Law Times

LAW TIMES 14 COVERING ONTARIO'S LEGAL SCENE | FEBRUARY 11, 2019 www.lawtimesnews.com in turn, resulted in F LP holding two classes of shares of NSULC. This use of two-class structure ensured that capital loss on dis- position of shares of NSULC matched capital gain on bor- rowed funds. Tower structure was unwound few years later when loans were repaid, but Minister reassessed taxpayer and concluded that while re- sulting structure technically complied with Income Tax Act, General anti-avoidance rule (GAAR) should be used to re- duce taxpayer's share of capital loss on disposition of common shares of NSULC by amount by which loss would have been ground under s. 112 (3.1) of Act. Taxpayer appealed. Appeal al- lowed. It was concluded that GAAR did not apply to trans- action in question and matter was referred back to Minister for reassessment. GAAR assess- ment did not challenge use of tower structure itself, but rather modification to structure that taxpayer made by introducing second class of shares. It was found that broad interpretation of s. 39 (2) of Income Tax Act applied, which deemed foreign exchange loss on disposition of NSULC shares to be capital loss from disposition of currency and it was concluded that tax- payer did not receive tax benefit. S. 39 (2) was deeming provision, and under broad interpretation of deeming provision, there was purposive support for first part of deeming provision and potential purposive support for second part of deeming provi- sion. The Bank of Montreal v. The Queen (2018), 2018 Car- swellNat 5103, 2018 TCC 187, David E. Graham J. (T.C.C. [General Procedure]). Ontario Civil Cases Bankruptcy and Insolvency DISCHARGE OF BANKRUPT conditionAl dischArge Bankrupt did not establish she would continue to experience financial difficulty Release from debt. Bankrupt made assignment into bank- ruptcy and received automatic discharge, but her student loans were not released. Bankrupt ended her studies over seven years ago after three unsuccess- ful attempts to complete dental hygienist program. Bankrupt made some payments on stu- dent loans over years. Bankrupt was 40 years old, had no chil- dren and was in common-law relationship. Bankrupt worked part-time as pharmacy assistant and earned $2,200 after-tax monthly income and reported her partner did not work due to series of deaths in his family. Bankrupt claimed she covered all monthly expenses and had $857 monthly deficit. Bankrupt brought motion for order re- leasing her from student loan debts pursuant to s. 178(1.1) of Bankruptcy and Insolvency Act. Motion dismissed. Bankrupt used student loans for intended purpose but was unable to com- plete program so could not be employed as dental hygienist. Bankrupt made some voluntary payments, bankruptcy occurred six years ago and bankrupt lived modest lifestyle. Good faith re- quirement was met. Bankrupt was in financial difficulty that presently made it impossible for her to pay her student loans, but s. 178(1.1)(b) required this situa- tion continue, and bankrupt did not meet burden of proof. Bank- rupt provided limited informa- tion on her hours of work, why she only worked part-time, and did not provide hers or her part- ners tax returns, information about their assets or more de- tails about her partner's circum- stances and purported inabil- ity to work. Bankrupt's reported $600 monthly expenditure on entertainment, alcohol and to- bacco also raised questions. Bankrupt did not establish she would continue to experience financial difficulty to such ex- tent that she would be unable to retire remaining student loans. Jones v. H.M.Q. (Canada) and H.M.Q. (Ontario) (2018), 2018 CarswellOnt 17023, 2018 ONSC 6170, A.D. Grace J. (Ont. S.C.J.). Civil Practice and Procedure CLASS AND REPRESENTATIVE PROCEEDINGS representAtive or clAss proceedings under clAss proceedings legislAtion Specific clauses of agreement which were overly broad and intrusive were to be deleted and replaced Representative plaintiffs in pro- posed class action sought to sue defendants for damages due to alleged negligent design and manufacture of cardiac defibril- lator devices. Litigation fund- ing agreement among plaintiffs, their lawyers and proposed third party funder was approved by judge, subject to conditions. Recovery of 10 per cent was pre- approved and determination of quantum of further compensa- tion was to be reserved until end of case. Specific clauses of agree- ment which were overly broad and intrusive were to be deleted and replaced. Plaintiffs ap- pealed. Appeal dismissed. Judge applied proper principles and provided roadmap to parties if they wished to proceed under proposed arrangement. Judge's analysis disclosed no error in principle and decision that he reached was not clearly wrong. It was not error for judge to have found that assessing fairness and reasonableness of full compen- sation to be paid to third-party lender could only take place once outcome was known. By removing clauses that allowed third party funder to withdraw funding on its own re-assess- ment of risk and adding court approval process, judge was satisfied that funder would be protected from risks and admin- istration of justice would be pro- tected from champertous fear of officious meddling. Question of whether necessity element was paramount or should be re- laxed would have to await case in which issue factored directly into outcome. Houle v. St. Jude Medical Inc. (2018), 2018 CarswellOnt 17713, 2018 ONSC 6352, Sachs J., Mullins J., and F.L. Myers J. (Ont. Div. Ct.); affirmed (2017), 2017 CarswellOnt 13215, 2017 ONSC 5129, Perell J. (Ont. S.C.J.). COSTS costs of pArticulAr proceedings Application was not public interest litigation as it sought private damages, but there could have been broad public impact Green Energy and Green Econ- omy Act, 2009 (GEGE Act) introduced feed-in tariff (FIT) program under which private suppliers of renewable energy were paid to "feed in" energy into Ontario's electricity grid. Global Adjustment