Law Times

Page 14 February 9, 2015 • Law Times www.lawtimesnews.com dismissed motion on ground that Nation, in holding election, acted as federal board, commis- sion or other tribunal and it had jurisdiction to entertain judicial review application. Appellants appealed. Appeal allowed. Fed- eral Court erred in law in ar- ticulation and application of test applied to answer jurisdictional issue. Proper questions to be an- swered were what jurisdiction or power was being exercised and what was source of jurisdiction or power. Nation was conduct- ing election of board of direc- tors. Source of Nation's power was bylaw of Nation. Nation's powers in respect of election did not originate from federal Act or prerogative. In conducting elec- tion, Nation was not exercising powers conferred by or under Act of Parliament or by or under order made pursuant to Crown prerogative and it was not acting as federal board. Federal Court lacked jurisdiction to conduct application for judicial review. Application for judicial review was dismissed. Pokue v. Innu Nation (Nov. 21, 2014, F.C.A., Eleanor R. Daw- son J.A., Wyman W. Webb J.A., and A.F. Scott J.A., File No. A-202-14) Decision at 239 A.C.W.S. (3d) 272 was reversed. 246 A.C.W.S. (3d) 493. TAX COURT OF CANADA Taxation INCOME TAX Taxpayers purchased from accountants false donation receipts use to claim tax credits Taxpayers were husband and wife who made charitable dona- tions. CRA believed that receipts for donations were forged by tax preparers. Minister of National Revenue assessed taxpayers un- der Income Tax Act for 2005- 2009 taxation years. Taxpayers appealed. Appeal dismissed. Taxpayers were not in posi- tion to make alleged donations given financial circumstances. Taxpayers' explanations for do- nations were not plausible. Hus- band participated in scheme for five years and matter could not be said to be one of momentary lapse of judgment. Wife could not be absolved of responsibility even if she relied on judgment of others. Taxpayers purchased from their accountants false do- nation receipts that were used to claim tax credits to which they were not entitled. Taxpayers were not instigators of schemes but could not escape tax liabil- ity. Assessment for years outside of regular limitation period was justified as taxpayers knowingly made false representations in re- spect of donations disallowed by Minister. Vekkal v. R. (Nov. 18, 2014, T.C.C. [Informal Procedure], Robert J. Hogan J., File No. 2013- 882(IT)I, 2013-883(IT)I) 246 A.C.W.S. (3d) 723. Taxpayer correct in considering he realized capital gain Taxpayer received payment for surrender of options pursu- ant to share appreciation right ("SAR"). Taxpayer reported pay- ment as capital gain. Minister re-assessed on basis payment ei- ther income from employment or employee benefit, shareholder benefit, or income from venture in nature of trade. Taxpayer ap- pealed. Appeal allowed. Sec- tion 7 of Income Tax Act (Can.), meant to provide complete code for taxing of benefits arising un- der or because of stock option agreement. Section 7(3) meant to exclude benefits arising from non-arm's length exercise and disposition of options. Surren- der payment not properly char- acterized as "salary, wages and other remuneration". SAR not separate property from options. Taxpayer did not treat options in same way as trader would. Nothing in record to suggest that taxpayer acquired options with intent of disposing of them or underlying shares for cash. Taxpayer held options until shortly before they expired. Pay- ment not shareholder benefit. Taxpayer gave up something of equal value. Surrender payment ref lected monetary value of op- tions. Taxpayer correct in con- sidering that he realized capital gain corresponding to amount of Surrender payment received as proceeds of disposition for his options. Rogers Estate v. R. (Nov. 25, 2014, T.C.C. [General Procedure], Robert J. Hogan J., File No. 2012-1845(IT)G) 246 A.C.W.S. (3d) 724. ONTARIO CIVIL DECISIONS Appeal FINAL OR INTERLOCUTORY ORDER Order against non-party lawyers could not be severed from judgment On January 19, 2014, court dis- missed respondent's motion to set aside judgment against her for $1.2 million. Court awarded costs on substantial