Law Times

Page 14 April 16, 2018 • lAw Times www.lawtimesnews.com behalf of other companies. Min- ister denied claim on basis tax- payer failed to satisfy conditions in 37(8)(a)(ii)(A)(III) of Income Tax Act because it purchased system with intent to use it to perform non-SRED research. Taxpayer appealed. Appeal dis- missed. Since SRED is defined term in s. 248(1), for actual uses of system to constitute SRED, and evidence of intention to use it for SRED, there must be systematic investigation or re- search. No evidence proffered to show system was used in system- atic way for particular purpose. Removing use of system for third parties reduced percentage of activities for SRED to 36 per cent, well short of what would be considered "all or substantially all". Taxpayer did not intend to use or actually use system for all or substantially all of its op- erating time for prosecution of its SRED activities so it failed to satisfy statutory conditions in s. 37(8)(a)(ii)(A)(III) and s. 248(1) of Act. Intention to be deter- mined at time of purchase of system purchased. VLN Advanced Technologies Inc. v. The Queen (2018), 2018 CarswellNat 459, 2018 TCC 33, K. Lyons J. (T.C.C. [General Pro- cedure]). Ontario Civil Cases Bankruptcy and Insolvency COMPANIES' CREDITORS ARRANGEMENT ACT Initial application Claimant breached duty to be forthright in claims process by failing to disclose sale of property Claimant leased property in Texas to N Inc., U.S. subsidiary of N Ltd.. N Ltd. guaranteed lease. N group of companies be- came involved in cross-border insolvency proceedings. Lease debt went unpaid. Claimant as- signed its rights under lease and guarantee to bank, which held security over property. Claimant claimed against N Ltd. under lease and guarantee in Com- panies' Creditors Arrangement Act (CCAA) proceedings. Bank foreclosed and sold property. Claimant did not advise monitor property had been sold. Claims officer granted claim for liqui- dated damages under s. 17.1(e) of lease, but reduced award by $1 on basis that claimant had duty to be forthright in claims process and breached that duty by fail- ing to disclose sale of property. Monitor and claimant brought motions appealing claims offi- cer's decision. Monitor's motion granted in part; claimant's mo- tion dismissed. Claims officer's finding that there is duty to be forthright in claims process was correct, and ample evidence es- tablished claimant breached that duty. Claims officer erred in law by failing to address whether sale of property under s.17.1(c) of lease occurred. Section 17.1(e) provided for liquidated damages "but only if property shall not have been sold under s. 17.1(c)". Nortel Networks Corpora- tion (Re) (2018), 2018 Carswel- lOnt 1939, 2018 ONSC 278, G.B. Morawetz R.S.J. (Ont. S.C.J. [Commercial List]). Civil Practice and Procedure COSTS Scale and quantum of costs Respondent not entitled to greater costs although work by her two law firms was of high quality Applicant applied to have fence removed from what applicant claimed was her property. Ap- plicant also claimed damages against respondent, for remov- ing limb from oak tree. Appli- cation was dismissed. Respon- dent claimed costs in amount of $62,755.63, including increased costs after offer to settle. Appli- cant claimed that costs should be no more than $18,000. Costs submissions made by both par- ties. Costs awarded to respon- dent in amount of $40,000. Of- fer to settle was not proper factor in this particular case. Amount claimed by respondent was more than applicant could expect to pay. Respondent was not entitled to greater amount, although work by her two law firms was of high quality. Carpenter v. Doull-MacDon- ald (2018), 2018 CarswellOnt 1032, 2018 ONSC 731, Perell J. (Ont. S.C.J.); additional reasons (2017), 2017 CarswellOnt 20339, 2017 ONSC 7560, Perell J. (Ont. S.C.J.). LIMITATION OF ACTIONS Actions in tort Presumption that date of discovery was date of accident Plaintiff was allegedly injured motor vehicle accident. Plain- tiff brought action three years and eight months after accident. Parties brought motion for sum- mary judgment based on limita- tion period. Motion dismissed. Two-year limitation period began to run on date on which claim was discovered. There was presumption that date of discov- ery was date of accident. In mo- tor vehicle accidents, because of threshold in s. 266 of Insurance Act, claim may not be discov- ered until it was apparent that injury was of permanent nature that might reasonably be basis for viable tort action. Up until one year and nine months af- ter accident, plaintiff was being told that her pain should resolve. Plaintiff did not stop working due to pain until month that she brought her action. Court could conclude that cause of action would have been apparent with exercise of reasonable diligence when she received medical re- port one year and nine months after accident, in which case, ac- tion was brought one month be- fore expiry of limitation period. Summary judgment was not granted to defendant because court could conclude that action was brought within limitation period. Summary judgment was not granted to plaintiff because there were genuine issues re- quiring trial regarding severity of injury, threshold, discover- ability and causation. Malyavina v. Akanda (2017), 2017 CarswellOnt 14481, 2017 ONSC 5458, Calum MacLeod J. (Ont. S.C.J.). Construction Law CONSTRUCTION AND BUILDERS' LIENS Holdback Provided owner complied with statutory obligations, their liability to subcontractor lien claimants was limited to amount of holdback Following consolidated trial of three actions arising out of con- struction project, court found general contractor was entitled to judgment against property owners for $78,824 outstand- ing under $184,624 contract. Court found two subcontractor lien claimants were entitled to share total holdback of $97,287, comprised of basic holdback of $18,462 (10 percent of contract price) plus notice holdback of $78,824, on pro rata basis. Own- ers took position $78,824 owed to general contractor for breach of contract was same $78,824 re- ferred to as notice holdback and that they should only be required to pay amount once with result that once it was paid to subcon- tractors it should be credited against amount owed to general contractor. General contrac- tor took position owners were required to