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PAGE 18 Chinese style Ming wood fur- niture from China for resale in North America. Appellant rent- ed booths at flea market and at antique market. Appellant's re- ported sales for four years were $31,104. Appellant did not re- order any furniture. Appellant terminated business. Minister disallowed appellant's claim for expenses on basis appellant was not carrying on business. Appeals were allowed. There was com- mercial character to appellant's preparation and planning for sale of furniture. Fact customers and sales were less than modest did not mean there was no busi- ness. Appellant was allowed to deduct expenses incurred from business for 1999, 2000 and first two months of 2001. Amounts of expenses claimed in each year were reduced. Appeals for 2002 and 2003 were dismissed. Ngai v. Canada (July 21, 2009, T.C.C., Rip C.J., File No. 2007-3220(IT)G) Order No. 009/211/092 (18 pp.). Appellant's activities not capable of generating income Appellant was retired chartered accountant. Appellant developed software programs that appel- lant intended to sell. Appellant had no scientific background. Appellant claimed business was research and development. Ap- pellant was refused patent from United States. Appellant intend- ed to earn money by selling or licensing patent. Minister de- nied business loss and scientific research and experimental de- velopment tax credit. Minister did not believe appellant was carrying on business. Appeal was dismissed. Appellant's activi- ties did not have ingredients of commerciality to make it busi- ness. No business was carried on by appellant in 2005. Appellant was taking steps to start business by seeking financing and patent. Appellant's activities were not capable of generating income. Payette v. Canada (July 17, 2009, T.C.C., Rip C.J., File No. 2007-3534(IT)G) Order No. 009/211/091 (10 pp.). ONTARIO CIVIL CASES Administrative Law BIAS College established reasonable apprehension of bias Appeal by college from deci- sion by tribunal made pursuant to Private Career Colleges Act (Ont.), upholding proposal of superintendent to revoke col- lege's registration. Tribunal found that there was overwhelming evidence to support superinten- dent's claims that college owed refunds to students totalling over $500,000, that college employed unqualified instructor and that college failed to pay rent and was locked-out by landlord resulting in disruption to student pro- grams. Appeal allowed. Decision was set aside, and matter was sent to tribunal for re-hearing. College established reasonable apprehension of bias. Tribunal member intervened frequently during college's examination of witnesses and raised unprompted questions about college's associa- tion with terrorist organization. Canadian College of Business and Computers Inc. v. Ontario (Private Career Colleges Act, Su- perintendent) (July 7, 2009, Ont. S.C.J. (Div. Ct.), Jen- nings, Pardu and Karakatsanis JJ., File No. 513/07) Order No. 009/203/250 (10 pp.). Air Law JURISDICTION Necessary to ensure that decisions pertaining to Montreal Convention or Warsaw Convention consistent and reliable Motion by plaintiffs for leave to re-open defendants' mo- tion. Defendants' motion to stay or dismiss plaintiffs' action had been dismissed. Plaintiffs sought to re-open motion to de- termine whether the Montreal Convention applied to their action, by virtue of EC Regula- tion 889/2002. Motion allowed. Plaintiffs could have put forth argument about Montreal Con- vention during original hearing had they exercised due diligence. However, this constituted excep- tional circumstance requiring court to exercise discretion and re-open motion as it was neces- sary to ensure that decisions per- taining to the Montreal Conven- tion or the Warsaw Convention were consistent and reliable. De- fendants would suffer no preju- dice as the re-opening could lead to the dismissal of plaintiffs' ac- tion. Plaintiffs ordered to pay $19,542 costs plus $433 dis- bursements to defendants since plaintiffs' inadvertence necessi- tated this motion. Strugarova v. Air France (June 26, 2009, Ont. S.C.J., Roberts J., File No. 07-CV-336943PD2) Order No. (5 pp.). 