer's ability to set, alter or reduce retail price of any e-book for sale to consumers in Canada. Consent agreements also prohibited respondents from entering into agreement with any e-book retailer that had one of those effects. K Inc. asserted that if consent agree- ments were implemented, it would suffer significant harm as its contractual relationships with respondents would be radi- cally altered. K Inc. brought ap- plication for declaration that consent agreements were un- lawful and for order to quash them. Application dismissed. It was not appropriate to exercise jurisdiction to hear application. K Inc. should not be permitted to use court's judicial review process to do "end run" around limited right of review of con- sent agreements that Parliament created for tribunal on applica- tions brought by third parties in subs. 106(2) of Competi- tion Act. Purposes and policy considerations underpinning consent agreement scheme that was now included in ss. 105 and 106 of Act were to streamline settlement process and make it faster and more predictable. Is- sue of whether anticompetitive agreements entered into outside Canada were within purview of s. 90.1 of Act was issue that raised question with respect to whether consent agreement was outside purview of tribunal and K Inc. failed to raise issue be- fore tribunal. Other factors that weighed against hearing appli- cation were expertise of tribunal, nature of errors alleged to have been made and costs associated with permitting third parties to seek judicial review. Rakuten Kobo Inc. v. Can- ada (Commissioner of Com- petition) (2018), 2018 Carswell- Nat 166, 2018 CarswellNat 167, 2018 FC 64, 2018 CF 64, Paul S. Crampton C.J. (F.C.). Tax Court of Canada Tax GOODS AND SERVICES TAX Administration and enforcement Testimony by taxpayer and spouse as to oral agreement on transfers being loans were credible and reliable Taxpayer's spouse was direc- tor and shareholder of registrant company. Spouse transferred his 50 per cent interest in matrimo- nial property to taxpayer. Com- pany ceased operations. Spouse filed assignment in bankruptcy. Spouse was assessed by Minister under Excise Tax Act for com- pany's failure to remit net tax in amount of $40,277.07. Taxpayer was assessed for $27,306.18 in respect of property transfer. Tax- payer appealed. Appeal allowed. Taxpayer and spouse testified that, in years prior to transfer, she had agreed to transfers of funds from their joint line of credit to company that was having cash f low issues. Taxpayer established, on balance of probabilities, that half of amount of transfers con- stituted loans by her to spouse and his company such that she gave consideration in exchange for transfer of property interest. Fair market value of that consid- eration, being half of transfers amounting to $71,500, exceeded fair market value of interest at time of transfer. Testimony by taxpayer and spouse as to oral agreement on transfers being loans were credible and reliable. Company's financial statements failing to specifically refer to debt owed by taxpayer was not conclu- sive, as various company ledgers indicated such debt and compa- ny's various payments to taxpayer over years were also indicative of debt. Evidence showed that agree- ment was that, between taxpayer and spouse, each of them would be responsible for half of money borrowed from bank. Taxpayer's explanation that she did not ini- tially refer to transfers in corre- spondence with CRA because of bankruptcy trustee's view that property interest transfer was null and void was credible. Nelson v. The Queen (2017), 2017 CarswellNat 4394, 2017 CarswellNat 9107, 2017 TCC 178, 2017 CCI 178, Dominique Laf leur J. (T.C.C. [Informal Pro- cedure]). INCOME TAX Non-residents Minister produced sufficient evidence to refute taxpayer's net worth assessments Taxpayer came to Canada through business immigration program but was no longer resi- dent. Taxpayer invested in real es- tate properties to derive rental in- come, and bought and sold prop- erties. Minister of National Rev- enue issues assessments for 2005, 2006, and 2007 taxation years to include additional income for net worth assessment in amounts of $122,100, $291,663, and $74,943, respectively. Gross negligence penalties were also assessed. Net worth assessment imputed in- come on both taxpayer and his former spouse; taxpayer was re- sponsible for 50 percent share of that unreported income. Tax- payer appealed. Appeal allowed. Taxpayer rebutted net worth as- sessment to extent of 84 percent of additional income asserted and gross negligence penalties were not to apply. Taxpayer gave reasonable explanations with re- spect to how he maintained his lifestyle during years in question, taking into consideration loans from his aunt and his family. Only 16 percent of additional in- come calculated under net worth assessment would be assessed. Translated documents submitted by taxpayer, including foreign fi- nancial documents, to Minister's counsel met requirements set out by R. 89 of Tax Court of Canada Rules and were admitted. Tax- payer received loans