was autho- rized by s. 25.33 of Electricity Act, 1998 (E Act) and was com- ponent of electricity pricing that incorporated obligations under FIT contracts. Manu- facturer brought applications for declaration that Global Adjustment was unconstitu- tional tax and that s. 25.33 of E Act was ultra vires. Attorney General of Ontario (AGO) and Ontario Crown brought mo- tions to strike out applications, supported by Independent Electricity System Operator (IESO). Motion judge granted motions. Parties made submis- sions on costs. Costs awarded to AGO and Crown in amount of $50,000, and to IESO in amount of $75,000, all-inclusive. Overall quantum was within manufac- turer's reasonable expectations. Manufacturer's application was not public interest litigation as it sought private damages, but there could have been broad public impact if its applications had been successful, and re- gime had not previously been challenged this way. IESO did not bring motion but it was full participant and its participation was contemplated by plan for motions. It was appropriate to substantially reduce quantum of IESO costs claim. National Steel Car Lim- ited v. Independent Electric- ity System Operator (2018), 2018 CarswellOnt 14937, 2018 ONSC 5165, W. Matheson J. (Ont. S.C.J.); additional reasons (2018), 2018 CarswellOnt 10017, 2018 ONSC 3845, W. Matheson J. (Ont. S.C.J.). COSTS offers to settle or pAyment into court Respondent was not entitled to full indemnity costs for entire history with all its events Property owner acquired prop- erty from province in 1972 on condition property be used as park but was using it for large scale commercial aggregate ex- traction. Owner's application for declaration that property's use for extraction of sand and gravel was permitted under 2006 zoning bylaw or was le- gal non-conforming use was dismissed on basis current by- law did not permit extraction, present use for commercial ag- gregate extraction was not just intensification of pre-existing use but use of different kind that was not reasonable evolu- tion of prior activity, and on basis present use diminished people's enjoyment of property and adjacent lake. Hearing was held to determine costs. $85,000 costs award, inclusive of fees, disbursements and taxes, was appropriate. As successful party, respondent was presumptively entitled to partial indemnity costs. Respondent was not en- titled to full indemnity costs for entire history with all its events. Respondent's 2015 proposal did not meet requirements for of- fer to settle as notice of applica- tion was not issued until 2016 and proposal was not done in context of application. Costs of $57,128.00 not related to Supe- rior Court application were to be deducted. Cobalt (Town) v. Coleman (Township) (2018), 2018 Car- swellOnt 14941, 2018 ONSC 5297, J.A.S. Wilcox J. (Ont. S.C.J.); additional reasons (2018), 2018 CarswellOnt 9532, 2018 ONSC 3713, J.A.S. Wilcox J. (Ont. S.C.J.). Construction Law CONSTRUCTION AND BUILDERS' LIENS right to lien Clean-up services as invoiced were necessary to project Plaintiff construction com- pany was retained by defen- dant homeowners, to renovate property. Company claimed that they were owed $49,271.84 by homeowners, from larger amount invoiced. Subcon- tractor claimed outstanding amounts from homeowners and company. Homeowners claimed they were not invoiced for services, and that any work done was substandard. Home- owners also claimed company's action was out of time. Com- pany brought action for claimed outstanding fees against home- owners. Subcontractor brought action against homeowners and company. Both actions allowed. Weight of evidence showed that claimed work was done, in 6-month time frame conclud- ing in June 2013. Evidence of de- fendants that work could not be completed due to family funer- al, lacked credibility. Work done by company was lienable, and proper procedure was followed to receive lien by company. Clean-up services as invoiced were necessary to project. Northridge Homes Ltd. v. Sandhu (2018), 2018 Carswel- lOnt 16294, 2018 ONSC 5689, Fragomeni J. (Ont. S.C.J.). Contracts FORMATION OF CONTRACT consensus Ad idem Bridge was not fixture to land owned by city In 1968, provincial government expropriated land from respon- dent mall owners to construct highway. Expropriation divided lands owned by mall owners, necessitating construction of bridge by mall owners. Govern- ment reimbursed mall owners for costs of bridge. Government reached settlement with mall owners, with settlement be- ing silent as to ownership and maintenance of bridge. In 2018, applicant city claimed that mall owners had ownership of bridge and responsibility for its main- tenance. Mall owners claimed that bridge was built on public land, and that city had acted as owners throughout contract. City applied for declaratory relief, finding that mall own- ers owned bridge. Application granted. Negotiations at time of construction released city from any claims, related to ex- propriation. Bridge added no value to city's lands, but was for purpose of allowing mall busi- ness to continue. Bridge was not fixture to land owned by city, as claimed by mall owners. Con- tractual interpretation prin- ciples showed that mall owners were true owners of bridge. In- tention of parties was clear from original negotiations. $20,000 in costs was payable to city. City of Toronto v. Clover- dale Mall Inc. (2018), 2018 CarswellOnt 16319, 2018 ONSC 5748, D.A. Wilson J. (Ont. S.C.J.). Family Law COSTS in fAmily lAw proceedings generAlly Mother's failure to make offer to settle was noteworthy in consideration of costs Both mother and father made motions for determination of custody and parenting of child. Mother claimed to be complete- ly successful. Mother made no offer to settle, and father made offer but it was not signed by counsel as required by Family Law Rules. Parties made sub- missions on costs. Costs award- ed to mother. Father demon- CASE LAW

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