Law Times

Page 14 August 20, 2018 • LAw times www.lawtimesnews.com be deprived of this information. Prothonotary recognized bal- ance to be struck between avoid- ing needless expenditure of pub- lic resources in likely event that matter may become moot before waiver had practical effect and ensuring, if repealed legislation was delayed or failed, that mat- ter could proceed without undue delay. Prothonotary considered factual circumstance in context of appropriate guiding principles and applied proper approach. Bernard v. Canada (Na- tional Revenue) (2017), 2017 CarswellNat 2498, 2017 Car- swellNat 6978, 2017 FC 536, 2017 CF 536, Cecily Y. Strick- land J. (F.C.). Transportation CARRIERS Fares and freight rates Order in council not necessary to authorize Minister of Transport to enter into bilateral agreement Jurisdiction. O Inc. was corpora- tion carrying on business in area of short sea shipping and inter- modal freight transportation. MAI Inc. was parent Crown providing services on two routes with mix of commercial and pas- senger traffic. As part of Consti- tution of Canada, Canada was constitutionally obliged to pro- vide ferry service between North Sydney, Nova Scotia and Port aux Basques, Newfoundland and Labrador (constitutional route). This service was effected by MAI Inc.. Minister of Trans- port approved rates for MAI Inc.'s commercial freight services for constitutional route. O Inc. claimed that Minister permitted MAI Inc. to charge freight rates that were heavily subsidized, compete unfairly with and were detrimental to O Inc. and that decision was made without tak- ing into account relevant con- siderations of national trans- portation policy. O Inc. brought application for judicial review to challenge decision. Application dismissed. There was no legisla- tive basis conferring rate-setting on Minister and no delegation. MAI Inc.'s ability to set its rates arose from informal amend- ment of bilateral agreement, which amendment was agreed to by Canada and MAI Inc. as parties to that contract. MAI Inc. was not exercising jurisdiction or power conferred by or under Parliament or order made pur- suant to prerogative of Crown when it made 2016/2017 freight rate decision, it was not acting as federal board, commission or tribunal pursuant to s. 2(1) of Federal Courts Act and as result, Federal Court did not have ju- risdiction under s. 18(1) of Act. There was no legislative require- ment that order in council be is- sued to permit Minister to enter into bilateral agreement, there was no legislative requirement that order in council be issued to permit this and Minister had authority and capacity to enter into contracts. As result, order in council was not necessary to au- thorize Minister to enter into bi- lateral agreement or to amend it. Oceanex Inc. v. Canada (Transport) (2018), 2018 Car- swellNat 753, 2018 FC 250, Cec- ily Y. Strickland J. (F.C.). Tax Court of Canada Public Law SOCIAL PROGRAMS Employment insurance Minister presumed that worker was lying in context of great tension between parties to litigious employment contract Minister held that in 2014 work- er transported other workers for employer as independent contractor so remuneration was not insurable earnings. Worker appealed. Appeal allowed. Work done in 2013 which had been held to be insurable was essen- tially same as work done in 2014. Worker was to go to places where he did same work as passengers. Agreed $ 50 was then added to pay for his work as employee. Worker's testimony was reason- able and coherent and had some documentation. Minister relied solely on employer's version and presumed from outset without any reason whatsoever, that worker was lying in a context of great tension between parties to a litigious employment contract. Kattous c. M.R.N. (2017), 2017 CarswellNat 7394, 2017 CarswellNat 8323, 2017 TCC 251, 2017 CCI 251, Alain Tardif J. (T.C.C. [Employment Insur- ance]). Tax GOODS AND SERVICES TAX Administration and enforcement Minister justified in using alternative method given failure of registrant to maintain trustworthy records Given absence of documents Minister assessed using alterna- tive verification method based on employees' salaries. Minister assessed registrant for GST and penalties. Registrant appealed. Appeal allowed in part. Salary verification method was accept- ed method. Minister justified in using alternative method given failure of registrant to maintain trustworthy records. Irrelevant that registrant sometimes re- placed other employees with- out remuneration. Adjustments made to assessment because of errors in number of hours worked and days restaurant open. Minister justified in im- posing penalty. Registrant and his accountant admitted that not all taxable supplies reported. Registrant knew report false and was grossly negligent in not re- porting proper amount. Langheit c. La Reine (2017), 2017 CarswellNat 7392, 2017 CCI 250, Johanne D'Auray J. (T.C.C. [General Procedure]). INCOME TAX Other income Gross negligence penalties appropriate where taxpayer knowingly failed to report $1.3 million in income Taxpayer was president of CC Ltd. and shareholder of CB Ltd.. Minister of National Revenue re- assessed taxpayer to include mon- ey in his income for unexplained deposits to taxpayer's personal bank accounts, appropriations from CB Ltd., and payments by CC Ltd. on taxpayer's personal credit cards, and to impose gross negligence penalties. Taxpayer appealed. Appeal dismissed for 2001 tax year and appeals allowed for 2002 and 2003 tax years. Tax- payer's income was to be reduced by $43,074 in 2002 and $52,500 in 2003. Taxpayer was alleged to have appropriated $33,400 by way of four cheques payable to WO in 2002 and was assessed share- holder benefit in respect of this payment. Absent assumption of fact indicating how taxpayer ben- efited from WO receiving money, amount had been improperly as- sessed so $33,400 was removed from taxpayer's 2002 income. CB Ltd. did not owe taxpayer any money in 2001, 2002 or 2003. Since CB Ltd. was not carrying on business, taxpayer could not have spent money for CB Ltd.'s busi- ness purposes. Auditor conduct- ed bank deposit analysis of tax- payer's personal bank accounts, as alternative method of deter- mining income when taxpayer's records were inadequate means of verifying