Law Times

Page 14 March 11, 2013 Law Times • CASELAW received initial notices of assessment and in some cases notices of reassessment in respect of its income tax returns for relevant taxation years, such notices were equivalent of or deemed to be notices of determination of amount of tax deemed to have been paid on account of its tax payable for that year. However, taxpayer had never claimed or calculated amount of such tax as required by s. 127(1)(c) of Income Tax Act (Can.), or filed prescribed information upon which CRA could verify its calculation because at time of initial filing, taxpayer did not believe it was eligible for such credits as non Canadian-controlled private corporation. View expressed by decision-maker was contrary to statutory scheme, which was premised on filing of prescribed information and calculation of RITCs and specifically provided in s. 127(1)(c) for amended returns. It was contrary to technical tax ruling. In circumstances, erroneous view that initial notice of assessment or reassessment was equivalent of notice of determination led to series of other flawed determinations. Signalgene R&D Inc. v. Canada (Minister of National Revenue) (Nov. 27, 2012, F.C., Lemieux J., File No. T-1949-10) 222 A.C.W.S. (3d) 825. ONTARIO CIVIL CASES Appeal LEAVE TO APPEAL Judge not personally involved in any circumstances of case Defendant brought motion for leave to appeal three interlocutory decisions. Plaintiff sued defendant for defamation. Defendant's motion to compel university's witnesses to answer questions and produce documents on grounds that judge demonstrated reasonable apprehension of bias was dismissed. Case management judge refused to set down defendant's motion to set aside judge's decision. Defendant's motion concerning refusal of plaintiff 's witnesses to answer questions and produce documents was dismissed. Defendant applied for extension of time to seek leave to appeal. Leave to appeal refused. It was in interests of justice that allegation of bias be considered. Extension of time was granted. However, this was not case that could possibly give rise to reasonable apprehension of bias. Judge was not personally involved in any of circumstances of case. There was nothing in judge's conduct that suggested that he favoured university. There was no problem with case management judge's refusing to set down motion that was entirely void of merit. Proposed appeal did not involve matters of importance. There was no reason to doubt correctness of orders. St. Lewis v. Rancourt (Nov. 29, 2012, Ont. S.C.J., Annis J., File No. 11-51657) 222 A.C.W.S. (3d) 578. Building Liens HOLDBACK Certificates issued as after-the-fact attempt to cure payments improperly made Defendant undertook construction of retirement home. By Spring 2010, project only 75% complete. Mortgagees exercised right to sell lands and vacated all registered liens. Lien claimants owed $800,000. Possible claimants' recovery would come only from proportionate shares of statutory holdback. Extent of basic holdback at issue. Lien claimants' position basic holdback of $497,236. Mortgagees' position basic holdback of $285,141. Difference consisted of amounts released by defendants to subcontractors during course of project. Claimants disputed validity of release of holdback funds. Architect certified specific subcontracts as complete, and authorized release of part of basic holdback. Defendant breached Construction Lien Act (Ont.). Section 33(1) to be strictly construed. Architect's failure to include date of certification of sub-contracts' completion a breach of s. 33(1). Service of Certificates of Completeness on contractor and affected sub-contractors not established. Certificates issued as after-the-fact attempt to cure payments improperly made to sub-contractors before certificates issued. Payments violated s. 25 when made. No statutory mechanism for curing breach of s. 25. Basic holdback fixed at $497,236 plus GST. Amount could be paid out to claimants in proportionate shares. Mortgagee knew it would assume defendant's lien obligations, even if uncertain as to statutory compliance. No unfairness in requiring statutory compliance. No windfall for unpaid subcontractors, who would suffer significant shortfalls. GST necessarily added to holdback funds. Wellington Plumbing & Heating Ltd. v. Villa Nicolini Inc. (Oct. 9, 2012, Ont. S.C.J., Boswell J., File