Law Times

Page 18 April 25, 2016 • lAw Times www.lawtimesnews.com CASELAW Supreme Court of Canada Employment GENERAL Members of school board's execu- tive committee could be examined Following his dismissal, union's teacher filed grievance before an arbitrator and sought request to examine executive committee's commissioners of executive who had decided in camera to dismiss him. School board objected to the examination on basis of principle of deliberative secrecy. Arbitrator dismissed Board's objections and allowed examination of executive committee's members regarding their deliberations and their deci- sion to dismiss teacher. On mo- tion for judicial review, Superior Court quashed arbitrator's deci- sion and barred any testimony by members of the executive committee. Majority of Court of Appeal restored arbitrator's deci- sion and allowed examination of executive committee's members. School board appealed. Appeal dismissed. Principle that motives of legislative body are "unknow- able" and deliberative secrecy do not apply to a public employer, Board in this case, that decides to take disciplinary action against employee, even if an in camera meeting is ordered. Here, it was reasonable for arbitrator to rule that he needed to know what had taken place in camera in order to determine whether executive committee's deliberations had been thorough. Hence, three members of Board's executive committee could be examined. Further, it was wrong to say that discussions held by members of executive committee in camera were shielded by deliberative se- crecy. Furthermore, arbitrator had exclusive jurisdiction to de- termine whether any questions that might be asked were relevant. Reasons for arbitrator's decision were transparent and intelligible, and justification given for it was sufficient. Arbitrator's decision fell within a range of possible ac- ceptable outcomes which were defensible in respect of facts and law. Therefore, there was no jus- tification for Court to intervene. Commission scolaire de Laval c. Syndicat de l'enseignement de la région de Laval (Mar. 18, 2016, S.C.C., McLachlin C.J.C., Abella J., Karakatsanis J., Wag- ner J., Gascon J., Côté J., and Brown J., 35898) Decision at 242 A.C.W.S. (3d) 103 was affirmed. 263 A.C.W.S. (3d) 396. Federal Court of Appeal Taxation INCOME TAX Arguable that Parliament intended to recognize split gifts, wherever made, in line with civil law Appellant claimed tax credits with respect to alleged gifts made to registered charity pursuant to s. 118.1 of Income Tax Act (Can.) (ITA). Some gifts were made from personal funds and some were funded by loans tied to the gifts. Appellant claimed he was entitled to full amount of claimed tax credits or, alternatively, to tax credits claimed in respect of por- tion of gifts that exceeded the val- ue of any consideration he would have received in the process. Al- ternative argument invoked civil law of Quebec even though no purported donations were made in that province. Tax Court judge allowed motion by respondent to strike out alternative plea, re- jecting argument that appellant could resort to civil law of Que- bec. Interpretation Act (Can.) (IA) ensures that civil law is not applied in rest of Canada and that common law not applied in Que- bec when private law concepts of two legal systems are called into play. Tax Court judge found sup- port in 2002 amendments to ITA allowing a tax credit for certain 'gifts' that would be invalid under private law solely because taxpay- er received benefit in return for making the gift. He held that by providing result more clearly re- f lecting civil law concept of remu- nerative gift, 2002 amendment "legislatively dissociates the com- mon law meaning of gift from the federal legislation". He held that common law meaning of "gift" has been clearly established and common law does not recognize as a gift a transfer of property for partial consideration. Appel- lant's appeal allowed. Explana- tory Notes to 2002 ITA amend- ments state that there have been certain decisions made under common law where it has been found that transfer of property to charity was made partly in con- sideration for services and partly as gift. Notes suggest that state of jurisprudence in common law provinces was not as certain as Tax Court judge held. Nor has ju- risprudence clearly rejected split gifting. It could not be said with certainty that meaning of "gift" prior to 2002 amendments ex- cluded notion of split gift in com- mon law provinces and that effect of amendments was to change that state of affairs. Quest for uniformity in application of ITA not, in itself, sufficient reason for disregarding applicable private law. IA recognizes role of civil law and common law in application of federal legislation which neces- sarily entails possibility of diverg- ing results. Appellant argued that Parliament intended to recognize split gifts, wherever made, in line with civil law. It would have been open to Parliament to do so and it was arguable this was what Parliament intended. Tax Court judge should not have struck out impugned plea. French v. R. (Feb. 29, 2016, F.C.A., Marc Noël C.J., A.F. Scott J.A., and Yves de Montigny J.A., A-102-15) Decision at 249 A.C.W.S. (3d) 222 was reversed. 