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PAGE 14 grant power to award costs to tribunal. Tribunal had no au- thority to make award of costs under Act. Canada (Attorney General) v. Mowat (Oct. 26, 2009, F.C.A., Letourneau, Sex- ton and Layden-Stevenson JJ.A., File No. A-89-08) De- cision at 164 A.C.W.S. (3d) 660 was reversed. Order No. 009/307/139 (42 pp.). SUPREME COURT OF CANADA Bankruptcy And Insolvency PRIORITIES Parliament's legislative authority over bankruptcy prevents provincial legislatures from modifying order of priority established in Bankruptcy and Insolvency Act (Can.) even though Quebec legislation does not contain similar provision Federal goods and services tax ("GST") and Quebec Sales Tax ("QST") collected, and credits apply, at each step of manufacturing and marketing chains. In principle, suppliers act as mandataries of Crown in collecting and remitting these taxes. A number of sup- pliers went bankrupt. At time of bankruptcy, GST and QST amounts collectible or had been collected but not remitted. Ca- nadian and Quebec tax author- ities argued they were entitled to tax amounts as owners. They claimed trustees in bankruptcy collected taxes on their behalf, as mandataries, and amounts not part of bankrupts' patri- mony. Quebec Superior Court addressed disputes between tax authorities and trustees in three separate cases. Judges in each case held that Crown owned tax amounts and trustees col- lected amounts as mandataries of tax authorities. Tax authori- ties not considered ordinary creditors and, in essence, GST and QST amounts not part of bankrupts' patrimony. Quebec Court of Appeal set aside Supe- rior Court's judgments, finding that as result of 1992 amend- ments to Bankruptcy and Insol- vency Act (Can.) ("BIA"), tax authorities must be treated as ordinary creditors, they do not own GST and QST amounts, and any deemed trust in favour of tax authorities ended at time of bankruptcy. Tax amounts part of bankrupts' patrimony but remained subject to any validly granted security inter- ests. Appeal to Supreme Court of Canada dismissed. When supplier goes bankrupt, tax authorities do not own GST and QST amounts that have been collected but not remit- ted or are collectible at time of bankruptcy but rather have unsecured claim against sup- plier. Consideration of overall context of system for collec- tion and remittance of tax amounts and provisions of BIA required to properly character- ize legal relationship between tax authorities and suppliers. Crown's mandatary, whether it be supplier or trustee, required to remit not amounts collect- ed but rather balance result- ing from offsetting claims of Crown and supplier. As result of 1992 amendments to BIA, deemed trusts over GST and QST amounts terminated at time of bankruptcy. Pursuant to concordance amendment to Excise Tax Act (Can.), deemed trusts intended to secure GST claims ineffective in bank- ruptcy situations. Parliament's legislative authority over bank- ruptcy prevents provincial leg- islatures from modifying order of priority established in BIA even though Quebec legisla- tion does not contain similar provision. 9083-4185 Quebec inc. (Syndic de) (Re); Consortium Promecan inc. (Syndic de) (Re); Banque Nationale du Canada v. Que- bec (Ministere du Revenu) (Oct. 30, 2009, S.C.C., McLach- lin C.J.C., Binnie, LeBel, Fish, Abella, Rothstein and Cromwell JJ., File No. 32486; 32489; 32492) Decision at 174 A.C.W.S. (3d) 894 was affirmed. Consolidated Case. Order No. 009/306/099 (30 pp.). Crown CONTRACTS Corporation was not Canadian supplier because it did not have place of business in Canada Northrop Overseas, a Dela- ware corporation owned by another Delaware corpora- tion, submitted bid to Public Works in response to request for proposals for procurement of military goods. When it was not awarded the contract, it filed complaint with Cana- dian International Trade Tri- bunal ("CITT"), alleging that Public Works failed to evalu- ate bids properly, violating ar- ticle 506(6) of Agreement on Internal Trade ("AIT") which requires procurements covered by AIT to clearly identify crite- ria used to evaluate bids. Pub- lic Works unsuccessfully chal- lenged Northrop's standing on grounds it was not "Canadian supplier". Federal Court of Appeal held that CITT's ju- risdiction under AIT limited to complaints brought by Ca- nadian suppliers and quashed CITT's ruling. Northrop's appeal to Supreme Court of Canada dismissed. AIT is in- ter-governmental agreement entered into by executive of federal, provincial and terri- torial governments. Chapter Five of AIT, which relates to procurement, is incorporated into CITT's statutory scheme. Section 30.11(1) of Canadian International Trade Tribunal Act deals with standing before CITT for procurement com- plaints. It provides that poten- tial supplier may file complaint concerning any aspect of pro- curement process that relates to designated contract. Purpose of Chapter Five is, as set out in article 501, to establish frame- work to ensure equal access to procurement for all Canadian suppliers. Canadian supplier CASELAW defined in article 518 as sup- plier having place of business in Canada. Considered along with Preamble and articles 100 and 101 of AIT, clear that AIT pertains to domestic trade within Canada. Northrop not Canadian supplier because it does not have place of business in Canada. It is not, therefore, entitled to invoke provisions of AIT in order to have standing before CITT. Canada (Attorney General) v. Northrop Grumman Overseas Services Corp. (Nov. 5, 2009, S.C.C., McLachlin C.J.C., Binnie, LeBel, Deschamps, Fish, Abella, Charron, Roth- stein and Cromwell JJ., File No. 32752) Appeal from 166 A.C.W.S. (3d) 611, 293 D.L.R. (4th) 335 was affirmed. Order No. 009/309/078 (33 pp.). FEDERAL COURT Constitutional Law CHARTER OF RIGHTS Section 24(1) of Charter was not engaged Minister of Public Safety filed Security Intelligence Report ("SIR") at closed hearings re- lating to issuance of security certificate concerning H.. SIR supported by reference mate- rial including source matrix relating to human sources used in SIR. Source matrix, de- signed to provide frank view of human source to assist court in making credibility assessments, should include source's motiva- tion, evaluation, payment and background. It was provided to Special Advocates for use in challenging Ministers' case against H.. Section in source matrix based on information from Canadian Security In- telligence Service ("CSIS") contained description of