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Law Times • November 7, 2011 transferred both legal and ben- eficial interest in property to its shareholders, thereby resulting in supply of property on which GST was required to be collect- ed pursuant to ss. 165 and 221 of Excise Tax Act (Can.). Min- ister imposed gross negligence penalty. Appeal allowed in part. Matter was referred back to Minister for reassessment on basis that s. 285 gross negli- gence penalty be deleted. Tax- payer was liable to collect and remit GST on transfer of prop- erty. Taxpayer failed to establish requisite certainty of intention establishing that property was in trust for taxpayer subsequent to transfer of title. While trans- fer by taxpayer amounted to negligence, action did not con- stitute gross negligence. Share- holders held subjective belief that taxpayer maintained some interest in property given that it continued to pay expenses related to it. Canpar Developments Inc. v. Canada (Aug. 2, 2011, T.C.C., Paris J., File No. 2009- 3264(GST)I) 205 A.C.W.S. (3d) 588 (7 pp.). Taxpayer mistakenly audited using figures for married person when he was in fact single Appeal by taxpayer from reas- sessment by Minister under In- come Tax Act (Can.), for 2003, 2004, and 2006 taxation year. Taxpayer immigrated to Cana- da from Vietnam in 1990 and operated currency business and nail salon. Taxpayer claimed to- tal income of $3,787.57 in 2003 taxation year, $10,400 in 2004 taxation year, and $12,437.84 in 2006 taxation year. Min- ister reassessed taxpayer, and included unreported busi- ness incomes of $264,798.35 and $111,135.58 in 2003 and 2004, imposing penalties for negligence, applying tuition credit to 2003 taxation year instead of 2006 taxation year, as claimed, and finding unpaid GST in amount of $18,417.16 for period of January 1, 2003 to December 31, 2003, and $7,779.35 for January 1, 2004 to December 31, 2004. Ap- peals allowed in part. There was no evidence that taxpayer was carrying on business other than currency business and nail salon. Taxpayer received gifts of money from family which had not been taken into account by Canada Revenue Agency. Taxpayer received $125,000 in 2003 and 2004. Amount al- lotted for personal expenses in 2003 was reduced by $55,000 to reflect double counting of amount spent to purchase property. Mortgage payments were accidentally counted twice in 2004 taxation year, result- ing in reduction in amount al- located to personal expenses of $8,677.64. Minister conceded that taxpayer was mistakenly audited using figures in 2003 for married person when he was in fact single, resulting in reduction of $11,283.01. Phan v. Canada (Aug. 23, 2011, T.C.C., Little J., File No. 2009- 3117(IT)G; 2009-3118(GST) G) 205 A.C.W.S. (3d) 589 (13 pp.). INCOME TAX Innocent good faith not sufficient to avoid strict penalty Appeal by taxpayer from pen- alty assessed by Minister. Tax- payer failed to report employ- ment income of $837 in 2005 tax return and employment insurance benefits of $14,071 for 2008 taxation year. Minis- ter assessed penalty of $1,407. Appeal dismissed. Penalty was properly imposed. Taxpayer failed to establish that he took reasonable measures to prop- erly report income. Income tax return omitted substantial amount of benefits and claimed tax credit for tuition paid. In- nocent good faith was not suf- ficient to avoid strict penalty under s. 163(1). If taxpayer was not aware of proper tax treat- ment of amount received, competent advice should have been sought. In order to avoid strict liability penalty for two- time failure to report income, taxpayer must demonstrate that appropriate measures were taken to correctly report all in- come. Taxpayer had not done so. Sheppard v. Canada (Aug. 26, 2011, T.C.C., Woods J., File No. 2011-519(IT)I) 205 A.C.W.S. (3d) 592 (6 pp.). ONTARIO CIVIL CASES Administrative Law JUDICIAL REVIEW Applicant had to exhaust remedies before Law Society before seeking review by court Hearing Panel made discipline decision and penalty. Applicant appealed decision of Hearing Panel to Appeal Panel. Appli- cant would have right to appeal final decision of Appeal Panel. Application for judicial review was quashed as premature. Ap- plicant had to exhaust remedies before Law Society before seek- ing review by court. There were no exceptional circumstances. Material did not show proceed- ing