Law Times

PAGE 14 CaseLawLaw FEDERAL COURT OF APPEAL Communications Law BROADCASTING Person whose sole involvement is to provide mode of transmission is not "broadcasting" Following question referred by Canadian Radio-television and Telecommunications Com- mission ("CRTC"): Do re- tail Internet service providers ("ISPs") carry on, in whole or in part, "broadcasting under- takings" subject to the Broad- casting Act (Can.), when, in their role as ISPs, they provide access through the Internet to "broadcasting" requested by end-users?. Question as framed based on assumption that "broadcasting" takes place on Internet. Answer turns on whether ISPs, when provid- ing access to "broadcasting", are themselves "broadcasting". ISPs provide infrastructure to enable end-user subscribers to access content, applications and services made available by others on Internet. To ac- cess "broadcasting" through Internet, end-user must make use of services of ISP. Content providers also depend on ISPs' services for delivery of content to end-users. ISPs fulfill func- tion using own facilities, facili- ties leased from another ISPs, or combination of both. ISPs do not select or originate pro- gramming or package or ag- gregate programming services. Definition of "broadcasting" when read on its own can in- clude person whose sole in- volvement is to provide mode of transmission as no distinc- tion made as to active or pas- sive nature of involvement. This ceases to be case, however, when definition considered contextually. Supreme Court of Canada has held that liabil- ity for copyright infringement cannot be visited upon persons whose only involvement is providing means of telecom- munication of infringing work to public. Distinction between means of communication and communication itself as funda- mental to Broadcasting Act as it is to Copyright Act (Can.). Both are concerned with con- tent being transmitted rather than means of conveying that content. Person whose sole in- volvement is to provide mode of transmission not transmit- ting program and, hence, not "broadcasting". Reference re: Broadcasting Act (Canada) applicability to In- ternet Service Providers (July 7, 2010, F.C.A., Noel, Nadon and Dawson JJ.A., File No. A-303-09) 192 A.C.W.S. (3d) 436 (47 pp.). Taxation GOODS AND SERVICES TAX Not all financial obligations incurred by lawyer while providing legal services incurred as agent of clients Minister of National Revenue assessed respondent law firm in respect of Goods and Ser- vices Tax ("GST"). Assessment related to firm's treatment of certain disbursements, includ- ing money spent in respect of searches, courier costs, office supplies, witness fees, record- ing services, transcript pro- duction, birth/death/marriage certificates, travel expenses and expert reports and testimonies. Minister argued disbursements were consideration for supply of legal services and taxable. Firm argued it incurred dis- bursements as agent for clients. Tax Court held that, except for office expenses, firm incurred disbursements as agent for clients and disbursements not subject to GST. Issue on appeal whether Tax Court Judge erred by concluding firm met onus to establish it acted as agent for clients when it incurred disbursements in question. Ap- peal allowed. Canada Revenue Agency's policy on whether disbursements incurred by firm as agent for clients, while not binding, provides useful guideline. Policy sets out three essential qualities of agency relationship and eight indica- tors of such relationship. It provides that agent must pos- sess authority to affect princi- pal's legal position, including principal's position with third parties. Although trial judge referenced liability under con- tract as being indicator of agency relationship, he failed to address whether firm or cli- ent liable under agreements with third-party suppliers to pay consideration owing under those agreements. No evidence before trial judge on this point. Instead, judge relied upon gen- eral nature of solicitor-client relationship. Although solici- tor-client relationship generally one of agency, not all financial obligations incurred by lawyer while providing legal services incurred as agent of clients. In absence of evidence to support conclusion it was firm's clients who were bound to contracts November 1, 2010 • Law Times COURT DECISIONS CaseLaw is a weekly summary of notable civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts. CaseLaw is a weekly summary of notable unreported civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts. Single or multiple copies of the full text of any case digested in this issue can be obtained by: These cases may be found online in BestCase and other electronic resources from Canada Law Book. To subscribe, please call 1-800-565-6967. i) completing and mailing in the order form in this issue; or ii) calling CaseLaw's photocopy department at (905) 841-6472 in Toronto, (800) 263-3269 in Ontario and Quebec, or (800) 263-2037 in other provinces; or iii) faxing a copy of the completed order form to (905) 841-5085. with third-party suppliers, firm could not meet onus to estab- lish it acted as agent when it incurred disbursements. Goods and services that attracted dis- bursements taxable supplies received by firm which was required to collect and remit GST. Merchant Law Group v. Can- ada (Aug. 5, 2010, F.C.A., Blais C.J., Dawson and Stratas JJ.A., File No. A-443-08) 192 A.C.W.S. (3d) 662 (19 pp.). FEDERAL COURT Citizenship OFFENCES Person charged with indictable offence contemplated by s. 22(1)(b) of act remained person charged with