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Page 14 January 14, 2019 • Law Times www.lawtimesnews.com ternative" (NIA) defence and in reaching this conclusion, court rejected defendant's arguments regarding causation, applica- bility of Patented Medicines (Notice of Compliance) Regula- tions, applicability of U.S. juris- prudence, and economic logic. April 19, 2000 was found to be date on which defendant could have produced non-infringing cefaclor, as it was date that last of relevant patents expired and de- fendant had offered no evidence that its wish to add cefaclor to its portfolio would have prompted it to seek out non-infringing method prior to patent expiry. Defendant appealed. Appeal al- lowed in part. It was found that there was not sufficient evidence for trial judge to conclude that cefaclor 2 was objectively com- mercially viable substitute. Trial court was looking for persuasive evidence from defendant to ef- fect that, had it not used infring- ing process in 1997, it would have sought out non-infringing process before 1998 and court found there was no such persua- sive evidence. Based on quan- tities of cefaclor 2 produced, it would have been open to trial court to conclude that defendant had met its burden regarding ca- pacity to obtain cefaclor 2 to en- ter market, but trial court found it would not have entered market at that time and trial court was ultimately correct to concluded that NIA defence was not avail- able to defendant in this case. Apotex Inc. v. Eli Lilly and Company (2018), 2018 Car- swellNat 7343, 2018 FCA 217, Johanne Gauthier J.A., Mary J.L. Gleason J.A., and J.B. Laskin J.A. (F.C.A.); affirmed (2015), 2015 CarswellNat 371, 2015 Carswell- Nat 3796, 2015 FC 1254, 2015 CF 1254, Russel W. Zinn J. (F.C.). Public Law SOCIAL PROGRAMS Employment insurance It was not role of Appeal Division to reconsider evidence on whether facts constituted just cause When applicant's government position was declared surplus, he found another government job while grievance was pend- ing. Applicant agreed to settle grievance, accepting lump sum severance payment conditional upon retirement, and left his new employment. Applicant's application for employment in- surance benefits was denied on basis that he left employment without just cause. Applicant's appeal was dismissed by Gen- eral Division of Social Security Tribunal. Applicant's appeal was dismissed by Appeal Division of Tribunal. Applicant applied for judicial review. Application dis- missed. Applicant's argument that Appeal Division erred by failing to consider entire context of his resignation and whether departure was involuntary in that it was required to obtain his severance pay could not suc- ceed. It was not role of Appeal Division to reconsider evidence on whether facts constituted just cause, and no argument was ad- vanced that General Division made erroneous finding of fact made in perverse or capricious manner. Argument about facts giving rise to just cause did not fall within scope of s. 58(1)(c) of Department of Employment and Social Development Act. While there was no evidence to support Appeal Division's comment that applicant could have pursued grievance while continuing in his employment, error was of no consequence as it occurred only after conclusion was reached that General Division had made no errors in its decision. General Di- vision made no such assumption in finding that applicant had rea- sonable alternative to leaving his employment and Appeal Divi- sion properly addressed itself to questions before it under s. 58(1) of Act before making superf lu- ous comment. Bose v. Canada (Attorney General) (2018), 2018 Carswell- Nat 7469, 2018 FCA 220, Donald J. Rennie J.A., Judith Woods J.A., and J.B. Laskin J.A. (F.C.A.). Federal Court Real Property MORTGAGES Priorities Prothonotary did not err by treating mortgage security as distinct from covenant to pay Taxpayer DG used nominees to control properties and corpora- tions to avoid paying taxes, in- cluding T and 164 Ltd. and was key player in obtaining mort- gage from mortgagee R Corp.. DG was convicted of defrauding public of $3.5 million in taxes. Charging orders and writs of seizure and sale were made in fa- vour of Canada Revenue Agency (CRA) $270,000 for unpaid taxes and Public Prosecution Service of Canada (PPSC) for $2 million fine. R Corp. was