before Appeal Panel would be fatally flawed. Allowing ap- plication to proceed would fragment proceeding before Law Society. Mundulai v. Law Society of Up- per Canada (Aug. 9, 2011, Ont. S.C.J. (Div. Ct.), Jennings, Fer- rier and Swinton JJ., File No. 330/11) 205 A.C.W.S. (3d) 309 (3 pp.). Arbitration JURISDICTION Policy on discrimination and harassment did not limit or amend terms of collective agreement Plaintiff was contract profes- sor with defendant. Group of colleagues expressed concerns in letter to dean about hiring procedure used in employ- ing plaintiff. Plaintiff claimed plaintiff suffered emotional and financial losses as result of letter. Defendant had collective agree- ment. Defendant argued claim arose during employment and arose under terms of collective CASELAW agreement requiring arbitration of claim and excluded jurisdic- tion of court. Plaintiff acknowl- edged all of claims arose from dispute properly falling under collective agreement if plain- tiff were found to be bound by collective agreement. Appellant was found to be bound by col- lective agreement. Policy on discrimination and harassment did not limit or amend terms of collective agreement which clearly did not permit court to have jurisdiction in plaintiff's type of claim. Defendants' mo- tions were allowed. Court had no jurisdiction to deal with claims. Christie v. Trent University (Aug. 12, 2011, Ont. S.C.J., Tucker J., File No. 10-20390) 205 A.C.W.S. (3d) 318 (8 pp.). Bankruptcy And Insolvency DISCHARGE Financial burden imposed by conditional discharge would serve to impair bankrupt's efforts Bankrupt was granted condi- tional discharge. Discharge was suspended for nine months and bankrupt was required to pay trustee $31,000 at rate of $600 per month. Bankrupt sought order granting bankrupt un- conditional discharge. Bank- rupt made four payments un- der conditional discharge order and was not able to meet obli- gations any further. Bankrupt's mobility was restricted because of physical health. Bankrupt had mental health issues. Bank- rupt underwent surgery twice since initial order. Bankrupt was unable to obtain work. Trustee did not oppose order sought. Bankrupt was mak- ing serious attempt to turn life around. Financial burden im- posed by conditional discharge would serve to impair bank- rupt's efforts. Bankrupt had no reasonable probability to be in position to comply with terms of conditional discharge. Bank- rupt was ordered to be uncon- ditionally discharged. Connor v. Rumanek & Co. (July 26, 2011, Ont. S.C.J. (Comm. List), Newbould J., File No. 32-789349) 205 A.C.W.S. (3d) 323 (5 pp.). Civil Procedure DEFAULT Defendant's reprehensible conduct justified imposition of punitive damages Default judgment was granted against defendant, who did not defend this action and was noted in default. Plaintiff was statutory self-governing body for legal profession in Ontario. Defendant owned and oper- ated court-reporting service. Parties entered into agreement, confirmed by e-mail, which provided that defendant would provide court reporting services to plaintiff on July 6th, 7th, 8th and 9, 2010 with respect to hearing relating to licensee and provide transcripts to plaintiff. Defendant attended at hear- ing and recorded proceedings and was paid $1,056 by plain- tiff for those services in accor- www.lawtimesnews.com dance with invoice rendered by defendant. Defendant advised the plaintiff that hard copy certified transcripts would be provided within four weeks of hearing dates. Despite this ad- vice, defendant failed to pro- vide any of transcripts within these times. As at time of hear- ing of this motion, defendant had delivered only electronic uncertified transcripts for July 6th, 8th and 9th hearing dates and hard copy certified tran- script for July 8th hearing date. Certified hard copy transcripts for July 6th, 7th and 9th and electronic copy for July 7th hearing date still had not been delivered despite passing of entire year. Licensee who was subject of hearing had appealed decision of Hearing Panel to plaintiff's Appeal Tribunal and it was evident that one or both parties to that appeal may be seriously prejudiced if required transcripts were not provided by defendant. Order required defendant to deliver remain- ing outstanding transcripts; granting possession to plain- tiff of tapes or other electronic storage of evidence required