Law Times

March 25, 2019

The premier weekly newspaper for the legal profession in Ontario

Issue link: https://digital.lawtimesnews.com/i/1095691

Contents of this Issue

Navigation

Page 13 of 15

LAW TIMES 14 COVERING ONTARIO'S LEGAL SCENE | MARCH 25, 2019 www.lawtimesnews.com Tax INCOME TAX administration and enforCement Reasonable to determine that taxpayers did not demonstrate financial hardship Individual taxpayer P practiced as astrologer through taxpayer corporation. After audit, Canada Revenue Agency (CRA) deter- mined that taxpayers owed tax arrears, interest and gross neg- ligence penalties under Income Tax Act and Excise Tax Act. CRA decided not to waive pen- alties and interest. Taxpayers brought applications for judicial review of four decisions. Appli- cations dismissed. There were no circumstances to waive interest or penalties. Delay in audit did not warrant waiver of interest or penalties. Taxpayer knew he could have paid penalties while pursuing appeals and CRA was not responsible for delay. Allega- tion of CRA error and challenge to net worth assessment were not before decision-makers. Taxpay- ers did not suggest that P's illness or mental distress started before failures to comply, so that condi- tion did not warrant waiver of in- terest or penalties. It was reason- able to determine that taxpayers did not demonstrate financial hardship as P had investment property and money and had been purchasing expensive non- essentials. Since corporation had ceased operation, there was no threat to jobs or community so there was no exceptional situa- tion warranting cancellation of penalties. Pathak v. Canada (Na- tional Revenue) (2019), 2019 CarswellNat 564, 2019 FC 252, Russel W. Zinn J. (F.C.). Tax Court of Canada Public Law SOCIAL PROGRAMS employment insuranCe Cheque dated at end of first month was corroborative of worker's position Worker worked as shingle packer at two lumber mills during rel- evant period and then applied for employment insurance (EI). Minister of National Revenue upheld ruling that worker had been engaged in insurable em- ployment with employer G Ltd. for two-week period, but not for following three-month period ("further period"). Worker ap- pealed. Appeal allowed in part. Minister's decision was varied by adding insurable employment of 98 hours in first month and 56 hours in third month of further period. Worker's testimony was general and vague as to dates worked and when he made EI applications, which was under- standable given lapse of time. Worker's evidence was consistent that he had worked in both mills during further period. Worker received cheque from G Ltd. dat- ed at end of third month, which was indicative that worker did work 56 hours for G Ltd. in third month. Whether that mill was closed during that period was not verified. Worker received cheque from G Ltd. dated at end of first month, which was corroborative of worker's position that he had worked for G Ltd. during that month. If there had been short- age of work prior to further pe- riod, that could be function of short term f luctuations in supply and demand for small operators in lumber industry. Sidhu v. M.N.R. (2018), 2018 CarswellNat 2704, 2018 TCC 101, B. Russell J. (T.C.C. [Em- ployment Insurance]). Tax INCOME TAX foreign inCome Payment from IRA to taxpayer was payment out of foreign retirement arrangement Taxpayer's father died and left taxpayer U.S. individual retire- ment account (IRA). Taxpayer's share was rolled over to IRA in his name and funds were dis- tributed to him, with amounts withheld for U.S. income taxes. Canada Revenue Agency (CRA) added amount in IRA to tax- payer's income and allowed him foreign tax credit to account for U.S. taxes withheld. Taxpayer ap- pealed on ground that IRA was inheritance. Appeal dismissed. Taxpayer received amount as dis- tribution from IRA and not from father's estate. Payment from IRA to taxpayer was clearly pay- ment out of "foreign retirement arrangement" within meaning of s. 56(1)(a)(i)(C.1) of Income Tax Act. Result of legislation was to treat IRA distribution in much same way as if it was distribu- tion from RRSP of his father. As result, distribution had to be in- cluded in taxpayer's income. Owen v. The Queen (2018), 2018 CarswellNat 2131, 2018 TCC 90, Gaston Jorré D.J. (T.C.C. [Informal Procedure]). Ontario Civil Cases Civil Practice and Procedure CLASS AND REPRESENTATIVE PROCEEDINGS representative or Class proCeedings under Class proCeedings legislation No duty of care on service provider to third party to perform activity outside scope of limited retainer Defendant retailer purchased clothes from manufacturer whose factory was in building in Bangladesh. Building collapsed, 1,130 people died, and 2,520 people were seriously injured. Retailer had retained defendant consulting services enterprise to conduct what was known as "social audit" of factories in Bangladesh, including one of factories in building in issue. Plaintiffs, four citizens of Ban- gladesh, commenced proposed class action in Ontario pleading causes of action in negligence, vicarious liability, and breach of fiduciary duty against retailer, and pleaded negligence action against consulting services en- terprise. Defendants were suc- cessful in their motions to have proposed class action dismissed as it was held laws of Bangla- desh governed plaintiffs' claim, claim was limitations-barred for all class members other than minors at time of collapse, and defendants did not owe class members duty of care. Plaintiffs appealed. Appeal dismissed. Es- sence of claim was based on inju- ries and since injuries occurred in Bangladesh, governing law was that of Bangladesh. Motion judge's determination that Ban- gladesh's one-year limitation pe- riod applied to claims in wrong- ful death and personal injury was correct. Plaintiffs' submis- sion that limitation period did not run respecting retailer under s. 13 of Bangladesh's Limitation Act, 1908, which tolled limita- tion period while defendant was absent from country was not accepted. With reference to In- dian case law, provision did not apply because plaintiffs pleaded that retailer was engaged in gar- ment manufacturing activities in Bangladesh, and retailer's rep- resentatives visited Bangladesh. With respect to claim against retailer, alleged duty of care was not analogous to those found in English authorities that held parent companies