indemnity basis against respondent, but dismissed appellant's motion for costs payable by lawyers for respondent on personal basis resulting from allegations that lawyers knew affidavit respon- dent had put before court was false. Appellant moved before Divisional Court for leave to appeal costs order to Divisional Court. Respondent claimed that Divisional Court did not have jurisdiction to hear appel- lant's motion for leave to appeal to Divisional Court. Motion for leave to appeal dismissed. Order respecting costs was final and not interlocutory. In result, leave to appeal must be obtained from Court of Appeal and Divisional Court had no jurisdiction to en- tertain appeal. It did not matter that order sought was against non-party lawyers. Order of costs against non-party lawyers was made as part of judgment and could not be severed or seg- regated from that judgment. Grewal v. Sidhu (Oct. 27, 2014, Ont. S.C.J., MacKenzie J., File No. DC-14-10-ML) 246 A.C.W.S. (3d) 586. Civil Procedure PLEADINGS Not open to appeal judge to adjudicate novel question of law Action arose out of single ve- hicle accident. Plaintiff appealed master's decision denying leave to amend statement of claim to add insurer as named party de- fendant in main action. Appeal was dismissed. Without prior notice appeal judge determined key contractual interpretation issue, which was conclusive of coverage dispute. Plaintiff ap- pealed. Appeal allowed. Ap- peal judge erred in proceeding in that manner. Proper focus of inquiry was whether requested amendment should be allowed. It was open to appeal judge to determine whether plaintiff 's proposed coverage claim against insurer was tenable at law but it was not open to him to finally adjudicate novel question of law under paradigm that was not disclosed to parties and where underlying relevant facts had not been determined. Claim sought to be advanced was nov- el. At early stage of proceedings where material facts remained contested, it could not be said that proposed claim was could not succeed at trial. Insurer would not suffer prejudice as result of proposed amendment that could not be compensated in costs. Amendment should be allowed. Vogler v. Lemiux (Nov. 13, 2014, Ont. C.A., E.A. Cronk J.A., E.E. Gillese J.A., and Paul Rouleau J.A., File No. CA C58646) Deci- sion at 230 A.C.W.S. (3d) 88 was reversed. 246 A.C.W.S. (3d) 551. Conflict of Laws JURISDICTION Food poisoning incident in China not related to business activities in Ontario Plaintiffs lived in Toronto. Ac- tion arose out of alleged incident of food poisoning when plain- tiffs ate at restaurant in hotel in China. Primary medical treat- ment was provided in China. Defendant was international hotel company incorporated in Maryland and with corporate headquarters in Connecticut. Defendant owned and operated hotels in Ontario. Defendant brought motion to dismiss ac- tion for want of jurisdiction or on basis of forum non conve- niens. Motion granted. Action dismissed. There was no juris- diction in Ontario. Defendant rebutted presumption of juris- diction arising from its carrying on business in Ontario. Ontario did not have jurisdiction sim- pliciter over plaintiffs' claims. Alleged food poisoning incident in China was not related to de- fendant's business activities in Ontario. Court refused to as- sume jurisdiction by reason of necessity. Plaintiff would not be left without place to sue if they were required to pursue claims in China. Convenient forum was China. Plaintiffs did not establish any juridical advan- tage they had in Ontario should weigh in balance on issue of fo- rum non conveniens. Kornhaber v. Starwood Hotels and Restaurants Worldwide, Inc. (Oct. 23, 2014, Ont. S.C.J., D.L. Corbett J., File No. CV-13- 484861) 246 A.C.W.S. (3d) 567. Contracts FRANCHISE AGREEMENTS No unjust enrichment as defendant`s mark-ups not unreasonable Defendant franchisor sold pet food, supplies, and related ser- vices, and did so as both whole- saler and retailer. Its stores of- fered national and premium brand products, as well as pri- vate label products. There were currently 281 franchised stores in Canada. Plaintiff was former franchisee who commenced class action against defendant. Plaintiff claimed that defen- dant had