No. CV-10-098074-00) 222 A.C.W.S. (3d) 592. Civil Procedure PARTIES Defendant always assumed dealing with sole proprietor Couple constructed home for family residence and showcase home. Couple engaged plaintiff to do tile installation. September 2001 contract totalled $24,056, including GST. Defendant paid $13,000 on account of original contract. Plaintiff alleged defendants added extras of $10,842. Plaintiff filed construction lien claim for balance owing. Claim filed by corporation. Defendants counterclaimed for defective workmanship. Defendants denied any extras, and alleged $13,000 paid exceeded value of defective work. Defendants' position all arrangements with contractor personally, not corporation. Plaintiff sought leave for corporation to continue proceeding under s. 7(1) of Busi- ness Names Act (Ont.). Leave under Act denied. Plaintiff led no evidence as to s. 7(2)(a) and (c). Defendant misled as to status of plaintiff. Defendant always assumed that dealing with a sole proprietor. Defendant denied receiving documentation identifying corporation. Plaintiff led no evidence of alleged documentation. Plaintiff's claim dismissed. World Stone & Tile Inc. v. Ezekiel (Oct. 5, 2012, Ont. S.C.J., McIsaac J., File No. CV-08-0340) 222 A.C.W.S. (3d) 643. Damages AGGRAVATED DAMAGES Defendant knowingly engaged in financially exploitative relationship Plaintiff met defendant while engaged in litigation over motor vehicle accident. Plaintiff a single mother disabled by diabetes, scoliosis, and Scheuermann's disease. Plaintiff received $70,000 settlement. Plaintiff's original intention to purchase house. Defendant persuaded plaintiff to move in with him in September 2009. Plaintiff's expectation defendant would pay one-half of household expenses and gift half of ownership of house to her. Defendant proposed marriage in October 2009. Plaintiff accepted. Plaintiff loaned defendant significant sums to pay outstanding bills. Plaintiff paid for improvements and renovations to house. Defendant withdrew funds from plaintiff's account without permission. Plaintiff purchased truck and motorcycle, placed in defendant's name for insurance reasons. Plaintiff purchased bike for son, and fridge for insulin. Both disappeared. Defendant evicted plaintiff and son in July 2010 without notice. Plaintiff forced to move to apartment owned by defendant's friend above bar. Plaintiff sold $15,000 motorcycle to defendant's friend for $10,000. Defendant refused to forward plaintiff's Canada Pension Plan and disability payments. Plaintiff and children in deplorable conditions for five weeks. Plaintiff and children incurred significant debt purchasing meals on credit from defendant's friend's bar. Defendant's friends threatened lives of plaintiff and children. Plaintiff sued defendant. No defence filed. Action allowed. Defendant failed to honour any commitment to marriage, apparently relied on. Defendant knowingly engaged in financially exploitative relationship. Defendant unceremoniously removed plaintiff from home when money exhausted. Defendant used guise of loving relationship to take money from trusting but gullible plaintiff. Defendant ordered to pay $15,000 in punitive and aggravated damages. Murray v. Toth (Oct. 17, 2012, Ont. S.C.J., Crane J., File No. 1128809SR) 222 A.C.W.S. (3d) 644. Debtor and Creditor RECEIVERS No documents indicating treatment of amounts as partial payments Under February 2012 share purwww.lawtimesnews.com chase agreement, respondent agreed to purchase shares of corporation from applicant. Price payable in two December 2011 and December 2012 installments of $50,000. Respondent granted applicant security interest in all undertaking, property and assets, including equipment via General Security Agreement. Applicant alleged respondent failed to make December 2011 payment. No payment made in response to applicant's March 2012 demand. Demand included notice of intention to enforce security under s. 244(1) of Bankruptcy and Insolvency Act (Can.). Applicant was only creditor with registered security interest against respondent. Applicant seized equipment owned by respondent March 2012. Respondent objected seizure illegal. Respondent alleged having paid at least $75,000 towards purchase by payments in March 2011 and April 2011 plus cash payments. Applicant sought order appointing receiver and manager over respondent's assets and undertaking. Applicant