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LAW TIMES 14 COVERING ONTARIO'S LEGAL SCENE | APRIL 15, 2019 www.lawtimesnews.com as to other expenses. Taxpayer chose not to participate in sen- tencing hearing, after due ser- vice upon him of order in May 2018, and with notice of date of sentencing hearing. Disobedi- ence of court order was serious matter and required specific de- terrence to ensure taxpayer did not breach orders again. Minis- ter also sought recovery of costs that included witness fees, but no supporting documents were provided to support witness fee, however those fees were seen as reasonable and would be al- lowed together with disburse- ments. Further order in respect of travel expenses for one wit- ness and bailiff would follow. Canada (National Rev- enue) v. Gray (2019), 2019 Car- swellNat 755, 2019 FC 352, E. Heneghan J. (F.C.). Tax Court of Canada Tax GOODS AND SERVICES TAX input tAx Credits Person other than specified person had to claim ITCs within four years after end of reporting period G Ltd. owned corporate taxpay- er and provided funds to finan- cially troubled taxpayer to meet financial obligations. Taxpayer used funds to pay GST to two law firms and reconciliation error, which amounted to $5,683.95 and these payments were made around 2008 and 2009. G Ltd. claimed input tax credits (ITCs) for this amount, but claim was denied by both Minister and Tax Court of Canada, because ITCs were not validly claimable by G Ltd. as amount of credit claimed was for services provided to tax- payer, not G Ltd.. Subsequently, taxpayer filed GST return and claimed subject input tax credits in 2015. Minister denied taxpay- er on basis that ITCs were not claimed within four-year limita- tion period specified in s. 225(4) (b) of Income Tax Act (ITA). Taxpayer appealed. Appeal dis- missed. Effect of s. 225(4)(b) of ITA was that person other than specified person, and it was un- disputed that taxpayer was not specified person, had to claim ITCs within four years after end of reporting period in which tax was paid. Provision was drafted restrictively having in it reference to "person", making it clear that it was person who was claiming ITC, and not any other person, including person who had previously claimed, who must abide by statutory four- year limitation. Taxpayer was well outside four-year limitation and there was no other choice but to dismiss taxpayer's claim. International Hi Tech In- dustries Inc. v. The Queen (2018), 2018 CarswellNat 2705, 2018 CarswellNat 2735, 2018 TCC 107, 2018 CCI 107, B. Rus- sell J. (T.C.C. [Informal Proce- dure]). GOODS AND SERVICES TAX rebAtes Although taxpayer declared condominium was habitual residence evidence indicated it was never occupied as such Taxpayer and partner purchased new-build condominium in Montreal as partner had been transferred from Mirabel Air- port to new airport 190 km from home in Val Morin. Minister issued assessment for $4 849.94 for GST and harmonized sales tax including interest. Taxpayer appealed. Appeal dismissed. Although taxpayer and partner had declared that condominium was to be their habitual resi- dence evidence indicated it was never occupied as such Insur- ance on condominium showed it as second residence. They had not changed their listed address to condominium. Personal ef- fects had not been moved to condominium. Collin c. La Reine (2018), 2018 CarswellNat 3778, 2018 CarswellNat 3961, 2018 TCC 145, 2018 CCI 145, Réal Favreau J. (T.C.C. [Informal Procedure]). GOODS AND SERVICES TAX Zero-rAted supplies Stamped form could be accepted as export but more was needed to trace goods from port of exit to destination Taxpayer corporation was jew- ellery business and many of tax- payer's loyal clientele were mem- bers of Chinese community and had extensive ties in China, and it was customary in taxpayer's clients' culture to bring gifts over to China. When customers purchased watch from taxpayer, customer knew it was authentic, but due to possible tampering, customers did not want to send jewellery by third party carrier or courier. Taxpayer's customs broker's solution was to obtain stamped form, as part of proce- dure, to serve as proof of export that goods left Canada tax free and procedure was only engaged if customer was f lying from Canada. Procedure involved that taxpayer retained physi- cal possession of jewellery, em- ployee of taxpayer would meet departing customer at Canada Border Services Agency (CBSA) office prior to departure and present CBSA form "Certificate of Destruction/Exportation". Both employee and departing customer would then attend CBSA office for examination and provide jewellery and form to CBSA officer, and if CBSA officer was satisfied, CBSA offi- cer handed over jewellery to de- parting customer. Minister re- assessed taxpayer on basis that export sales in amount of over two million dollars were subject to GST/HST, to which taxpay- er objected. Canada Revenue Agency (CRA) appeals officer dismissed taxpayer's objection on basis that form, which was only document produced, was not acceptable to CRA for ze- ro-rating purposes under s. 12 of Excise Tax Act, as jewellery must be traced from port of exit to destinations and carrier was absent from procedure. Tax- payer appealed. Appeal allowed in part. Minister made conces- sion that $19,020 pertaining to goods and services that were de- livered outside of Canada were not subject to GST/HST, how- ever in all other respects, appeal was dismissed. Section 12(a) of Excise Tax Act called for third party carrier under contract for carriage, as no party carrier was engaged under contract for car- riage, taxpayer did not ship Jew- ellery within meaning of s. 12(a) of Act. Although stamped form could be accepted as export by CRA for its purposes, that dif- fered from satisfying conditions set out in s. 12 of Act to establish zero-rating, as more was needed to satisfy tracing of goods from port of exit to their destination, and this was