Law Times

Page 16 November 30, 2015 • Law Times www.lawtimesnews.com FEDERAL COURT OF APPEAL Contracts EXEMPTION CLAUSES No error in trial judge's con- clusion that exclusion clauses did not protect appellant Appellant, in business of stor- ing and servicing vessels, agreed to remove respondent's vessel from water in order to ef- fect repairs. Respondent signed Statement of Acceptance of Re- sponsibility which stated that respondent accepted responsi- bility for all damage which may result during lift of vessel except that resulting from negligence by crane operator. Statement incorporated by reference no- tice and warning at appellant's premises stating that owners took all responsibility for ves- sels. While respondent's vessel undergoing repair, heavy winds swept through and dislodged respondent's vessel, causing serious structural damage. Respondent commenced ac- tion. Appellant claimed it was respondent's responsibility to build cradle to secure vessel and relied on exclusion clauses in Statement of Acceptance, and more particularly, statement that respondent understood and agreed that securing and locking of vessel was his re- sponsibility. Trial judge allowed respondent's action. Appellant appealed, arguing that trial judge erred in drawing adverse inference against appellant for allegedly disposing intention- ally of relevant evidence and in concluding that exclusion clauses did not protect appel- lant from its negligence. Ap- peal dismissed. Trial judge did not make any reviewable error in concluding that exclusion clauses did not protect appel- lant. She found that "securing and locking" related to securing of lines, buoys and equipment and closing of hatches, win- dows and doors of vessel while vessel on appellant's premises. Since it was clear that appellant was responsible for erection of cradle, this interpretation did not constitute error. Appel- lant took over from respondent the obligation to secure vessel, notwithstanding contractual provision in statement. Appel- lant, having decided to assume obligation of securing vessel, was bound to secure it prop- erly. Warning signs applied to situations where boats had been left on appellant's premises for purpose of storage and not ap- plicable. Burin Peninsula Marine Service Centre v. Forsey (Oct. 9, 2015, F.C.A., M Nadon J.A., Johanne Trudel J.A., and Yves de Mon- tigny J.A., File No. A-506-14) Decision at 246 A.C.W.S. (3d) 699 was affirmed. 258 A.C.W.S. (3d) 314. Industrial and Intellectual Property PATENTS Decision finding patent invalid for obviousness was upheld on appeal Applicants applied under s. 6(1) of Patented Medicines (Notice of Compliance) Regulations for order prohibiting Minister of Health from issuing notice of compliance to respondent for its generic version of product Vi- gamox, antibacterial eye drop. Judge found that patent was in- valid for reasons of obviousness and dismissed application. Ap- plicants appealed. Appeal dis- missed. Judge had to interpret patent as it would be under- stood by person skilled in art to which it pertained. Applicants did not question judge's con- struction of inventive concept, which was identified as phar- macological composition for topically treating or preventing ophthalmic infection, which comprised 0.1 to 1.0 wt per cent moxif loxican. Judge did not fail to understand implications of what inventive concept at issue meant to skilled person in art. Judge logically considered each of known separately in light of state of art with view to deter- mining whether moxif loxican was obvious or obvious to try at relevant date. Judge careful- ly set out prior art evidencing what skilled person would have knowledge of. Evidence dem- onstrated that patent disclosed and enabled essential element of moxif loxican claimed in more than one patent that addressed treatment of eye infections. Judge was entitled to accept ex- pert's opinion without adopting every aspect of it. Judge drew own conclusions on evidence as to whether inventive step of try- ing moxif loxican for claimed application would have been obvious to skilled person in art. Judge did not make palpable and overriding error in factual finding or reasoning. Alcon Canada Inc. v. Acta- vis Pharma Co. (Sep. 16, 2015, F.C.A., Eleanor R. Dawson J.A., Wyman W. Webb J.A., and Richard Boivin J.A., File No. A-284-14) Decision at 240 A.C.W.S. (3d) 966 was affirmed. 258 A.C.W.S. (3d) 399. Labour Relations JUDICIAL REVIEW By granting applications for judi- cial review, judge was necessarily setting aside adjudicator's decision Adjudicator dismissed employ- ees' grievances with respect to disciplinary measures imposed on them by employer. Employ- ees brought applications for judicial review. Judge held that adjudicator failed to address material facts and arguments relevant to issues of delay and condonation and allowed ap- plications on that basis. Matter was returned to adjudicator. Employees maintained that adjudicator's redetermination would be limited to issue of condonation and by not ad- dressing other issues, judge ef- fectively prevented them from obtaining decision on merits of those issues. Employees ap- pealed. Appeals dismissed. By granting applications for judi- cial review, judge was necessar- ily setting aside adjudicator's decision. Adjudicator's decision was no longer valid and was of no effect. Matter was sent back to adjudicator for redetermi- nation and redetermination would constitute new decision and subject to full challenge by any party not satisfied with re- sult. By failing to address other issues employees raise in chal- lenging decision, judge had not precluded employees from rais- ing those issues in context of judicial review application of adjudicator's redetermination decision. Chopra v. Canada (Attorney General) (Sep. 22, 2015, F.C.A., M. Nadon J.A., Webb J.A., and Boivin J.A., File No. A-203- 14, A-206-14) Decision at 242 A.C.W.S. (3d) 835 was affirmed. 