such offence, notwithstanding that Crown might have stayed proceedings This was appeal of citizenship judge's decision denying ap- plicant citizenship. Applicant was citizen of China. In March 2007, applicant submitted ap- plication for Canadian citizen- ship. In May 2008, applicant was charged with number of offences, including possession of heroin, cocaine, cannabis and other controlled substanc- es and possession of proceeds of crime. In May 2009, charges against her were stayed. Appli- cant was denied citizenship on ground that there were out- standing charges against her in respect of indictable offences contemplated by s. 22(1)(b) of Citizenship Act (Can.). Appeal dismissed. Stay of proceedings did not alter fact that applicant remained person charged with indictable offence. It was only after expiry of one year after en- try of stay of proceedings that proceedings were deemed nev- er to have commenced. Prior to that time person whose charges had been stayed remained per- son who was charged within meaning of s. 22(1)(b) of Act. Person who had been charged with one or more indictable offences contemplated by s. 22(1)(b) of Act remained per- son who was charged with such offence, notwithstanding that Crown might have stayed pro- ceedings in respect of charges. Citizenship judge's conclusion was correct. Citizenship judge erred by referring to s. 22(2) but reference was inadvertent, inconsequential and did not af- fect outcome of decision. Citi- zenship judge did not breach principles of natural justice or procedural fairness. www.lawtimesnews.com Zhan v. Canada (Minister of Citizenship and Immigration) (Aug. 18, 2010, F.C., Cramp- ton J., File No. T-1852-09) 192 A.C.W.S. (3d) 374 (27 pp.). Contempt Of Court PROOF OF OFFENCE Motion by Human Rights Commission for order requiring respondent to appear to answer allegations of contempt of court was allowed Motion by Human Rights Commission for order requir- ing respondent to appear to answer allegations of con- tempt of court. Respondent had posted material to various websites which contained racist remarks about Jews, Blacks and other non-white minorities. In February 2007, Canadian Hu- man Rights Tribunal found that respondent had caused to be communicated repeatedly by telecommunication mat- ters that were likely to expose persons to hatred or contempt because they were identifiable on basis of prohibited ground of discrimination within mean- ing of Canadian Human Rights Act. Respondent was ordered to cease and desist discriminatory practice of communication by means described in s. 13 of Act, namely the internet, material of type which was found to vio- late s. 13(1) and to pay penalty of $4,000. Respondent's ap- plication for judicial review of decision was dismissed. Com- plainant filed affidavits in Feb- ruary 2009 and March 2010, to which were attached material found to be hate literature with- in meaning of s. 13(1) of Act. Respondent contended that he had not "communicated" as only evidence against him were documents downloaded by complainant from internet and he had not communicated telephonically with complain- ant or anyone else by posting matters on internet. Motion granted. Prima facie there was no defence. Evidence against respondent comprised copies of postings on internet. Act as originally enacted did not deal explicitly with internet. How- ever, as result of Anti-terrorism Act (Can.), Act was amended to add s. 13(2). Since s. 13(2) is declaratory there was no need to specifically refer to it in order. In any event, tribunal had spe- cifically ordered respondent to cease communication of mate- rial by internet. Warman v. Canada (Human Rights Commission) (June 22, 2010, F.C., Harrington J., File No. T-293-07) 192 A.C.W.S. (3d) 582 (9 pp.). TAX COURT OF CANADA Taxation INCOME TAX Marijuana growing equipment not to be included in appellant's net worth calculations Appellant reported appellant had no income for 2002 and 2003 taxation years. Appel- lant reported appellant had $10,000 in employment in- come for 2004 taxation year. Minister reassessed appellant to include amounts of unre- ported income. Appeals were allowed. Edinburgh House and 69th Avenue House were not beneficially owed by appel- lant and amounts were to be removed from Minister's reply. Court was not convinced ap- pellant paid for furniture and appliances. Amount of cash contained in safety deposit box was received by appel- lant and wife as wedding gifts. Appellant and wife lived with appellant's parents. Calcula- tion of appellant's personal living expenditures was to be reduced by 50%. $18,000 was to be included in net worth calculations of appellant as value of cannabis seized from appellant's residence. Mari- juana growing equipment was not to be included in appel- lant's net worth calculations. Cash of $1,100 on appellant's property and cash of $10,000 at 69th Avenue House were to be removed from schedule of net worth calculations. Mann v. Canada (Aug. 30, 2010, T.C.C., Little J., File No. 2007-4582(IT)G) 192 A.C.W.S. (3d) 677 (13 pp.). ONTARIO CIVIL CASES Arbitration AWARD Arbitration was to be final and binding Respondent was employee of applicant. Parties entered change of control agreement. Change of control resulted in end of stock option plan. Respondent argued failure to institute new long-term incentive plan constituted constructive dismissal as per change of control agreement. Applicant delivered final form of respondent's proposed em- ployment agreement which included new incentive plan. No agreement was finalized

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