Law Times

Law Times • February 13, 2012 Minister assessed taxpayer for taxation years 2003 to 2008, add- ing income of $56,599, $58,700, $58,000, $58,700, $60,300 and $60,300 respectively. Appeals dis- missed. Taxpayer did not disprove assumptions by Minister and did not provide prima facie evidence assessments were not correct. Assessments were timely. Taxpayer filed no information in support in claim of deductions for expenses, and was not taken to have incurred any. Penalties imposed were appro- priate. Taxpayer was aware he had income and that tax was payable. Ostroff v. Canada (Nov. 2, 2011, T.C.C., Favreau J., File No. 2011- 860(IT)I; 2011-955(IT)I; 2011- 1591(IT)I) 208 A.C.W.S. (3d) 623 (10 pp.). Service of notice of objection condition precedent to institution of appeal Motion by Minister to quash tax- payer's appeal. Minister assessed taxpayer in respect of 2006 tax year in May 2007. Minister reas- sessed taxpayer in respect of 2006 tax year in June 2007 and again on July 2, 2010, nullifying June 2007 reassessment. Taxpayer filed notice of appeal to Tax Court. Eight months after filing notice of appeal, taxpayer served notice of objec- tion to reassessment and requested extension of time to serve notice of objection. Motion granted. Appeal was quashed. Service of notice of objection was condition precedent to institution of appeal. Taxpayer's notice of objection was served after notice of appeal was filed and after expiration of time within which notice of objection could be served under s. 165 of Income Tax Act (Can.). Section 169(1) of Act per- mitted taxpayer who had served notice of objection under s. 165 to appeal assessment, but no appeal could be instituted after expiration of 90 days from day notice con- firming assessment or reassessment was mailed to taxpayer. Taxpayer's notice of objection was filed eight months after notice of appeal was filed and approximately one month before date scheduled for hearing. Cole v. Canada (Nov. 3, 2011, T.C.C., Webb J., File No. 2011-535(IT)I) 208 A.C.W.S. (3d) 625 (6 pp.). SUPREME COURT OF CANADA Administrative Law JUDICIAL REVIEW Arbitrators given broad mandate in adapting relevant legal principles to grievances Employer and union parties to col- lective agreement containing exten- sive provisions on casual employ- ees and annual vacations. Grievor, who worked extensively on casual basis, alleged she was denied cer- tain vacation benefits in violation of agreement. She disagreed with employer's position that start date for accruing seniority for pur- pose of calculating vacation ben- efits was date she became perma- nently hired. Grievor engaged as casual nurses' aid in 1988 but not employed in indefinite term posi- tion until 1999. Parties agreed that employer consistently applied rele- vant provisions using interpretation that excluded credit for casual time, that practice never questioned by union, and that relevant provisions existed for at least five previous versions of agreement. Arbitrator found that employment date rel- evant date for purpose of deter- mining vacation entitlement, but union estopped from pursuing that interpretation. Union's application for judicial review dismissed but appeal to Court of Appeal allowed. Applying standard of review of cor- rectness, Court of Appeal held that arbitrator's key finding that it was legally sufficient that union "ought to have been aware" of manner in which employer applying agree- ment correct but arbitrator erred by failing to consider and make find- ing regarding union's intent to affect legal relations with employer. It set aside estoppel. Employer's appeal allowed. Arbitrators given broad mandate in adapting relevant legal principles to grievances. They are not bound by strict legal interpre- tation but must exercise mandate reasonably. Labour arbitrators, uniquely placed to respond to exi- gencies of employer-employee rela- tionship, require flexibility to craft appropriate remedial doctrines. Arbitral award, however, that flexes common law or equitable principle in manner that does not reason- ably respond to distinctive nature of labour relations necessarily remains subject to judicial review for reasonableness. Reasonableness relates primarily to transparency and intelligibility of reasons but also encompasses quality requirement that applies to reasons and to out- come. Arbitrator's reasons not only transparent and intelligible, but coherent. Arbitrator reviewed and applied relevant, persuasive prece- dents. Reasons sufficient to explain why he imposed remedy of estop- pel. Question not whether labour arbitrator failed to apply doctrine of estoppel to the letter, but whether he adapted and applied doctrine in manner reasonably consistent with objectives and purposes of labour relations. He did. Manitoba Assn. of Health Care Professionals v. Nor-Man Regional Health Authority Inc. (Dec. 2, 2011, S.C.C., McLachlin C.J.C., LeBel, Deschamps, Fish, Abella, Rothstein and Cromwell JJ., File No. 33795) Decision at 319 D.L.R. (4th) 193, 194 L.A.C. (4th) 193, 189 A.C.W.S. (3d) 284 was reversed. 