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March 11, 2019

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LAW TIMES COVERING ONTARIO'S LEGAL SCENE | MARCH 11, 2019 15 Court. Prothonotary did not err in differentiating between own- ership allegations contained in defence and those asserted in counterclaim. Prothonotary correctly considered counter- claim separately from statement of defence and did not err in finding defendant failed to es- tablish irreparable harm if re- quired to pursue contract claim in another court. There were no palpable and overriding errors. Farmobile, LLC v. Farm- ers Edge Inc. (2018), 2018 Car- swellNat 8484, 2018 Carswell- Nat 8485, 2018 FC 1269, 2018 CF 1269, Anne L. Mactavish J. (F.C.). Labour and Employment Law LABOUR LAW discipline And terminAtion Arbitrator did not err in referring to subsequent facts of dismissal Employee was issued suspen- sion letter as result of refusal to deliver goods. Employer alleged that employee attacked supervi- sor with both hands on thorax as result of receiving letter. Em- ployee was dismissed. Employee brought unfair dismissal com- plaint under Canada Labour Code. Complaint allowed in part because given fault of em- ployee, it was not acceptable to reinstate but severance pay was ordered. Employer brought ap- plication for judicial review. Ap- plication dismissed. Subsection 242(4) of Canada Labour Code set out types of remedies arbi- trator may grant when finding that dismissal was unfair and arbitrator had broad discretion to grant relief. Arbitrator did not err in referring to subse- quent facts of dismissal because he did so in context of analysis of whether or not dismissal was warranted. Arbitrator did ex- actly type of contextual analysis required. Transport Dessaults inc. c. Arel (2019), 2019 CarswellNat 8, 2019 FC 8, 2019 CF 8, William F. Pentney J. (F.C.); application for judicial review refused (2017), 2017 CarswellNat 849, Jean- Claude Bernatchez Member (Can.Adjud.(CLC Part III)). Tax Court of Canada Tax GOODS AND SERVICES TAX rebAtes Term "particular individual" refers to all purchasers as group Homebuyer and spouse sought to purchase property but were unable to obtain mortgage fi- nancing and sought assistance of third party. Third party agreed to be co-mortgagor on loan and to be registered own- er on title for homebuyer and spouse to receive financing ap- proval. Homebuyer, spouse and third party signed Acknowl- edgement of Trust under which third party held title in trust for homebuyer and spouse. Home- buyer, spouse and third party took possession of property and took legal title to property as joint tenants. Homebuyer claimed rebate in amount of $25,015.70 for which he had been credited by builder and rebate application was denied by Minister. Notices of objec- tion, confirmation and appeal were issued. Homebuyer ap- pealed. Appeal dismissed. Sec- tion 254(2)(b) of Excise Tax Act requires that, at time particular individual becomes liable or as- sumes liability under agreement of purchase and sale for prop- erty, he or she must be acquir- ing property for use as primary place of residence for him or her personally or for relative. Where there was more than one pur- chaser, s. 262(3) of Act makes it clear that term "particular individual" in s. 254 refers to all purchasers as group. As was case with co-signer of 2016 de- cision, third party declared that she neither lived nor intended to live in property. Requirement for obtaining new house rebate, that particular individual must intend to occupy property, was not met. Omapas Duyo v. The Queen (2018), 2018 CarswellNat 1902, 2018 TCC 79, Robert J. Hogan J. (T.C.C. [Informal Procedure]). GOODS AND SERVICES TAX Zero-rAted supplies Registrant did not keep adequate books and records in accordance with Excise Tax Act Registrant carried on business of selling used vehicles, which consisted of purchase at auction of damaged or high mileage vehicles that could not be used in Canada and resale of them. Auditor could substantiate only 5.91 percent of sales made by registrant as export sales during month of September 2011 and applied this percentage to full period under audit. Minister of National Revenue reassessed registrant for 2011 and 2012 reporting periods. For 2011 and 2012 periods, adjustments were made to increase amount of GST/HST collectible under Excise Tax Act and allow addi- tional input tax credits resulting in net tax liabilities of $29,415.13 and $29,187.17. Registrant con- ceded that 13 percent of sales in 2011 and 2012 periods were ex- port sales. Registrant appealed. Appeals allowed in part to ex- tent of permitting concessions made by registrant. Registrant did not provide sufficient and reliable evidence showing, even on prima facie basis, that more than 13 percent of his sales dur- ing 2011 and 2012 periods were expert sales under Act. Regis- trant did not provide evidence that would require interven- tion. Registrant did not keep adequate books and records in accordance with Act. Nwaukoni v. The Queen (2018), 2018 CarswellNat 8326, 2018 TCC 252, Dominique Laf- leur J. (T.C.C. [General Proce- dure]). Ontario Civil Cases Bankruptcy and Insolvency AVOIDANCE OF TRANSACTIONS PRIOR TO BANKRUPTCY frAudulent And illegAl trAnsActions All trusts appeared to do was protect assets from bankrupt's creditors Bankrupt and his spouse were married 1994 and 4 children. Following marriage, bankrupt and spouse purchased Ledge Lodge (LL) for $700,000 as joint tenants and later in 2003, pur- chased Humber Station (HS) for $635,000 as joint tenants. Bankrupt worked in telecom- munications and became CEO for company Look in 2004. Look experienced financial dif- ficulties in 2008 and proceeded by way of arrangement consist- ing of supervised auction for sale of Look's assets. AS CEO, bankrupt was awarded about $5.6 million in compensation package however, he was or- dered to repay $5,565,696 for breach of fiduciary duty. In June 2017, bankrupt with his man- agement company, filed notice of intention to make proposal under Bankruptcy and Insol- vency Act. At meeting of credi- tors held on December 2017, creditors