said it had substantial purchasing power. It said defen- dant was contractually obliged to share volume-related pricing benefits with franchisees but did not do so. Defendant denied that it had any contractual obligation to share volume-related rebates, but said that in any event, all vol- ume rebates were in fact shared with franchisees by way of re- duced prices. Seven common issues were certified in class ac- tion involving contractual and documentary interpretation. Defendant brought motion for summary judgment on com- mon issues. Motion granted in part. There were no undis- closed or "phantom" rebates. All volume rebates were passed on and shared with franchisees. Defendant's mark-ups were not unreasonable. As defendant's mark-ups were not unreason- able, there could be no finding of unjust enrichment. Common issues related to whether defen- dant had ongoing obligation under s. 3 of Arthur Wishart Act (Franchise Disclosure), 2000 (Ont.), to provide franchisees with information about volume rebates was deferred so that plaintiff could bring motion amend to add common issue re- lated to purchasing power. 1250264 Ontario Inc. v. Pet Valu Canada (Oct. 31, 2014, Ont. S.C.J., Belobaba J., File No. CV- 09-392962-CP) 246 A.C.W.S. (3d) 575. MISREPRESENTATION Respondents failed to exercise due diligence as contemplated by purchase and sale agreement Parties signed agreement of pur- chase and sale of real property. Deposit of $85,000 was paid to real estate agency that interme- diated transaction. Sale was nev- er completed because proposed use of property was not legal. Applicant brought applica- tion to declare that respondent purchasers were in breach of contract for fraudulent misrep- resentation and to release and pay deposit made. Respondents brought identical application to declare applicant in breach of contract and to release de- posit. Respondents' application dismissed. Despite having used property for transportation and storage purposes, there was no reasonable basis for respondents to conclude that use was legal. Applicant made no fraudulent misrepresentations since he was informed that area was required for business purposes. Respon- dents failed to exercise due dili- gence as contemplated by pur- chase and sale agreement. Brar v. Smith (Aug. 29, 2014, Ont. S.C.J., Barnes J., File No. 6551/13) 246 A.C.W.S. (3d) 577. Employment WRONGFUL DISMISSAL No authority for contention that plaintiff should have seen writing on wall Plaintiff worked for defendant for 33 years. Plaintiff 's employ- ment was terminated when she was 66 years old. Plaintiff was not ready for retirement and intended to work for two more years. Defendant's office was closed at same time plaintiff was terminated. Plaintiff received no compensation on termina- tion. Plaintiff sought damages for wrongful dismissal. Action allowed. There was no author- ity for contention that plaintiff should have seen writing on wall and notice should be reduced. Financial performance of busi- ness did not reduce notice pe- riod. Employment of this length should not be capped. Plaintiff intended to work another two years but there was absence of evidence of attempt to find other employment. Defendant failed to pay even notice required by Employment Standards Act (Ont.). Plaintiff was awarded $54,500 based on 18 months' notice. Zeats v. Sullivan (Nov. 19, 2014, Ont. S.C.J., Eberhard J., File No. CV-11-113-00SR) 246 A.C.W.S. (3d) 600. Family Law CHILD WELFARE Neither parent put forward meritorious plan with chance of positive change Society sought order making three children wards of Crown and committing them to society care. Children were first taken from parents in early March 2010. Society concerns included inadequate food and housing, drug use and trafficking, father's recent incarceration, eviction, substance abuse on both parent's parts and history of resistance to counselling or treatment. Court issued two supervision orders contingent on father staying away from home. By end of 2012, mother had stopped meeting with family support worker and children had lost their daycare spots. Residence maintained by mother for children was often in desperate state. Emotionally, CASELAW

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