258 A.C.W.S. (3d) 408. Taxation GOODS AND SERVICES TAX Registrant farm was not entitled to input tax credits claimed Registrant carried on business as strawberry farm. To bring in biannual berry harvests, regis- trant hired seasonal labourers through intermediary labour suppliers, would pay labour suppliers directly, and paid GST to labour suppliers on in- voiced gross amounts. Labour suppliers had registrant make payments to different named or numbered corporations, and advised registrant that all such corporations were GST- registered and GST-compliant. Registrant claimed and ob- tained input tax credits (ITCs) in respect of GST paid to labour suppliers, after providing docu- mentation to support GST paid. Minister ultimately discovered that several corporations were not validly GST-registered, and reassessed registrant, disallow- ing ITCs taken in respect of those corporations on basis that corporations were suppliers of convenience, and imposing ad- ministrative penalties for provi- sion of false statements with re- spect to those disallowed ITCs. Registrant's appeal of Minister's reassessment was allowed in part. To impose penalty, evi- dence of some additional objec- tive moral fault was required, inter alia intent, recklessness or wilful blindness. Record in present case did not evidence such fault, and in fact appeared to establish that registrant was innocent dupe of individuals or other related persons unknown. Absent evidence of fault, min- ister failed to meet burden of proof justifying imposition of penalties and appeal was ac- cordingly properly allowed in part and penalties deleted. While minister did not dispute that registrant did employ tem- porary labourers and did remit funds to corporations, regula- tions promulgated pursuant to s. 169(4)(a) of Excise Tax Act, placed clear burden of proof on registrant to provide full and accurate documentation in sup- port of ITCs claimed. Accord- ingly registrant was not entitled to ITCs claimed, and appeal was consequently dismissed to that extent. Registrant appealed. Appeal dismissed. There was no reason to intervene with pre- vious decision, in spite of regis- trant's difficulties in managing seasonal labourers. Pépinière A. Massé Inc. c. R. (Sep. 14, 2015, F.C.A., M. Nadon J.A., Pelletier J.A., and Gauthier J.A., File No. A-450-14) Decision at 244 A.C.W.S. (3d) 476 was af- firmed. 258 A.C.W.S. (3d) 443. TAX COURT OF CANADA Taxation INCOME TAX Motion to exclude lawyers' testimony was dismissed Company terminated taxpayer's employment by sending notice of termination in accordance with employment contract. Par- ties reached settlement agree- ment and signed confidential- ity clause. Taxpayer included confidential settlement amount on his tax return as retiring al- lowance. Taxpayer commenced appeal objecting to minister's assessment confirming imposi- tion of confidential settlement amount as retiring allowance. Taxpayer sought to include tes- timony of lawyers, who acted for parties during signing of settlement agreement, alleging it was necessary for court to de- termine true nature of payment made by company to taxpayer. Company brought motion pur- suant to s. 65 of Tax Court of Canada Rules for order forbid- ding lawyers from testifying on existence and terms of settle- ment agreement, and that if tes- timony was allowed, hearing be conducted in camera. Motion granted in part. Motion for re- quest for in-camera hearing was granted, but motion to exclude testimony was otherwise dis- missed. Discussions between lawyers prior to settlement were not protected by profes- sional secrecy, and lawyers were not precluded from testifying. Taxpayer established two over- arching public interests which prevailed over interest in favour settlement negotiations. Over- arching public interests were preservation of Canadian tax base and taxpayer's right to fair trial. Based on contract and cir- cumstances under which settle- ment agreement was reached, clauses of agreement did not show that parties intended to exclude exceptions to privilege laws. It was implicit at time parties signed agreement that they were aware that terms of agreement could be brought to attention of public author- ity. Court could not conclude that parties clearly intended to preserve confidentiality in situ- ation when considering excep- tions to settlement privileges. Section 151.21 of Code of Civil Procedure could not prevent in- tended testimony. Abenaim c. R. (Jul. 24, 2015, T.C.C. [General Procedure], Johanne D'Auray J., File No. 2012-2005(IT)G) 258 A.C.W.S. (3d) 444. ONTARIO CIVIL CASES Education COLLEGES AND UNIVERSITIES Plain and obvious that action against univer- sity could not succeed Claim related to academic dis- pute. Plaintiff alleged she was target of harassing verbal com- ments by defendant professor and professor showed feelings of hate toward her. Plaintiff brought action against profes- sor and university claiming breach of contract, negligence and tort of intentional inf liction of mental distress. Defendants brought motion to strike out fresh as amended statement of claim without leave to amend. Motion was granted and ac- tion was dismissed in entirety. Plaintiff appealed. Appeal dis- missed. Plaintiff failed to plead requisite elements of causes of action or material facts to sup- CASELAW 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. These cases may be found online in BestCase and other electronic resources from carswell.com. To subscribe, please call 1-800-387-5164.

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