referenced in GST Memorandum and Appendix. It was unfortunate that when broker provided solution re- garding stamped form, as part of procedure, that taxpayer did not obtain legal advice or con- sult accountant. Montecristo Jewellers Inc. v. The Queen (2019), 2019 Car- swellNat 278, 2019 TCC 31, K. Lyons J. (T.C.C. [General Proce- dure]). Ontario Civil Cases Bankruptcy and Insolvency ASSIGNMENTS IN BANKRUPTCY Annulment of Assignment Fact debtor had access to equity in property not leading to conclusion she would be able to meet obligations Creditors obtained judgment against debtors in amount of $25,565.64 in relation to f lood- ing incident. Creditors learned male debtor had filed consumer proposal under Bankruptcy and Insolvency Act several months earlier. Female debtor made as- signment into bankruptcy 15 days after creditors served her with notice of examination. Creditors alleged debtors had substantially undervalued their property and were not insol- vent. Creditors brought applica- tion for order annulling male debtor's consumer proposal and resulting deemed assignment into bankruptcy and annulling female debtor's assignment into bankruptcy. Application dis- missed. Market value of prop- erty was accepted as being sig- nificantly higher than debtors had claimed, but creditors failed to show female debtor's assign- ment ought not to have been filed. Female debtor's monthly expenses exceeded her monthly income by $2,010. Fact that fe- male debtor had access to equity in property did not lead to con- clusion that she would be able to meet her obligations generally as they become due. Creditors failed to discharge their onus under s. 181(1) of Act of show- ing female creditor had not been insolvent person at time of her assignment or had engaged in abuse of process of court. Kormos v. Fast (2018), 2018 CarswellOnt 16831, 2018 ONSC 6044, Cavanagh J. (Ont. S.C.J.). Civil Practice and Procedure LIMITATION OF ACTIONS reAl property Inference of effective exclusion arose from use of house lands which included erection of permanent home Property owner's mother and neighbours each purchased ad- joining country properties in 1980s. In 1990, mother added stepfather as owner, and in 2007 she sold property to her son (property owner). In 2008, neighbours accidentally discov- ered encroachments. In 2010, property owner brought suc- cessful action claiming posses- sory title to house lands, cedar trail, and laneway for which neighbours held paper title. Neighbours appealed. Appeal allowed in part. Trial judge's finding of prescriptive ease- ment over cedar trail was set aside. There was no error in trial judge's finding that posses- sion of house lands was adverse. Trial judge's reasons concern- ing accommodation of domi- nant tenement and continuous use with respect to cedar trail could not be sustained. It was open to trial judge to make or- der permitting maintenance of laneway. It was open to trial judge to conclude that infer- ence of effective exclusion arose from nature of neighbour's use of house lands, which included erection of permanent home. Trial judge erred by failing to properly consider whether continuous use she found with respect to cedar train met crite- rion of accommodating domi- nant tenement. Majewsky v. Veveris (2018), 2018 CarswellOnt 17536, 2018 ONCA 848, Janet Simmons J.A., B.W. Miller J.A., and Fairburn J.A. (Ont. C.A.); affirmed (2016), 2016 CarswellOnt 15872, 2016 ONSC 5608, M.J. Donohue J. (Ont. S.C.J.). PRACTICE ON APPEAL interloCutory or finAl orders Plain meaning of order disclosed that issue remained outstanding Application involved family dis- pute about care of 91-year-old woman suffering from demen- tia. Judge made several orders regarding physical and financial care, including change of power of attorney but adjourned bal- ance of trial to allow guardians to work together on plan. Ap- peal was brought. Respondent brought application to quash appeal on basis that order ap- pealed from was interlocutory. Application granted; appeal quashed. Plain meaning of order disclosed that issue remained outstanding. Order appealed from was interlocutory. Carey-Patel v. Carey (2019), 2019 CarswellOnt 2493, 2019 ONCA 144, C.W. Hourigan J.A., M.L. Benotto J.A., and Grant Huscroft J.A. (Ont. C.A.). Debtors and Creditors RECEIVERS ConduCt And liAbility of reCeiver Procedural issues with buyer did not reveal misconduct in purchasing process Asset purchase agreement (APA) was made, with company as buyer of bankrupt corpo- ration. APA was approved by judge, with number of vesting orders made. APA's closing date was extended by one month. Buyer reached agreement with another company, who would purchase some assets of bank- rupt. Subsequent purchaser was bound by agreement with unsuccessful bidder. Bidder sought injunction against sub- sequent purchaser. Further ex- tensions were granted pending injunction. Buyer was alleged to have violated confidentiality. Buyer questioned standing of bidder. Hearing took place for directions in matter. Monitor was allowed to consider fur- ther extension. Any extension would be without prejudice to confidentiality issue and relief f lowing from it. Further hear- ing was scheduled to deal with any issues from closing of APA. Sales process was to be resumed if APA was not closed by set deadline. Procedural issues with buyer did not reveal mis- conduct in purchasing process. Buyer had not manipulated pro- cess for own advantage. Buyer had significant investment in transaction, which it would lose if transaction failed. Dundee Oil and Gas Lim- ited (Re) (2018), 2018 Carswel- lOnt 18355, 2018 ONSC 6376, S.F. Dunphy J. (Ont. S.C.J. [Com- mercial List]). Municipal Law COUNCIL MEMBERS misCellAneous On the whole, complaints had thread grasping, conspiracy like quality to them Applicant, DK, was Regional Councillor candidate in mu- nicipal election in township. He placed third out of four CASE LAW

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