pay amount twice, once to it and once to subcon- tractors. Owners brought mo- tion under R. 59.06(2)(c) of Rules of Civil Procedure for directions as to how order should be carried into operation. Motion granted. There was bona fide disagree- ment between parties as to how order should be interpreted/im- plement. This was precisely sort of issue R. 59.06(2)(c) was intend- ed to deal with. Order could not be considered in isolation and had to be interpreted within con- text of Construction Lien Act. Purpose of holdback under Act was to create fund to which lien claimants could look if they were unable to recover from person with whom they had direct con- tract. Provided owner complied with statutory obligations, their liability to subcontractor lien claimants was limited to amount of holdback. Portion of fund used to pay subcontractors was deducted from amount owed to general contractor. In this case, owners acknowledged they had paid basic holdback to general contractor as part of original payment under contract. They were liable to pay that amount to subcontractors. Owners had, however, retained notice hold- back of $78,824 in accordance with Act. Once they paid that amount to subcontractors, it had to be deducted from amount owed to general contractor. Since notice holdback was equal to amount owed under contract, balance owed to general contrac- tor would become nil. King Road Paving and Land- scaping Inc. v. Plati (2017), 2017 CarswellOnt 16276, 2017 ONSC 6319, R.E. Charney J. (Ont. S.C.J.). CONSTRUCTION AND BUILDERS' LIENS Practice on enforcement of lien Costs on full indemnity basis would reward and punish litigation tactics respectively Defendant brought motion for order discharging construction lien registered by plaintiff, and release to defendant of balance of funds it had paid into court as security to vacate lien. Plaintiff brought motion for summary judgment for sum of $298,937.92 together with costs. Plaintiff did not pursue summary judgment to exhaustion in oral argument. Narrow issue for determina- tion as framed by plaintiff was whether parties entered into one contract or five. Defendant was successful in obtaining relief it sought, and lien was vacated. Court found that there were five contracts, not one. Issues arose concerning costs. Defen- dant entitled to costs of mo- tion for summary judgment on partial indemnity basis, fixed at $35,000.00 in fees, one half of dis- bursements as claimed, and HST, and to costs of motion for dis- charge in amount of $42,000.00 in fees, one half of disbursements as claimed, and HST. Defendant was prima facie entitled to costs of summary judgment motion having been successful party or on basis of motion having been abandoned. Plaintiff chose to litigate issues elaborately, which led to number of adjournments, examinations and undertakings, purposes of which were not in service of expeditious approach to litigation. Costs on full in- demnity basis would reward and punish litigation tactics respec- tively, that parties could readily have foregone in interests of hav- ing merits of dispute decided as soon as reasonably practicable at as modest cost as possible. TACC Construction Ltd. v. Ajax Audley Developments Lim- ited (2018), 2018 CarswellOnt 2353, 2018 ONSC 1110, A.M. Mullins J. (Ont. S.C.J.); additional reasons (2017), 2017 CarswellOnt 15445, 2017 ONSC 5143, A.M. Mullins J. (Ont. S.C.J.). Family Law DIVISION OF FAMILY PROPERTY Determination of ownership of property Wife under no obligation to make out-of-pocket payments towards mortgage and property taxes for husband's property At separation, wife was sole reg- istered owner of Lot 8 and she made mortgage and property tax payments. Trial judge found that husband was beneficial owner, by resulting trust, of Lot 8, and that wife was owed money for mortgage and tax payments. Appellate court partially al- lowed wife's appeal and declared parties joint owners of Lot 8. Court set aside judge's award reimbursing wife for payments she made toward property in its entirety but noted that wife may be entitled to reimbursement for certain payments she made. Parties made additional submis- sions on issue of payments ow- ing to wife in respect of Lot 8. Husband owed wife $30,788 for amounts she paid in relation to husband's half of Lot 8. Because basis of wife's entitlement to half of Lot 8 was by way of resulting trust interest, her entitlement to 50 per cent of proceeds of sale did not compensate her for pay- ments she made towards hus- band's share of property. Law of unjust enrichment entitled wife to recovery. Wife was under no obligation to make out-of-pock- et payments towards mortgage and property taxes for husband's property. To allow husband to retain such payments would un- justly enrich husband at wife's expense. As wife was entitled to half of property as joint owner, she was entitled to reimburse- ment for payments she made in relation only to husband's half- interest. Holtby v. Draper (2018), 2018 CarswellOnt 3530, 2018 ONCA 231, Weiler J.A., K. van Rensburg J.A., and Grant Huscroft J.A. (Ont. C.A.); additional reasons (2017), 2017 CarswellOnt 18889, 2017 ONCA 932, K. van Rens- burg J.A., K.M. Weiler J.A., and Grant Huscroft J.A. (Ont. C.A.). Insurance ACTIONS ON POLICIES Practice and procedure Duty to defend contemplated apportionment of costs Plaintiff was walking on road and was seriously injured when struck by vehicle. Plaintiff brought action against driv- er and owner of vehicle, and against regional municipality and municipality where colli- sion occurred. Municipalities contracted out winter mainte- nance and lighting services, and contractors were also named as defendants in main action. Mu- nicipalities commenced third party claims against insurers. Insurers agreed to defend mu- nicipalities in respect of any claims against them in main action. Municipalities success- fully brought application for declaration they were entitled to appoint their own counsel and manage their own defence of main action at insurers' expense. Issue arose as to costs. Insurers were ordered to pay $13,000 in costs. Municipalities' were enti- tled to reasonable indemnifica- tion. Duty to defend addressed obligation of insurers to cover reasonable costs incurred in de- fence of action. Costs incurred here pertained to municipalities' CASELAW

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