totalling $385,288 from his aunt, $439,216 from his family, and $125,000 from company. Taxpayer also submitted that shareholders' loan balance in T Ltd. for $325,362 was undervalued due to account- ing balance and should have been for $558,610.89. Taxpayer made prima facie rebuttal of Minis- ter's assumptions with respect to loans from his aunt and from his family. As with net worth as- sessments, taxpayer's share in loans was also 50 percent, which reduced his additional income by approximately 84 percent. However, taxpayer did not make out prima facie case with respect to various loans from company, balance in shareholders' loan in D Ltd. and Scheduled D of reply. Since taxpayer was unable to have accountant from T Ltd. testify as to undervaluation of sharehold- ers' loan balance, that amount was determined to be valued at $352,362. Minister produced sufficient evidence to refute con- cerns raised by taxpayer with respect to accuracy of Schedule D which formed part of his net worth assessments (amounts included water, fuel, electricity, communications expenses). Tang v. The Queen (2017), 2017 CarswellNat 4350, 2017 TCC 168, Dominique Laf leur J. (T.C.C. [General Procedure]). Ontario Civil Cases Civil Practice and Procedure LIMITATION OF ACTIONS Actions involving municipal corporations Determination that action brought within limitation period made for purpose of amending statement of claim only In 2004, plaintiff municipality retained consultant to prepare proposal for rehabilitation of bridge. Consultant proposed three alternatives but recom- mended third, overlaying entire deck with hydrophobic concrete, eliminating need for waterproof- ing membrane, which munici- pality accepted. Municipality retained defendant contractor to carry out work with product pro- vided by defendant supplier in 2005. Concrete deficiencies were discovered in 2006 and repaired by contractor in 2007. When de- ficiencies were discovered again in 2008, contractor refused to undertake further repairs claim- ing deficiencies were result of consultant specifying inappro- priate product. In 2010, munici- pality brought action for dam- ages against contractor and sup- plier. Supplier issued third party claims against product manu- facturers. Consultant contin- ued to assure municipality that deficiencies were result of poor workmanship by contractor. In 2014, contractor and municipal- ity both obtained expert reports suggesting that product recom- mended by consultant was not as impermeable to moisture as advertised and should not have been used. Municipality success- fully brought motion to amend statement of claim to add con- sultant as defendant. Consultant appealed. Appeal quashed. Trial judge's determination that action was brought within limitation period was made for purposes of motion only. Motion judge was satisfied that, for purposes of determining whether to add consultant as a party, limitation period had not expired. Order under appeal was interlocutory. This court had no jurisdiction to hear appeal. Consultant may, if so advised, seek leave to appeal in Divisional Court, or it may raise limitations argument at trial. Prescott & Russell (Unit- ed Counties) v. David S. Laflamme Construction Inc. (2018), 2018 CarswellOnt 8543, 2018 ONCA 495, Doherty J.A., H.S. LaForme J.A., and Himel J. (ad hoc) (Ont. C.A.). Equity EQUITABLE DOCTRINES Subrogation Plaintiff went ahead with loan knowing that defendant's mortgage stood in priority Plaintiff lent 837 Ltd. money. Loan was secured by $1,100,000 mortgage on commercial prop- erty. There were two prior mort- gages: P held first mortgage of $449,070, and defendant held second mortgage of $49,900. Plaintiff paid off P's mortgage and more than $75,000 in tax ar- rears. 837 Ltd. defaulted on pay- ments on plaintiff mortgage, and property was sole under power of sale, without notice to defendant. Plaintiff brought action claim- ing that it was entitled to priority based on equitable subrogation for having paid off P's mortgage and taxes. Defendant brought successful motion for summary judgment. Plaintiff appealed. Ap- peal dismissed. Once defendant proved that her mortgage was registered in priority to plaintiff 's, motion judge was correct to im- pose burden on plaintiff to prove entitlement to equitable subroga- tion. On findings motion judge was entitled to make, plaintiff went ahead with loan knowing that defendant's mortgage stood in priority and that she would not postpone her interest. Plaintiff was seeking subrogated priority over defendant for mortgage that was more than double in value to P mortgage, and that carried much higher interest rate than mortgage it replaced. There were cogent and proper reasons for motion judge's decision to reject request for remedy that would leave defendant with nothing. L-Jalco Holdings Inc. v. MacPherson (2018), 2018 Car- swellOnt 8207, 2018 ONCA 488, S.E. Pepall J.A., K. van Rensburg J.A., and David M. Paciocco J.A. (Ont. C.A.); affirmed (2017), 2017 CarswellOnt 10043, 2017 ONSC 4055, Mew J. (Ont. S.C.J.). CASELAW

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