to produce remaining outstand- ing transcripts; judgment for damages for breach of contract, fixed at $1,056; and judgment for punitive damages, fixed at $20,000; and judgment for costs, fixed on a substantial in- demnity basis, at $8,300. De- fendant's reprehensible conduct justified imposition of punitive damages. Such award provided appropriate and reasonable punishment to deter defendant and others in her profession from embarrassing, as she had done, administration of justice and causing harm to others who rely on them to perform their duties properly. Law Society of Upper Canada v. Q & A Reporting Services (Aug. 2, 2011, Ont. S.C.J., Matlow J., File No. CV-11-423162) 205 A.C.W.S. (3d) 347 (4 pp.). Contempt Of Court GROUNDS Wife's non-compliance was deliberate and wilful Motion by husband for order finding wife to be in contempt of court. Parties separated in 2007 and divorced in 2009. Wife consented to order to list matrimonial home for sale by specified date. Wife refused to sign listing agreement. Parties entered into another consent order providing that parties would sign back or accept any offer to purchase home at $2.05 million, and either party could purchase home by matching any offer which parties were bound to accept. Wife provided very small portion of disclosure that she was ordered to pro- vide. Costs orders were made against wife, which she did not pay. Motion granted. Wife was ordered to comply with order for disclosure, including by specified date after which time husband may move to have her pleadings struck. Wife's non- compliance was deliberate and willful. Wife's non-compliance was not trivial but involved sig- PAGE 17 nificant matters in litigation. Wife was given one more try to comply with court orders. Nashid v. Michael (Aug. 5, 2011, Ont. S.C.J., Herman J., File No. FS-08-343270) 205 A.C.W.S. (3d) 379 (5 pp.). Defendant breached order by retaining copy of evidence he was obliged to file Motion by plaintiff for order of contempt against defendant. Defendant was employed by plaintiff as manager of informa- tion technology. Defendant's role gave him access to plain- tiff's data, and he took copies of it in various forms. Defendant alleged to have discovered sev- eral legal and financial impro- prieties that plaintiff was engag- ing in that were in violation of statutory authorities and which put public at large at severe risk. Defendant was no longer em- ployed by plaintiff. Defendant was ordered to produce any and all evidence or documents in his possession with respect to busi- ness, computer and electronic records of plaintiff. Defendant retained copies of at least some of evidence or documents that he was obliged to deliver. Mo- tion granted. Defendant was found to be in contempt of court. Order clearly intended to sweep up all of evidence or documents in defendant's pos- session with respect to busi- ness, computer and electronic records of plaintiff. Therefore, order plainly did not anticipate that defendant would retain any of such evidence personally or permit him to do so. Defen- dant breached order by retain- ing copy of some of evidence that he was obliged to file and by disseminating it, thereby in- terfering with business of court. Sweda Farms Ltd. v. Ontario Egg Producers (July 28, 2011, Ont. S.C.J., Lauwers J., File No. CV- 37312/05; CV-08-357570) 205 A.C.W.S. (3d) 380 (19 pp.). Defendant had engaged in repeated unrepentant acts of contempt Motion by plaintiffs for fur- ther order for contempt against defendant. In 2007, plaintiffs obtained default judgment against defendants in amount of $854,924.21. In 2008, de- fendant attended Examination in Aid of Execution where he refused to answer any ques- tions. On re-attendance, de- fendant again refused to answer substantial number of proper questions. Following motion to compel by plaintiffs, defendant provided answers to some ques- tions. Defendant was found to be in contempt of court. Mo- tion judge concluded that of 406 questions defendant was required to answer, only 70 appeared to be responsive or informative. Defendant served 21 days in jail. Defendant still refused to answer questions. Motion granted. Defendant was declared to be in con- tempt of court, sentenced to 42 days' imprisonment, and fined $40,000. It was clear that there had been active defiance on de- fendant's part. Defendant had engaged in repeated unrepen-