Law Times

Page 14 January 14, 2013 Law Times • caselaw CaseLaw is a weekly summary of notable civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada, and all Ontario courts. FEDERAL COURT OF APPEAL Air Law CARRIAGE Structural order not solution that was effective, realistic, and adapted to facts This was appeal of judgment. Respondents brought application under s. 77(1) of Official Languages Act (Can.), for alleged violations of language rights that occurred during course of international air flights. Respondents complained that on two separate trips between Canada and United States appellant did not offer them service in French they were entitled to at each point of service in itinerary. Judge found appellant breached duties under Part IV of Act. Appellant was ordered to issue letter of apology; make every reasonable effort to comply with all duties under Part IV of Act; introduce proper monitoring system and procedures to quickly identify and document potential violations; pay damages of $6,000 to each respondent; and pay costs of $6,982. Appeal allowed. Appellant conceded that it was subject to Part IV of Act. Convention for the Unification of Certain Rules Relating to International Carriage by Air incorporated under Carriage by Air Act (Can.), Schedule IV (Montreal Convention), came into play once incident or situation occurred during international carriage and it set out causes of action that might give rise to compensation and compensable types of damage. Properly construed, legislative instruments could be harmonized and could both be applied concurrently without producing unreasonable result. Article 29 of Montreal Convention precluded award of damages for causes of action that were not specifically provided for and constituted complete code respecting aspects of internation- Heydary-Caselaw_LT_Jan14_13.indd 1 al air carriage it expressly regulated, such as air carrier's liability for damages, regardless of source of liability. Article 29 of Montreal Convention excluded respondents' action in damages brought under Part IV of Act for incidents that occurred during international carriage. Judge was not entitled to issue general order against appellant to comply with Part IV of Act, as order was too vague. Structural order was not justified based on evidence. It was imprecise and disproportionate to prejudice suffered by respondents. Structural order was not solution that was effective, realistic and adapted to facts of case. Order went much further than was needed to remedy violation of respondents' language rights and was not just and appropriate remedy. Declaration against appellant, letter of apology and damages for incident that occurred at airport was just and appropriate remedy in circumstances. Thibodeau v. Air Canada (Sep. 25, 2012, F.C.A., Pelletier, Gauthier and Trudel JJ.A., File No. A-358-11) Decision at 218 A.C.W.S. (3d) 823 was reversed. 220 A.C.W.S. (3d) 538. FEDERAL COURT Admiralty LIENS Parliament could not have intended to grant maritime lien to those engaged in construction of ship Plaintiff brought in rem only action against defendant ship. Ship was recorded in Canadian Registry of Ships as ship being built in Canada for benefit of Norwegian company. Builder, entered into subcontract with plaintiff to provide skilled welding services. Builder then went under protection of Companies' Creditors Arrangement Act (Can.), while it was in course of building ship. Action dismissed. Sec- These cases may be found online in BestCase and other electronic resources from Canada Law Book. To subscribe, please call 1-800-565-6967. tion 139 of Marine Liability Act (Can.) (MLA), created maritime lien where none existed before. If plaintiff held maritime lien, it would rank ahead of mortgagee. Section 139 of MLA did not apply to those who had rendered services in respect to construction of ship. Failure to mention "building" or "construction" in s. 139(2) (a) of MLA was not slip. Parliament could not have intended to grant maritime lien to those who were engaged in construction of ship, such as plaintiff here. Comfact Corp. v. "Hull 717" (The) (Oct. 1, 2012, F.C., Harrington J., File No. T-2112-11) 220 A.C.W.S (3d) 456. Industrial and Intellectual Property TRADEMARKS Likelihood of confusion between applicant's services and respondent's wares This was appeal from board's decision refusing applicant's application to register trademark. Applicant operated retail stores that specialized in sale of products including vitamins, nutritional supplements and fitness products. Applicant applied to register trade-mark "Nature's Source" in association with services including retail store, franchising and ecommerce services. Respondent manufactured and sold healthy snack foods such as cereals, nuts and cookies under trademark "Natursource." Respondent's trademark was registered in 1983. Board found that there was likelihood of confusion with respondent's trademark used in association with retail, franchising, and e-commerce services and refused to register applicant's trademark. Appeal dismissed. Additional evidence filed by parties was not significant and would not have influenced board's decision. As additional evidence was not material, standard of review was reasonableness. Question to be asked www.lawtimesnews.com was whether, as matter of first impression, casual consumer somewhat in hurry who saw applicant's trademark in association with service of selling various natural products, having no more than imperfect recollection of respondent's trademark or trade name in association with wares it manufactured, would likely think that applicant's services were of same source as respondent's products. Board's decision fell within range of possible, acceptable outcomes. It was not unreasonable for board to conclude that there was some kind of connection between applicant's services and respondent's wares. Natursource Inc. v. Nature's Source Inc. (July 20, 2012, F.C., Bedard J., File No. T-463-09) Decision at 72 C.P.R. (4th) 423 was affirmed. 220 A.C.W.S. (3d) 608. TAX COURT OF CANADA GOODS AND SERVICES TAX Taxpayer's lifestyle appeared to contradict claims of modest income Appeal by taxpayer from assessment by Minister under Income Tax Act (Can.), for 2000 to 2002 taxation years, and under Excise Tax Act (Can.), for 1998 to 2002 taxation years for unpaid GST. Taxpayer operated automobile brokerage, traded in shares of Internet business, and temporarily rented his home. Minister added income from business and rental income, and treating sale of shares as capital gain. Appeal allowed in part. Shares of Internet business may have been dealt with in manner contrary to securities commission rules. Gains from disposition of shares were capital in nature, and reassessment to make them part of ordinary income would be out of time. Payments made to internet business were not expenses but loans, and were not deduct- ible. Loans did not have contingent obligation for repayment. Minister properly assessed revenue from automobile brokerage in 2000 and 2001 taxation years based on initial returns, and minister's assumptions were not demolished. Home was used for car business purposes, and deduction was granted of 20 per cent of home expenses when premises were not leases. Deduction of 10 per cent suggested by minister was too low. No reliable evidence regarding use of home to meet business clients. Deposit analysis of 2002 taxation year showed deposits into bank of more than $500,000 and reported income from car business of $29,324. Certain expenses for automotive brokerage in 2002 were conceded by minister. All deposits were not likely from sale of cars, as some amounts were in American dollars and car sales were Canadian. Income from automobile brokerage reduced by $170,000. Taxpayer was not required to prove source of income to disprove minister's assumptions. Taxpayer's lifestyle appeared to contradict claims of modest income. Payment to law firm was not shown to be business related deduction of legal expenses. Rental income which was not reported in returns but not included in assessments could be reassessed, as taxpayer made misrepresentation regarding rental income. Deposit in amount of $10,000 could not be added to rental business as issue was not raised in pleadings. No adjustment made to GST collectible in 1998 and 1999, amount in other taxation years to be adjusted to reflect new findings regarding income tax owing. Minister did not show sufficient evidence to warrant penalties. Last v. Canada (Oct. 9, 2012, T.C.C., Woods J., File No. 20062525(IT)G; 2006-2902(GST)I) 220 A.C.W.S. (3d) 650. 13-01-09 2:33 PM

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