taxpayer's income. Tax- payer provided acceptable expla- nation for deposit of $9,674 made in 2002 and of $500 in 2003, so his 2002 and 2003 incomes were reduced by those amounts. Other unexplained deposits were not adequately explained by taxpayer. CC Ltd. made payments on tax- payer's personal credit card, so auditor treated those payments as employment benefit. Two pay- ments that taxpayer made on his credit card were supported by du- plicate cheques, so taxpayer's 2003 income was reduced by $52,000. Taxpayer did not establish that CC Ltd. owed him money. Ap- plication of gross negligence penalties was appropriate as tax- payer knowingly failed to report $1.3 million in income over three years and reported less than nine per cent of his income over those years. Carlini v. Her Majesty The Queen (2017), 2017 Carswell- Nat 7396, 2017 TCC 259, David E. Graham J. (T.C.C. [General Procedure]). Ontario Civil Cases Civil Practice and Procedure SUMMARY JUDGMENT Sufficiency of claim as basis for judgment Landlord insisted tenant pay for terms in addition to unpaid rent before being allowed to re-enter premises Motion judge found that land- lord and tenant reached agree- ment to reinstate 2012 lease and that landlord fundamen- tally breached that agreement. Landlord appealed. Appeal dis- missed. Motion judge's second finding was supported by land- lord's letter. In that letter, land- lord insisted that tenant pay for terms in addition to unpaid rent and costs of re-entry before be- ing allowed to re-enter premises. 772067 Ontario Limited v. Victoria Strong Manufactur- ing Corporation (2018), 2018 CarswellOnt 378, 2018 ONCA 36, John Laskin J.A., G.T. Trot- ter J.A., and Fairburn J.A. (Ont. C.A.); affirmed (2017), 2017 Car- swellOnt 6459, 2017 ONSC 2719, Firestone J. (Ont. S.C.J.). Construction Law CONTRACTS Building contracts There was no legally relevant disparity in bargaining power between parties Plaintiff developers entered into two agreements with defendant architects to provide design and architectural services for 12 townhouses. In consultation with city, architects proposed plan for 24 unit stacked back to back townhome project. Busi- ness plan prepared by develop- ers was based on $130 per square foot. Design developed by archi- tects cost $245 per square foot. Developers did not proceed with development and obtained per- mission from city to revert to original plan. Developers com- menced action against architects for negligent misrepresentation. Developers sought damages and return of fees paid to archi- tects. Architects successfully brought motion for summary judgment to dismiss develop- ers' action. Developers appealed. Appeal dismissed. Motion judge reasonably found there to be no legally relevant disparity in bargaining power or any other basis for finding that architects took advantage of developers. In coming to this conclusion mo- tion judge considered level of in- dustry experience of two parties and found that architects did not improperly induce developers to enter into Second Agreement. On this record, there was no rea- son to interfere with conclusion. Manorgate Estates Inc. v. Kirkor Architects and Plan- ners (2018), 2018 CarswellOnt 10942, 2018 ONCA 617, Gloria Epstein J.A., P. Lauwers J.A., and K. van Rensburg J.A. (Ont. C.A.); affirmed (2017), 2017 Carswel- lOnt 18860, 2017 ONSC 7154, Favreau J. (Ont. S.C.J.). Estates and Trusts ESTATES Construction of wills Parties unable to negotiate details of agreement because one party reverted to original position Testatrix provided in will that if any of her children, or combina- tion of them, wished to purchase farm property, they could do so at 75 per cent of appraised mar- ket value provided they entered into agreement of purchase and sale (APS) with her trustee with- in one year of date of her death. Trustees were two of testatrix's children. Trustees received competing offers from four chil- dren: JJ, AJ, and each of trustees. Trustees and AJ had been will- ing to purchase farm in combi- nation with JJ, but JJ wished to purchase farm on his own. Ul- timately, four children submit- ted individual offers. APS was not concluded within one-year period, and trustees brought ap- plication for directions. Applica- tion judge found that testatrix's intention in face of competing offers could not be ascertained. Application judge ordered that trustees were at liberty to sell to farm. JJ appealed. Appeal dismissed. JJ raised, on appeal, matter of memorandum of un- derstanding (MOU), signed af- ter expiry of one-year period, for parties to purchase farm togeth- er. Application judge found that MOU was "agreement to agree" and that parties were unable to negotiate remaining details be- cause JJ reverted to his original position that he alone should be able to purchase farm. This find- ing was amply supported on re- cord. Record did not support JJ's alternative argument that trust- ees acted unreasonably. JJ's con- duct, in reverting to his original position, was reason agreement was not concluded. It was not es- tablished that trustees consulted with other children for purpose of frustrating JJ's objective of purchasing farm. Janicek v. Janicek (2018), 2018 CarswellOnt 12570, 2018 ONCA 679, Alexandra Hoy A.C.J.O., K.M. van Rensburg J.A., and G. Pardu J.A. (Ont. C.A.); affirmed (2018), 2018 Car- swellOnt 1091, 2018 ONSC 681, J.C. George J. (Ont. S.C.J.). Insurance ACTIONS ON POLICIES Commencement of proceedings Alleged negligent use of vehicle was not predicate element of negligent interference Plaintiff was rendered partial quadriplegic as result of all-ter- rain vehicle accident. All-terrain vehicle f lipped backwards, land- ed on top of him and injured plaintiff 's spinal cord. Plaintiff brought action against defen- dant for damages for negligence. Defendant did not defend action and was noted in default. Insurer brought application for declara- tion that it had no duty to defend defendant under homeowner's policy. Application dismissed. Insurer had duty to defend. Mo- torized vehicle exclusion applied to each allegation. Motorized vehicle exclusion was ambiguous as it related to nature of activities that were intended to constitute insured's use of motorized vehi- cle as use was not defined in pol- CASELAW

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