ordered to pay surplus funds from sale of prop- erties of $380,228 into court, after taking into account prin- cipal, interest, costs and admin- istrative expenses of mortgages, but later claimed that it was still owed $370,116 for legal fees and interest. Prothonotary made or- der that R Corp. had first prior- ity and was entitled to $61,039 plus interest, CRA was second in priority and entitled to $270,057 plus interest, and PPSC was enti- tled to any remaining monies. R Corp. brought motion to appeal prothonotary's order. Motion dismissed. Prothonotary did not err in finding that R Corp.'s conduct was commercially un- reasonable and in finding that R Corp. knew that DG was real borrower of funds. Prothonotary did not err in piercing corporate veil of 164 Ltd., as shareholder T made no claim to any interest in properties or shares. R Corp. was not bona fide purchaser for value without notice. Prothonotary did not err by treating mortgage security as distinct from cov- enant to pay. Prothonotary did not err in interpreting law as it related to recovery of costs and expenses under s. 27 of Mortgag- es Act and in disallowing invoice and interest amounts. Digiuseppe (Re) (2018), 2018 CarswellNat 7854, 2018 Car- swellNat 7879, 2018 FC 1095, 2018 CF 1095, Patrick Gleeson J. (F.C.); affirmed (2017), 2017 Car- swellNat 9352, 2017 FC 129, Kev- in R. Aalto Prothonotary (F.C.). Tax Court of Canada Tax GOODS AND SERVICES TAX Administration and enforcement Registrant was not entitled to claim interest on letter of credit as "costs of proceedings" Minister of National Revenue assessed American registrant for uncollected GST/HST on sales of recreational vehicles (RVs) and freight transportation service relating to parts and un- collected provincial component of HST with respect to parts shipped from US to Canadian dealers. Registrant provided let- ter of credit to secure its unpaid GST/HST and paid interest of $1,409,710.52 on it. Tax Court judge allowed registrant's appeal in part. Judge held that regis- trant was not required to collect and remit GST and HST on RVs but was required to collect and remit provincial component of HST on parts shipped from US to Canada. Registrant brought motion for costs. Motion grant- ed. Registrant was awarded costs of appeal of $427,222.42 plus tax but not costs of motion. Regis- trant was substantially success- ful in its appeal as 98 per cent of assessed amount related to sales of RVs. Registrant was entitled to Tariff A fees of Tax Court of Canada Rules (General Proce- dure) prior to settlement offer and substantial indemnity costs of $347,856.80 after offer. Regis- trant was not entitled to claim in- terest on letter of credit as "costs of proceedings" under s. 147(3)(j) of Rules or as disbursement un- der Tariff B of Rules. Interest re- lated to GST/HST owed and was not paid to establish that Min- ster's assessment was incorrect. It was difficult to understand why Minister did not admit one fact or foreign law but this con- duct did not justify enhancing fees beyond substantial indem- nity after settlement offer. Tak- ing into account factors under s. 147(3) of Rules, costs should be enhanced to $20,000 for period before offer of settlement. Regis- trant was entitled to $59,365.62 as disbursements after 15 per cent discount. Jayco, Inc. v. The Queen (2018), 2018 CarswellNat 7470, 2018 TCC 239, Johanne D'Auray J. (T.C.C.); additional reasons (2018), 2018 CarswellNat 534, 2018 TCC 34, Johanne D'Auray J. (T.C.C. [General Procedure]). INCOME TAX Administration and enforcement Motion brought five months after being advised of taxes owing not brought as soon as circumstances permitted Taxpayer participated with others in donation program and claimed corresponding tax credit. In 2006, taxpayer was reassessed for 2002 taxation year and Minister denied her donation claim for tax credit. In June 2014, Minister confirmed taxpayer's reassessment and tax- payer had until September 2014 to file notice of appeal, which neither she nor her representa- tive did. In November 2016, thir- teen applications for extension of time to file appeal were called to be heard and taxpayer was one of parties who did not attend hear- ing. Year later, notice of hearing was sent by hearing coordinator to representative of taxpayer, but at hearing representative stated that he was unable to contact