009/216/005 Arbitration JURISDICTION Arbitrator erred in finding himself functus officio Appeal by the commercial and townhouse condominium cor- porations from the arbitrator's decision that he was functus of- ficio with respect to costs on a previous appeal. Parties had been in ongoing arbitration because respondent apartment condo- minium corporation alleged it was being treated unfairly un- der parties' reciprocal agreement that allowed parties to share certain facilities. Appellants had been successful in appealing to court to have portions of respon- dent's statement of claim struck and in overturning arbitrator's finding he had jurisdiction to rewrite Schedule A. Judge then heard submissions on costs in which all parties agreed to have matter of costs remitted to arbi- trator. Judge did not specifically rule that arbitrator rule on costs, but declined to make order her- CASELAW self given parties' agreement. Re- spondent then withdrew consent to have arbitrator rule on costs so arbitrator declared himself functus officio. Appeal allowed. Parties' unequivocal agreement to have arbitrator rule on costs was binding and became part of arbitration agreement, so re- spondent could not withdraw consent. Arbitrator erred in find- ing himself functus officio. York Region Condominium Corp. No. 889 v. York Region Condo- minium Corp. No. 878 (July 28, 2009, Ont. S.C.J., Mesbur J., File No. 09-CV-378450; 09-CV-379113) Order No. 009/210/126 (7 pp.). PROCEDURE Application judge erred in holding that commencement of arbitration was valid Arbitration clause in agreement entered into in 1999 between parties stipulated that arbitration would be conducted under Ar- bitration Act, 1991 (Ont.), and "then-current rules" of Institute. In 2005, dispute arose between parties. Respondents delivered to appellant draft notice demand- ing arbitration. On December 14, 2005, respondents delivered final notice demanding arbitra- tion. No notice to arbitrate was, nor has ever been, filed with In- stitute. Last sentence of arbitra- tion clause specified that failure to file notice of arbitration in time would constitute irrevoca- ble waiver of claim. Application judge erred in holding that com- mencement of arbitration was valid. Judgment was final order. Leave to appeal from it was not necessary. Decision must be set aside whether standard of review was properly one of correctness, or palpable and overriding er- ror. Errors in application judge's reasoning manifested themselves particularly in two areas: (1) in his failure to give meaning and effect to important term of arbi- tration clause, namely require- ment in conduct of arbitration provision that arbitration was to be conducted under then- current rules of Institute; and (2) in his interpretation of phrase " to file" in waiver provision as "to deliver" or "to serve" notice upon appellant, which could not be sustained. Order of applica- tion judge set aside. Arbitration directed to be commenced by fil- ing notice of request to arbitrate with institute. Plan Group v. Bell Canada (July 7, 2009, Ont. C.A., Goudge, Gillese and Blair JJ.A., File No. C48892) Appeal from 167 A.C.W.S. (3d) 855 al- lowed. Order No. 009/189/101 (86 pp.). Assessment BUSINESS ASSESSMENT Board erred in interpretation of definition of "current value" In assessing property tax for bank towers in downtown To- ronto, Assessment Review Board erred in law in construing defi- nition of "current value" in s. 1 of Assessment Act (Ont.), and in particular, phrase "fees simple, www.lawtimesnews.com if unencumbered". "Fee simple, if unencumbered" describes valuation standard, and does not limit nature of asset to be valued, which is whole of land. In context of income-producing property, "fee simple, if unen- cumbered" means value calcu- lated without reference to leases at other than market value, long- standing principle governing as- sessment of income-producing property. Matter must be re- turned to board to differently constituted panel. BCE Place Ltd. v. Municipal Property Assessment Corp., Re- gion No. 9 (Aug. 11, 2009, Ont. S.C.J. (Div. Ct.), Car- nwath, Jennings and Pardu JJ., File No. 07-DV-001290; 122/08; 126/08;) Appeal from 170 A.C.W.S. (3d) 691 al- lowed. Order No. 009/224/051 (23 pp.). Bankruptcy And Insolvency ADMINISTRATION OF ESTATES Creditors barred from re-litigating issue Appellant creditors of E.N. were arguing among themselves over amount owing to one of them, O.E.. Appellant