208 A.C.W.S. (3d) 583 (25 pp.). Constitutional Law DISTRIBUTION OF LEGISLATIVE AUTHORITY Notion that trading in securities matter of national concern rejected Governor-in-Council sought advi- sory opinion as to whether pro- posed Securities Act fell within legislative authority of Parliament. Canada argued that Act falls within general branch of power to regulate trade and commerce. Canada con- tended securities market evolved from provincial matter to national matter affecting country as whole and that, consequently, federal gen- eral trade and commerce power gives Parliament legislative authori- ty over all aspects of securities regu- lation. Alberta and Quebec Courts of Appeal concluded proposed Act unconstitutional. Supreme Court of Canada agreeing. Provinces CASELAW have jurisdiction to regulate secu- rities within their boundaries as matter of property and civil rights. Constitution gives Parliament pow- ers enabling it to pass laws that affect aspects of securities regulation and, more broadly, to promote integrity and stability of Canadian financial system. Parliament also has power over regulation of trade and com- merce. Canada relies entirely on general trade and commerce power for authority to enact proposed Securities Act. While flexibility and co-operation important to federal- ism, constitutional boundaries that underlie division of powers must be respected. Constitutional valid- ity of legislation from division of powers perspective determined by application of "pith and substance" analysis to identify "main thrust". After pith and substance analysis, inquiry turns to whether legislation so characterized falls under head of power said to support it. On its face, general trade and commerce power so broad it has potential to permit federal duplication of pro- vincial powers over large aspects of property and civil rights and local matters. To avoid undermining fed- eralism principle, however, trade and commerce power confined to matters genuinely national in scope and qualitatively distinct from those falling under provincial heads of power. Essence of general trade and commerce power is national focus. Purpose of proposed Act to imple- ment comprehensive Canadian regime for regulation of securities with view to investor protection, promotion of fair, efficient and competitive capital markets and ensuring integrity and stability of financial system. Effects would be to duplicate existing provincial and territorial securities regimes. Main thrust to regulate, on exclusive basis, all aspects of securities trad- ing in Canada. Legislation, viewed as whole, does not address matter truly national in importance and scope and that transcends provin- cial competence. Act descends into detailed regulation of all aspects of trading in securities, matter long viewed as provincial. Notion that securities market so transformed as to make day-to-day regulation of all aspects of trading in securities matter of national concern rejected. Ref. re Securities Act (Can.) (Dec. 22, 2011, S.C.C., McLachlin C.J.C., Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ., File No. 33718) 208 A.C.W.S. (3d) 490 (72 pp.). Family Law SUPPORT Trial judge erred in failing to make finding about whether material change in wife's circumstances Shortly after parties' marriage in 1988, wife diagnosed with multiple sclerosis. She had not worked since then but looked after household and children while husband pur- sued career. When parties separated, they entered into comprehensive agreement that was incorporated into court order in 2003. Pursuant to terms, wife to receive spousal support with no termination date. Husband brought variation appli- cation in 2007, arguing change in financial circumstances and that wife should seek employment. Trial judge rejected claim of change in cir- cumstances but concluded wife able www.lawtimesnews.com to work. He granted order reducing, then terminating, spousal support. Court of Appeal dismissed wife's appeal, finding that failure to become self-sufficient over time gave rise to material change. Appeal to Supreme Court of Canada allowed and origi- nal 2003 order restored. Section 17 of Divorce Act (Can.), authorizes court to vary, rescind or suspend prior sup- port orders, defines factors allowing for variation and sets out objectives such variation should serve. Unlike factors relevant to initial support order, no reference to agreements. Court must simply be satisfied that change in condition, means, needs or other circumstances of either for- mer spouse has occurred. Change of circumstances must be "material", meaning change that "if known at the time, would likely have resulted in different terms". Appropriate def- erence should be given to terms of prior order, whether or not order incorporates an agreement. Material change must have some degree of continuity. Incorporated