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Page 14 September 24, 2018 • Law timeS www.lawtimesnews.com of $12,136.40. Taxpayer also reported $2,419 in administra- tive fees and safety deposit box fees claimed against investment income. Upon bankruptcy of taxpayer's truck driver husband, taxpayer bought truck and went into trucking business for hus- band's employment. Taxpayer's 2009 income tax return re- ported net rental loss of $4,701 and reported gross trucking revenue of $38,565 with claimed expenses reducing business income to $7,428.55. Minister reassessed taxpayer under In- come Tax Act, disallowing all claimed expenses for 2008 taxa- tion year and, for 2009 taxation year, disallowing rental loss and all trucking business expenses while levying gross negligence penalties for both years. Tax- payer appealed. Appeal allowed in part. Taxpayer admitted that she did not have any investment income or know what claimed fees were for, so there was no basis for those claimed deduc- tions. Taxpayer filed variety of documents at hearing which led to concessions of various ex- penses on premise that greater gross revenue shown on such documents must also be ac- cepted. Taxpayer did not claim any amount for capital cost al- lowance for purchased truck and she would be allowed to do so. Small amount of $750 would be allowed to recognize vari- ous miscellaneous expenses but taxpayer did not otherwise es- tablish entitlement to expenses beyond those conceded. Truck- ing business earned $53,400 in revenue and incurred $27,000 in expenses, leading to taxpayer's net business income of $26,400 before any claim for capital cost allowance which was $12,165 less than assessed income. Bobic v. The Queen (2017), 2017 CarswellNat 2670, 2017 CarswellNat 3976, 2017 TCC 107, 2017 CCI 107, Gaston Jorré J. (T.C.C. [Informal Procedure]). INCOME TAX Capital gains and losses Phrase "active business" in section 248(1) of Income Tax Act interpreted broadly Minister re-assessed taxpayer, disallowing business invest- ment loss of $ 274,114 for 2011 taxation year. Minister con- tended that taxpayer's company did not actively carry on busi- ness in 2011 taxation year or for twelve months previous. Tax- payer appealed. Appeal allowed. Company was active during twelve months preceding its dissolution, in 2010 and 2011 taxation years, despite having minimal activities. Company remained active only to sell un- sold stock of radio communica- tion equipment and parts – Tax- payer maintained website where remaining inventory was posted and responded to e-mails and calls from potential custom- ers, with intention of selling re- maining assets -- Phrase "active business" in s. 248(1) of Income Tax Act interpreted broadly so that little that company could do that would make it possible to conclude that it was not being actively carried on. Hébert c. La Reine (2018), 2018 CarswellNat 1161, 2018 CCI 48, Sylvain Ouimet J. (T.C.C. [Informal Procedure]). Ontario Civil Cases Bankruptcy and Insolvency PRACTICE AND PROCEDURE IN COURTS Stay of proceedings There was no requirement to establish prima facie case to find material prejudice Appellant was debtor, who worked for corporation. Plain- tiff investment company ad- vanced loans to corporation. Investment company brought action against debtor and an- other employee of corporation, for alleged misrepresentation. Court action was set down for trial. Before scheduled pre-trial conference, debtor filed pro- posal in bankruptcy. Debtor applied to have proposal ap- proved. Company moved to have automatic stay of proceed- ings lifted. This motion was granted by master. Debtor ap- pealed from motion judgment. Appeal dismissed. There was no requirement to establish prima facie case to find material preju- dice. Merits of company's claim depended on credibility, which master could not determine. Company established that there was some chance of success. Summary proceeding under bankruptcy law was not proper proceeding in this case. Deter- mining claim against debtor ran risk of inconsistent find- ings. Court action was proper forum to determine all claims. Lifting stay would not under- mine debtor's proposal. Issue of prejudice only pertained to creditors. Debtor could bring summary judgment motion, to obtain same relief sought under bankruptcy law. Re: In the Matter of the Proposal of Rajneesh Mathur (2018), 2018 CarswellOnt 11949, 2018 ONSC 4425, H.J. Wilton- Siegel J. (Ont. S.C.J.). Civil Practice and Procedure CLASS AND REPRESENTATIVE PROCEEDINGS Representative or class proceedings under class proceedings legislation Common issue cannot be based on theory of legal liability not advanced by plaintiff Purchaser brought action against developer for relief for breach of statutory duties, neg- ligent and fraudulent misrep- resentation, breach of contract, failure to act in good faith, and unjust enrichment. Motion for certification of action as class proceeding granted. Defen- dant appealed. Appeal allowed in part. Allegation of fraudu- lent misrepresentation was not made with respect to disclo- sure statement and Agreement of Purchase and Sale (APS) but with respect to acknowledge- ment. Any misrepresentation about contents of acknowledge- ment could not possibly have induced class members to sign APS, because APS had already been signed earlier. Common issue cannot be based on theory of legal liability not advanced by plaintiff. New subclass cre- ated being purchasers who had signed acknowledgement. Sixth common issues varied to raise legal effect of acknowledgement as no consideration given for it. Heyde v. Theberge Develop- ments Ltd. (2018), 2018 Carswel- lOnt 11999, 2018 ONSC 4257, M. Charbonneau J., F.L. Myers J., and S. Gomery J. (Ont. Div. Ct.); reversed (2017), 2017 Carswel- lOnt 3790, 2017 ONSC 1574, Robert Smith J. (Ont. S.C.J.). COSTS Appeals as to costs Tribunal was not bound to proportionality principle as court would be Parties entered into contract, with appellant manufacturer re- ceiving farm implements from respondent supplier. In 2006, manufacturer indicated they would not be renewing contract due to alleged breach. Supplier claimed that manufacturer did not comply with then-newly introduced law regarding deal- erships. Supplier brought claim before tribunal, as