poly- graph examination and results thereof. CSIS subsequently be- came aware that important in- formation regarding polygraph results not included in source matrix. CSIS witnesses given opportunity but failed to dis- close polygraph information. On being made aware of fail- ure to disclose polygraph infor- mation, this court issued an or- der granting special advocates' access to file of human source who was subject to polygraph. Court then held closed hearing in which special advocates and counsel for Attorney General present to discuss manner in which court should proceed. Three CSIS witnesses given opportunity to explain their testimony and failure to pro- vide important information to court. Evidence established institutional failure of CSIS. Handful of CSIS employees asked to make important deci- sions for purposes of this pro- ceeding, including deciding on content of human source ma- trix, without proper advice or support. Lack of support and institutional concern over re- leasing human source informa- tion, even to legal counsel and persons asked to testify in sup- www.lawtimesnews.com port of certificate proceedings, led, in part, to non-disclosure of information going to reliability of human source relied on by CSIS to support case against H.. When human source infor- mation used to support serious allegations against individual, court and special advocates must be able to effectively test credibility and reliability of information. As remedy pur- suant to s. 24(1) of Canadian Charter of Rights and Free- doms, special advocates sought exclusion of all information provided by human source who was subject to polygraph. Application dismissed. Sec- tion 24(1) of Charter not en- gaged. Polygraph information was disclosed to court prior to commencement of H.'s public evidence on reasonableness of certificate and prior to special advocates' cross-examination of any witnesses in relation to reasonableness in closed pro- ceedings. Nevertheless failure of CSIS and witnesses to act in accordance with obligation of utmost good faith, and espe- cially where CSIS invoked co- vert intelligence human source privilege, undermined integ- rity of court's process. Infor- mation filed in support of cer- tificate by Ministers has been "filtered" and undertakings made to court have not been fulfilled. Given exceptional cir- cumstances, production of hu- man source file to court and to special advocates necessary to repair damage done to admin- istration of justice, to re-estab- lish necessary climate of trust and confidence and to ensure no further concern in relation to special advocates' ability to fully test evidence. Harkat (Re) (Oct. 15, 2009, F.C., Noel J., File No. DES-5- 08) Order No. 009/300/012 (37 pp.). Human Rights Legislation DISCRIMINATION Tribunal's determination that employer failed to accommodate employee to point of undue hard- ship was reasonable Application by employer for ju- dicial review of decision of Ca- nadian Human Rights Tribunal awarding employee $15,035 for discrimination on basis of disability. Employer was bus company that primarily pro- vided charter services. Em- ployee had worked as full-time bus driver for only five months when she took sick leave. Em- ployee returned to work about five months later but could only work three days per week. Employee improved to point where she could work five days per week but not night shift. Employer refused to treat em- ployee as full-time driver unless she could work full-time hours without restrictions. Employee successfully complained to tri- bunal. Application dismissed. Standard of review was cor- rectness in relation to tribunal's legal test for accommodation and reasonableness in relation to applying legal test to facts. Tribunal correctly applied legal January 11, 2010 • Law Times principles of Supreme Court of Canada. Tribunal's determina- tion that some degree of hard- ship was acceptable as long as it was not undue was entirely consistent with Supreme Court of Canada authorities. Tribu- nal's determination that em- ployer failed to accommodate employee to point of undue hardship was reasonable. Em- ployer never tried to justify its employee availability policy as being necessary for continued business operation. Employer's position did not favour accom- modation. Employee provided evidence indicating employer could have easily accommodat- ed her with little or no impact on employer's business. AZ Bus Tours Inc. v. Tanzos (Nov. 5, 2009, F.C., Mainville J., File No. T-1634-07) Order No. 009/320/136 (27 pp.). Intellectual Property Industrial And PATENTS Disclaimer was invalid and patent as disclaimed invalid in any event Application by pharmaceutical company for order prohibiting Minister of Health from issu- ing notice of compliance to competitor until expiration of related patent. Pharmaceuti- cal company held patent and notice of compliance in con- nection with cancer drug Taxo- tere whose active ingredient was docetaxel. Patent covered formulation consisting of do- cetaxel and two other ingre- dients that rendered docetaxel soluble enough to be used as drug. Competitor wished to market more effective variant of Taxotere that had reduced amount of one ingredient plus additional ingredient. Com- petitor applied for notice of compliance and served notice of allegation alleging patent was invalid. Pharmaceutical company filed disclaimer to narrow its claims. Competitor initially proceeded on basis that disclaimer was valid but subse- quently challenged its validity. Application dismissed. Dis- claimer was invalid and patent as disclaimed would have been invalid in any event. Claims in patent were to be considered as of date of hearing rather than date of notice of allegation. Prior authorities to contrary had not considered Supreme Court of Canada authority in- dicating hearing date was rel- evant date for determining whether notice of compliance could issue. Different context did not undermine principle that hearing date was relevant date for assessing allegations in notice of allegation. Pharma- ceutical company was entitled to file disclaimer prior to hear- ing provided that conditions for disclaimer were satisfied. Competitor was not estopped from challenging validity of disclaimer. Pharmaceutical company had not relied on competitor's initial assumption that disclaimer was valid. Phar- maceutical company also failed to establish any detriment aris- ing from purported reliance. Onus was on pharmaceutical

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