tax- payer, and taxpayer's application for extension of time to file appeal was dismissed. Taxpayer brought motion to set aside judgment that dismissed extension of time to file appeal. Motion dismissed. Tax- payer was aware that she owed large amount of money to Cana- da Revenue agency and taxpayer filed her motion five months after being advised by CRA that she was liable for large amount of tax- es. Accordingly, motion was not brought as soon as circumstances permitted. Larson v. The Queen (2018), 2018 CarswellNat 7611, 2018 CarswellNat 8102, 2018 TCC 242, 2018 CCI 242, Johanne D'Auray J. (T.C.C.). INCOME TAX Business and property income Taxpayer did not conduct activities in commercial manner for profit Taxpayer was engineering tech- nologist and management ac- countant who worked full-time for municipality. Minister as- sessed taxpayer in absence of filing of income tax return, pri- marily on basis of income re- ceived from municipal employer. Taxpayer objected, including by claiming income of $3,140 and net business loss of $29,731.16 from side business providing engineering and planning ser- vices. Minister reassessed to al- low certain other deductions and claimed loss carry-back but deny- ing taxpayer's claimed business income and net business loss of $29,731. Taxpayer appealed. Ap- peal dismissed. Taxpayer's busi- ness expenses were not submit- ted in organized manner, as they were provided in bulk and not segregated from employment ex- penses which were reimbursed by municipality. Cross-examination revealed that some expenditures were personal in nature, some were mistakenly submitted as they were purely for entertain- ment or for prior years, and that some were clearly unreasonable. There was material personal ele- ment in activities carried on by taxpayer and in expenses claimed. Taxpayer claimed expenses for use of office at home when mu- nicipality provided office to him and did not require home office. Taxpayer did not provide receipts for delivery and professional li- ability insurances expenses claimed, and made claims for en- tertainment expenses without re- cords showing names of clients or potential clients entertained. Tax- payer did not conduct activities in commercial manner for profit. Taxpayer had no business plan and had many unprofitable years. Books and records maintained by taxpayer were inadequate to allow determination of business expenses. Free v. The Queen (2018), 2018 CarswellNat 7421, 2018 TCC 238, Réal Favreau J. (T.C.C. [Informal Procedure]). INCOME TAX Tax credits Taxpayer at all relevant times had severe and prolonged impairment Taxpayer had qualified for Dis- ability Tax Credit (DTC) for several years. Minister of Na- tional Revenue denied taxpayer entitlement to DTC for period beginning January 2016. Tax- payer served Minister with No- tice of Objection, and Minister confirmed determination. Tax- payer appealed. Appeal allowed. Section 118.4(1) of Income Tax Act provides that basic activity of daily living is markedly re- stricted when all or substantially all of time, even with therapy, individual is blind or unable, or requires inordinate amount of time, to perform basic activ- ity of daily living. It further pro- vides that basic activity of daily living means mental functions necessary for everyday life and excludes working, housekeep- ing or social or recreational ac- tivity. Taxpayer at all relevant times had had severe and pro- longed impairment causing her to largely be unable to leave her house. That was indicative of marked restriction in mental functions necessary for every- day living, being basic activity of daily living. It was concluded that taxpayer did qualify for DTC applicable to period com- mencing January 2016 and that appealed determination of Min- ister erroneously denied same. Cochrane v. The Queen (2018), 2018 CarswellNat 7137, 2018 TCC 212, B.S. Russell J. (T.C.C. [Informal Procedure]). Charitable donation receipts were manifestly deficient on multiple grounds Taxpayers, husband D and wife S, had tax returns prepared by O organization in return for large cash payments, which would al- legedly be given to charitable or- ganizations. Taxpayers claimed large charitable donations to three different charities in two taxation years. Minister of Na- tional Revenue disallowed tax

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