voted against accep- tance of proposal. Accordingly, bankrupt was deemed to have made assignment in bank- ruptcy. Trustee of bankrupt's estate applied for realization on bankrupt's assets for benefit of his creditors. Bankrupt and his spouse asserted LL and HS were held in trust for their children and placed reliance for this as- sertion on trust documents al- leged to have been created in 1995 for LL and 2004 for HS. Trustee's application granted. Overwhelming evidence sup- ported conclusion that alleged trusts over properties were shams. Expert was retained in fonts, and font identification who definitively identified type- face used in property LL dated January 1995, as set out in Cam- bria, however, Cambria typeface did not reach public until Janu- ary 2007. Similarly, typeface used in HS document was de- finitively identified as set in font called Calibri and like Cambria, it was designed in 2002 but not released to public until 2007. Given heavy reliance placed by bankrupt on LL and HS trust documents, and trustee's claim that trusts were shams, there was no doubt expert's evidence was relevant to material issue in litigation. Expert's report's evi- dence was reliable and there was no suggestion that any prejudice to bankrupt outweighed proba- tive value of expert's evidence. Finally, there was no applicable exclusionary rule. Contrary to bankrupt's direct evidence, trust documents neither existed on not were signed on dates in- dicated; at earliest, these docu- ments could not have come into existence until 2007. Nothing distinguished bankrupts' use of properties from that of owner as they used properties as they wished, encumbered them at will and described themselves as owners in legal documents. All trusts appeared to do was protect assets from bankrupt's creditors, creditors to which his exposure was known at least by early 2010. McGoey (Re) (2019), 2019 CarswellOnt 254, 2019 ONSC 80, Penny J. (Ont. S.C.J.). Civil Practice and Procedure COSTS pArticulAr orders As to costs Lawyer culpable for knowing of misappropriation and advising clients to take untenable legal positions Deceased had five children, and daughter, A, was granted power of attorney for property. Acting under that power of attorney, A misappropriated deceased's funds to pay personal debts, caused deceased to incur debts for benefit of herself, her hus- band, and sister I, transferred title of deceased's home to de- ceased and herself jointly, then to herself alone after his death, and borrowed significant funds against home. When estate liti- gation ensued, A, her husband and I hired lawyer D to resist claims. Litigation was eventu- ally settled, but D's file revealed she knew of A's misappropria- tion and failed to disclose this to court and misled court. Par- ties made submissions on costs. Plaintiffs, C, G and L, sought costs on full recovery basis in amount of $394,727.40 plus punitive costs. Rule 57.07 of Rules of Court provides statu- tory jurisdiction to award costs against lawyer, as well as inher- ent jurisd iction as sanction for misconduct. D was culpable for knowing of misappropriation and advising clients to take un- tenable legal positions, as well as initiating and maintaining useless procedures resulting in more legal costs. D also misled court, permitted her clients to mislead court, and facilitated clients' breaches of court orders. Costs were ordered in inclusive amount of $365,519.70, with 25 percent to be paid personally by solicitor, and remaining costs to be paid 75 percent by A and her husband and 25 percent by I. BACA v. TIBERI (2018), 2018 CarswellOnt 21793, 2018 ONSC 7282, Price J. (Ont. S.C.J.). DISPOSITION WITHOUT TRIAL money in court And offers to settle There was real risk that if fund not paid into court defendant would spend significant portion of it Defendant owned property until he sold it to plaintiff, who claimed they entered into bind- ing verbal agreement. Plaintiffs stated that they fully performed their obligations under agree- ment, paying approximately $420,000.00 in expenses on defendant's behalf with respect to property in period from October 2009 to July 2015. In July 2015, defendant demand- ed payment from plaintiffs of $600,000 and at time, mort- gage remaining on property was $109,000. Plaintiff refused to pay money, defendant listed property for sale and advised plaintiff that he would be re- taining all sale proceeds. De- fendant did not pay mortgage, mortgage went into default and receiver was appointed. Prop- erty was sold to third party and plaintiffs negotiated with third party to buy it back from them. Plaintiffs brought ac- tion for damages on basis that by virtue of defendant's breach of agreement, they effectively paid for property twice. Plain- tiff brought motion pursuant to Rule 45.02 of Rules of Civil Pro- cedure for order requiring that surplus sale proceeds arising from sale by receiver of defen- dant's property to be paid into court pending determination of plaintiffs' claims in this pro- ceeding. Motion granted. Plain- tiffs' causes of action and re- quested relief were proprietary in nature and directly linked to property. Tracing had long been recognized as method by which claimant may substitute traceable proceeds for original asset as subject matter of claim. There was strong argument in tracing as appropriate remedy should plaintiffs prove to be successful in their claim that there was valid and binding agreement for transfer of prop- erty. There was real issue to be tried with respect to whether payments constituted consider- ation for transfer of restaurant business. There was concern that defendant attempted to defeat plaintiffs' claims once al- ready through his default with respect to mortgage. There was real and significant risk that if fund was not paid into court that defendant would spend significant portion of it, with effect of potentially defeating plaintiffs' legitimate claims. Oriental Garden Chinese & Vietnamese Restaurant Inc. et al. v. Nguyen (2018), 2018 Car- swellOnt 22524, 2018 ONSC 7538, T.J. Nieckarz J. (Ont. S.C.J.). CASE LAW

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