liable for ac- tions of subsidiaries. Among other things, English cases were distinguished in that retailer had little control over factories; was not in same business as factories, did not have superior knowledge or expertise about is- sues of structural safety; and did not undertake to audit building for structural safety. Similarly, respecting claim against con- sulting services, it was plain and obvious that no duty of care was owed to plaintiffs since consult- ing services had not undertaken to inspect for structural integrity. No precedent case law imposed duty of care on service provider to third party to perform activity outside scope of its limited re- tainer. Possibility was acknowl- edged that defendants could owe duties of care to third parties, in- cluding class members, however, scope of that duty was limited by defendants' undertakings. Das v. George Weston Limited (2018), 2018 Carswel- lOnt 21598, 2018 ONCA 1053, Doherty J.A., K. Feldman J.A., and D.K. Gray J. (ad hoc) (Ont. C.A.); affirmed (2017), 2017 CarswellOnt 10590, 2017 ONSC 4129, Perell J. (Ont. S.C.J.). (Ont. C.A.); affirmed (2017), 2017 Car- swellOnt 14604, 2017 ONSC 5583, Perell J. (Ont. S.C.J.). LIMITATION OF ACTIONS aCtions in ContraCt or debt Homeowners were not relying on good faith efforts of company to deal with their concerns Appellant homeowners con- tracted with respondent com- pany, to install HVAC system in their residence. Installation was completed in late 2006. Problems arose with HVAC system almost immediately after installation. Maintenance done by company was unsuccessful. After one final failure of system in fall of 2010, homeowners contacted U.S. based manufacturer of system. Manufacturer informed home- owners that improper installa- tion was cause of system failure. Homeowners brought action against company in February 2012. Company claimed action was statute-barred, as homeown- ers were aware of problems well before February of 2010. Com- pany successfully moved for summary judgment, to dismiss action. Homeowners appealed from dismissal of action. Appeal dismissed. Knowledge of com- pany's installation of system and subsequent problems, constitut- ed knowledge that was sufficient to start claim. It was not necessary for homeowners to know cause of problem from manufacturer. By fall of 2009, homeowners' con- cerns about company were clear, from evidence of homeowner himself. Homeowners were not relying on good faith efforts of company to deal with these con- cerns. Homeowners had at least by this time, discovered concerns that would allow them to bring action. Zeppa v. Woodbridge Heat- ing & Air-Conditioning Ltd. (2019), 2019 CarswellOnt 1342, 2019 ONCA 47, G.R. Strathy C.J.O., K. Feldman J.A., and David Brown J.A. (Ont. C.A.); affirmed (2017), 2017 Carswel- lOnt 15909, 2017 ONSC 5847, P.J. Monahan J. (Ont. S.C.J.). Construction Law CONTRACTS building ContraCts Determinations necessary to resolve defendant's involvement gave rise to potential for inconsistent findings Plaintiff Condominium Corpo- ration brought action for damag- es alleged to result from deficien- cies in condominium building. One of 53 defendants, L Devel- opment Corporation ("L Corp."), advanced motion for summary judgment to extricate itself from action. Motion dismissed. Court was not satisfied that fair and just determination of L Corp.'s in- volvement can be made in sum- mary judgment process. Among over 3,000 pages of materials filed on motion, court identi- fied genuine issues regarding L Corp.'s liability that were not capable of being determined on current record using tools con- tained in Rule 24.04(2.1) of Rules of Civil Procedure. Moreover, this was not appropriate case for summary judgment in context of this action as whole because determinations necessary to re- solve L Corp.'s involvement gave rise to potential for inconsistent findings on myriad surviving el- ements that will continue against other 52 defendants. York Regional Standard Condominium Corporation No. 1206 v. 520 Steeles De- velopments Inc. (2018), 2018 CarswellOnt 10015, 2018 ONSC 3766, Sanfilippo J. (Ont. S.C.J.). Estates and Trusts TRUSTEES nature of trustee's offiCe General provisions of Corporations Act not intended to prevail over specific provisions of special acts Starting in 1849 number of acts were passed by legislature regard- ing trust established for mainte- nance of general burying ground and its trustees. Trustees of land became incorporated and known as MPGC. Until 1987 MPGC fol- lowed procedure outlined in 1849 Act but had not done so since. By 1989 trustees had started describ- ing themselves as directors, ad- opted bylaws fixing their number at ten and imposing terms limits without legislative authorization. Applicants brought application for declarations regarding nature of MPGC and appointment of its trustees. Application granted. Seven most senior directors of MPGC currently in office were appointed as trustees and notice of their appointment was to be placed in Ontario Gazette. Appli- cants were permitted to call pub- lic meeting in accordance with provisions of 1849 Act to name one or more trustees in replace- ment of seven trustees already named. Parties were directed to negotiate protocol to govern call- ing and holding of public meeting in question for approval by judge. Neutral chair of public meeting was to be provided for. Trustees in office in 1987 had failed to se- lect replacement trustees in ac- cordance with governing law so there were no validly appointed trustees. Neither 1871 Act nor originating petition from trustees expressed any particular intent to repeal prior statutes. 1871 Act was silent on matter of corporate gov- ernance with three notable excep- tions that all indicated there was no intent to make complete break with statutory past once trust was incorporated. There was no ex- plicit repeal of any prior statutes and trustees power to make by- laws was made subject to existing laws. 1849 Act conferred specific obligation upon trustees to call meeting to appoint replacement trustee upon vacancy arising and stipulated rules applicable for do- ing so. Section 2 of 1871 Act im- posed all of existing obligations of trustees upon new corporation unless inconsistent with the Act and there was no inconsistency. CASE LAW

Articles in this issue

Links on this page

Archives of this issue

view archives of Law Times - March 25, 2019