to improper ending of agreement by manu- facturer. Tribunal determined that breach took place, as appli- cable law applied retroactively. Tribunal awarded supplier $200,516.61 in damages. Tribu- nal, against its ordinary practice, awarded supplier $376,338.05 in costs. Manufacturer ap- pealed to Divisional Court on both damages and costs issues. Majority of Divisional Court upheld decision on damages. Divisional Court allowed ap- peal as to costs. Manufacturer appealed from Divisional Court judgment on damages issue. Supplier cross- appealed on costs issue. Appeal dismissed. Cross-appeal allowed. Tribunal properly exercised discretion to award costs. Tribunal identified conduct of manufacturer with- in litigation, as reason to award costs. Tribunal was not bound to proportionality principle, as court would be. Tribunal's costs award was restored. CNH Canada Ltd. v. Ches- terman Farm Equipment Ltd. (2018), 2018 CarswellOnt 11407, 2018 ONCA 637, David Watt J.A., M.L. Benotto J.A., and B.W. Miller J.A. (Ont. C.A.); af- firmed (2016), 2016 CarswellOnt 3448, 2016 ONSC 698, Molloy J., Hackland J., and Hambly J. (Ont. Div. Ct.). LIMITATION OF ACTIONS Actions in tort Motion judge erred in principle by establishing an evidentiary threshold that was too high Plaintiffs alleged defendants, 48 individual financial institu- tions organized into 16 groups of financial institutions, had engaged in conspiracy to fix prices in futures exchange mar- ket from 2003 to 2013. Plaintiffs commenced action against de- fendants in 2015 for damages for contraventions of Competi- tion Act, conspiracy, and unjust enrichment. One settling defen- dant provided evidence impli- cating two additional groups of financial institutions. Plaintiffs' motion in 2016 for order adding two additional groups as defen- dants was dismissed. Plaintiffs appealed. Appeal allowed. Mo- tion judge erred in principle by establishing too high evidentia- ry threshold on motion. Motion judge further erred in finding that plaintiffs could have identi- fied additional groups with due diligence in absence of any evi- dentiary foundation and failing to determine with sufficient pre- cision when they ought to have discovered their claim. Plain- tiffs provided reasonable expla- nation why they could not have identified additional groups as co-conspirators before July 20, 2014. At least some of steps suggested by motion judge went beyond those reasonable plain- tiff would have taken in circum- stances. Motion judge should have permitted plaintiffs to add additional groups as defendants and reserved their right to plead limitation defence. Mancinelli v. Royal Bank of Canada (2018), 2018 Carswel- lOnt 9315, 2018 ONCA 544, Alexandra Hoy A.C.J.O., D.M. Brown J.A., and Gary Trotter J.A. (Ont. C.A.); reversed (2017), 2017 CarswellOnt 19562, 2017 ONSC 7384, Perell J. (Ont. S.C.J.). Debtors and Creditors PAYMENT BY DEBTOR Mode of payment Creditors claim to set-off was result of planned and deliberate breach of collections agreement SAG was Swiss-based manu- facturer and licensor of men's clothing. SAG licensed use of brand to debtor in Canada. Creditor provided collection services to debtor pursuant to letter of agreement in exchange for fee. Title to debtor's accounts receivable did not pass to credi- tor under agreement unless account was uncollected by creditor, in which case, after 120 days, it was credited to debtor's account and title to account re- ceivable was assigned to credi- tor. Creditor provided letter of credit to SAG in amount of $500,000. Letter of credit was provided to guarantee payment of unsecured invoices issued by SAG to debtor under distri- bution agreement and license agreement. Side agreement provided that debtor would pay creditor amount of $500,000 in event of draw against letter of credit. Debtor was placed in re- ceivership. SAG made demand on letter of credit which credi- tor refused to honour. Creditor continued to collect accounts receivable but refused to remit funds to receiver. Creditor re- mitted one dollar to SAG in order to trigger debtor's obliga- tion to pay $500,000 under side agreement. Receiver success- fully moved for order that credi- tor remit funds in its control. In response to motion by receiver for distribution of funds, credi- tor brought cross-motion for determination of entitlement to set-off against any payments to receiver in amount of $500,000 and legal fees. Cross-motion dismissed. Under agreement, title to funds controlled by cred- itor remained with debtor at all times. Controlled funds were property of debtor and did not constitute debt from debtor to creditor. Creditors claim to set- off was result of planned and deliberate breach of collections agreement and receivership or- der to obtain leverage over SAG and debtor. Side letter did not create contractual right to set- off. Letter of credit specifically excluded set-off. Creditor was not entitled to set-off amount of letter of credit and legal costs against funds owing to receiver. Strellson AG v. Strellmax Ltd. (2018), 2018 CarswellOnt 13254, 2018 ONSC 1808, Hainey J. (Ont. S.C.J.). Estates and Trusts ESTATES Actions involving personal representatives Running up costs of quarter million dollars ostensibly to recover $30,000 painting was shocking and reprehensible Parties, who were three siblings, were trustees of estate of their deceased father. Applicants sought advice from court with respect to painting alleged to be asset of estate and stated to be worth $30,000, and appli- cants alleged breach of fiduciary duty and negligence on part of respondent. Respondent's posi- tion was successful. Painting was found not to be asset of es- tate; applicants were obliged to convey ownership to respon- dent upon receipt of payment of $30,000. Submissions were made as to costs. Applicants were to personally pay respon- dent substantial indemnity costs and HST totaling $203,589, and disbursements and HST total- ing $12,493; applicants were to reimburse estate for any dis- bursements estate had paid to parties. Respondent had been prepared to pay precise amount applicants alleged painting was worth. Given that applicants purported to act in their capac- ity as estate trustees, and given CASELAW

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