creditors sought order under s. 135(5) of Bankruptcy and Insolvency Act (Can.), entitling them to chal- lenge and determine validity of proof of claim filed by O.E.. That proof of claim was founded upon judgment rendered in Sin- gapore prior to E.N.'s assign- ment into bankruptcy. Applica- tion judge correctly dismissed creditors' motion on res judi- cata and issue estoppel grounds, holding that very issue they wished to have determined had already been decided in proceed- ings before courts in Singapore. Mitigation/set-off issue was both fully argued and determined in Singapore proceedings. E.N.'s creditors were barred from re- litigating that very issue in their efforts under s. 135(5) to accom- plish what E.N. failed to do in Singapore courts and Ontario courts. EnerNorth Industries Inc. (Re) (July 3, 2009, Ont. C.A., Sim- mons, Blair and Juriansz JJ.A., File No. C49062; C49072) Appeal from 170 A.C.W.S. (3d) 455 dismissed. Order No. 009/188/048 (28 pp.). Civil Procedure CLASS ACTIONS Settlement was reasonable and fair Motion by plaintiff in proposed class action under Class Pro- ceedings Act, 1992 (Ont.), for an order certifying, for settle- ment purposes, action as class proceeding and order approv- ing partial settlement. Proposed class action brought on behalf of persons who invested in seg- regated funds offered in invest- ment options under contracts of insurance alleging breach of terms of insurance contracts by deduction of more management fees and expenses than permitted September 28, 2009 • Law timeS by terms of contract. Settlement agreement without prejudice to plaintiff's right to continue ac- tion in respect of replication claim. Settlement agreement provided for payment, without admission of liability, of compen- sation to any policyholders who purchased insurance products if they were charged management fees, investment advice fees and/ or operating expenses in excess of amounts permitted. Objec- tive of restitution calculation to put each policyholder in posi- tion enjoyed under contract had overcharges not occurred subject to assumptions, adjustments and compromises. Restitution calcu- lation done on individual policy- holder basis and would use actual transactions and historic returns of segregated funds in which policy invested. Compensation would be paid without regard to any potential limitation periods. Motion granted. For settlement purposes, criterion for certifica- tion had been satisfied. Settle- ment was reasonable and fair. Highly unlikely class members would have achieved better out- come had claim about manage- ment fee overcharge been pressed to trial. Trial may not have been beneficial for some class members assuming some bite to limitation period defences. Some risk for all class members about how court might decide issue of signifi- cance of summary information folder to defendant's contractual responsibilities. Settlement that approaches full payment of harm caused plus interest and without any deduction for expense or risk of litigation reasonable and fair. Fantl v. Transamerica Life Canada (Aug. 10, 2009, Ont. S.C.J., Per- ell J., File No. 06-CV-306061- CP) Order No. 009/229/062 (14 pp.). COSTS Plaintiff entitled to additional costs from deceptive defendant Application by plaintiffs for costs of $214,704 on partial indem- nity basis from all defendants and $96,851 on substantial in- demnity basis from defendant found to have deceived one of the plaintiffs. All defendants had been found to have oppressed the plaintiffs. Application al- lowed in part. Defendant found to have deceived one plaintiff did not have to lie, despite existence of non-disclosure agreement and he continued to make denials during cross-examination. That defendant was obligated to pay costs on substantial indemnity basis, but only to the plaintiff he deceived. All three plaintiffs were entitled to partial indemnity costs from all defendants. Plain- tiffs' bill of costs included some excessive hourly rates, duplica- tion and excessive time charged for preparation. Plaintiffs award- ed $150,000 from all defendants. Plaintiff who had been deceived entitled to one-third the differ- ence between partial indemnity award and substantial indemnity award from deceptive defendant, for an additional $25,000. Fiorillo v. Krispy Kreme Dough- nuts, Inc. (July 27, 2009, Ont.