sought judgment for $100,000 for March 2010 promissory note. Respondent counter-applied for return of equipment and losses. Application allowed. Overwhelming evidence respondent failed to make first installment payment. None of alleged $90,000 in payments from respondent to applicant constituted payments under note. Respondent failed to file business records attesting to treatment of payments. Respondent pointed to no document indicating treatment of amounts as partial payments. None of payments constituted payments on their face. Payments apparently for supply and delivery of materials. No support for alleged cash payments totaling $10,000. Judgment granted for $100,000 due under note. Just and convenient to appoint receiver. Respondent would not cooperate with private appointment of receiver. Respondent's counterapplication dismissed. 1529599 Ontario Ltd. v. Dalcor Inc. (Oct. 10, 2012, Ont. S.C.J. (Comm. List), Brown J., File No. CV-12-9706-00CL) 222 A.C.W.S. (3d) 660. Equity GENERAL Apparent plaintiff partner/investor in enterprises despite lack of business records Plaintiff's action to recover moneys invested as equal partner in two partnerships with defendant. Alleged partnerships related to pizza and cheese steak enterprises. Alternatively, plaintiff alleged defendant misrepresented facts relating to investment, with result defendant unjustly enriched. Defendant denied plaintiff invested moneys in pizza enterprise. Defendant admitted receiving funds from plaintiff towards cheese steak enterprise, but as investor not partner. Action allowed. No doubt that some kinds of business venture between parties. Defendant's evidence not credible. Plaintiff's evidence preferred. Despite lack of business records, apparent plaintiff a partner/investor in both enterprises. Defendant could not have purchased and renovated cheese steak premises without plaintiff's investment. Parties agreed defendant would have control of pizza enterprise without money up front, and would defer payment to plaintiff until able to sell for profit. Defendant took unfair advantage of plaintiff. Defendant unjustly enriched. Plaintiff awarded $12,500 for pizza enterprise, and $54,039 for cheese steak enterprise. Awarded reduced to $50,000 under simplified rules. Taranom v. Karaoglu (Sep. 26, 2012, Ont. S.C.J., Sloan J., File No. 09-4026-SR) 222 A.C.W.S. (3d) 802. Family Law CHILD WELFARE Mother exposed children to significant domestic violence by continued contact with father Society's application for orders that three children were still in need of protection, and children made Crown wards without access for adoption. Children born in September 2000, November 2001 and March 2007. Application under s. 37(2)(g) of Child and Family Services Act (Ont.). Society sought summary judgment. Children apprehended from mother in August 2010. Children placed temporarily with maternal grandparents until apprehended in January 2011. Grandparents breached supervision order. Father incarcerated serving three-year sentence. Summary judgment motion allowed. No genuine issues for trial. Risks requiring August 2010 apprehension remained. Parenting capacity assessment indicated mother's parenting deficiencies serious and longstanding. No capacity to meet children's physical and emotional needs. Mother took no steps to get help with parenting. Mother acknowledged no difficulties with parenting. Children had significant special needs incompatible with mother's chaotic lifestyle. If mother's allegations true, children not protected from stalkers. If mother's allegations untrue, children made unnecessarily fearful by mother's delusions. Mother unwilling to obtain treatment for mental health problems. Mother unwilling to admit significant substance abuse program. Mother misled court about continued use of drugs. Mother exposed children to significant domestic violence by continued contact with father. Mother failed to follow through with domestic violence counselling for self or children. Mother had no support. Children's Aid Society of Halton (Region) v. K. (D.) (Oct. 3, 2012, Ont. C.J., Zisman J., File No. C360/10) 222 A.C.W.S. (3d) 671. CUSTODY Necessary for father to be primary parent so children could grow and develop in positive environment Parties had two children. Each parent sought sole custody of children with other parent having

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