agreement may address future circumstances and predetermine who will bear risk of changes. It may also provide whether contemplated future event amounts to material change. Degree of specificity is evidence of whether parties or court contemplated situa- tion raised on variation application. Courts should give effect to these intentions. Even where agreement incorporated into order includes term providing it is final, how- ever, court's jurisdiction under s. 17 cannot be ousted. If thresh- old for variation met, court must determine what variation required in light of change. Support order should not have been varied. Trial judge erred in conducting de novo hearing on issue of wife's ability to work and failing to make finding about whether material change in wife's circumstances. Court of Appeal erred in concluding that trial judge's factual determination of wife's capacity to work, coupled with passage of time, amounted to material change. Expert evidence was that there had been little or no change in wife's medical condi- tion in 19 years. There had been no change, let alone material one, since 2003 order. This ought to have been dispositive of variation application. In addition, however, nothing in order suggesting that wife expected to seek employment. No material change in circumstances justifying variation order. Droit de la famille - 10897 (Re) (Dec. 21, 2011, S.C.C., McLachlin C.J.C., Binnie, LeBel, Deschamps, Abella, Rothstein and Cromwell JJ., File No. 33749) Decision at 193 A.C.W.S. (3d) 1263 was reversed. 208 A.C.W.S. (3d) 561 (55 pp.). ONTARIO CRIMINAL CASES Appeal CROWN APPEAL No apparent reason why trial judge rejected complainant's evidence of fear After repeated and persistent breaches of her peace bond not to contact complainant, accused's for- mer personal trainer, accused was charged with criminal harassment. Trial judge acquitted accused based PAGE 15 on his finding that complainant's fear of accused was unreasonable. Crown appealed that decision. Appeal allowed, new trial ordered. Trial judge's reasons repeatedly referred to fact that accused had not contacted complainant for 13 months, which was a wholly irrel- evant consideration. Trial judge incorrectly imported objective ele- ment into assessment of whether complainant was in fear. There was no apparent reason why trial judge would reject complainant's evi- dence of fear. Court was persuaded trial judge erroneously effectively required Crown to introduce evi- dence of prior physical violence, threats of violence or psychological threatening conduct as precondi- tion to finding fear was reasonable instead of examining all of circum- stances. Trial judge misapprehend- ed evidence in relation to previous threat by accused to complainant's wife. R. v. Wisniewska (Nov. 10, 2011, Ont. S.C.J., Durno J., File No. 89/10) 97 W.C.B. (2d) 595 (30 pp.). Drug Offences TRAFFICKING Facts demonstrated concerted effort on part of accused to effect transfer of narcotics Accused charged with two counts of trafficking in oxycodone along with two counts of possession of property obtained by crime namely $750.00 in cash on two separate occasions and two counts of breach of an undertaking given to an offi- cer in charge for having failed to abstain from the possession of non- prescription drugs. Twice an under- cover officer met with the accused to buy oxycodone but the accused had the transaction actually take place through his alleged business partner. Accused claimed he was not a busi- ness partner with the man who actu- ally sold the drugs but that he simply arranged for the officer and that man to meet and do business. Accused guilty of two counts of trafficking and one count of possession of the proceeds of crime, accused not guilty of breach of undertaking or the sec- ond charge of possession of property obtained by crime. Facts did not sup- port a conviction for the offences of having breached the undertaking given to an officer in charge because at no time did the accused possess the narcotics. Oxycodone is pre- scription drug and while there was no evidence that these drugs were prescribed to accused he could not be convicted of having possessed non-prescription drugs. There was no evidence that the accused pos- sessed or ever took control of $750 paid to seller by undercover officer for purchase of 10 tablets of oxy- codone. Facts demonstrated con- certed effort on part of accused to effect transfer of narcotics. Accused located seller, brought seller to site and introduced parties. He negoti- ated price and handled money on one occasion. While there was no evidence that he ever received any money for his role in these transac- tions, court concluded on this evi- dence that without accused's assis- tance, undercover officer would not have come into contact with ultimate seller and he was therefore aider and abettor. R. v. Frayne (Oct. 24, 2011, Ont. C.J., Villeneuve J., File No. 11-238-90) 97 W.C.B. (2d) 621 (6 pp.). LT

• Cover