263 A.C.W.S. (3d) 534. Lump sum payment from workers' compensation board constituted income In 1969, taxpayer was injured while working, which caused continuing pain. Taxpayer made claim to workers' compensation board in 2011 on basis of new diagnosis of complex regional pain syndrome. Taxpayer re- ceived award of $39,123.95, ret- roactive to 1969, and lump sum of $53,816 in 2012. Taxpayer did not include lump sum amount in his income claiming it was award of damages for pain suffered. Minister of National Revenue determined that taxpayer was to repay Old Age Security Pension in amount of $3,269 that he re- ceived in 2012, on basis that his income for 2012 included lump sum payment, making his to- tal income $109,634. Tax Court judge dismissed taxpayer's ap- peal and held that lump sum re- ceived from board should have been included in taxpayer's in- come for purposes of ss. 56(1)(v) and 180.2(1) of Income Tax Act (Can.). Taxpayer appealed. Ap- peal dismissed. Judge was correct in holding that lump sum pay- ment constituted income. Even if lump payment was made on account of non-economic loss, it would still constitute income within meaning of s. 56(1)(v) of Act. Policies of board did not de- termine whether non-economic loss compensation payments constituted income for purpose of Act. Section 56(1)(v) of Act was sufficiently broad to encompass non-economic loss payments re- ceived by injured workers under provincial workers' compensa- tion legislation to compensate them for pain and suffering. Lump sum payment received by taxpayer was compensation and was made in respect of compen- sable injury or disability, within meaning of s. 56(1)(v) of Act. Butler v. R. (Feb. 26, 2016, F.C.A., Johanne Gauthier J.A., Donald J. Rennie J.A., and Mary J.L. Gleason J.A., A-166-15) Deci- sion at 249 A.C.W.S. (3d) 898 was affirmed. 263 A.C.W.S. (3d) 533. Federal Court Constitutional Law CHARTER OF RIGHTS Marihuana for Medical Purposes Regulations (Can.) infringed s. 7 and not justified under s. 1 Plaintiffs each had medical re- quirement for marihuana. Mari- huana for Medical Purposes Regulations (Can.) (MMPR) con- trol use of marihuana for medi- cal purposes. They limit patient to single government-approved contractor and eliminate ability to grow one's own marihuana or to engage one's own designated producer. Plaintiffs challenged MMPR, claiming that restric- tions they impose on access to marihuana for medical purposes violates their s. 7 of Canadian Charter of Rights and Freedoms. MMPR declared invalid as con- trary to s. 7 of Charter. Prohibi- tion against marihuana engages s. 7 liberty interests in two dis- tinct ways: right not to have one's physical liberty endangered by risk of imprisonment and right to make decisions of fundamental personal importance. Choice of medication, including cannabis, to alleviate effects of illness with life-threatening consequences is decision of fundamental personal importance. Security of person is engaged by establishment of regulatory regime that restricts access to marihuana. Security of person encompasses personal autonomy involving control over one's bodily integrity and be- ing free from state interference. MMPR prohibit cultivation of marihuana for oneself or pur- chase from supplier not registered as licensed producer (LP). If one cannot access LP for any reason, that person's security is engaged as there would be no access to medication, resulting in physical or psychological suffering. Limi- tations imposed by MMPR are not in accordance with principles of fundamental justice. Objec- tives of MMPR are reduction of risk to public health and safety and to improve way in which per- son who needs marihuana gains access to cannabis. Restrictions in MMPR bear no connection to ob- jectives. MMPR force plaintiffs to choose between medication and other basic necessities without rational connection to objectives. Government costs savings, while legitimate policy goal, could not trump plaintiffs' Charter rights. Law is arbitrary and overbroad. Infringement of s. 7 not justified under s. 1. Plaintiffs demonstrat- ed that cannabis can be produced safely and securely with limited risk to public safety and consis- tently with promotion of public health. There were simple mea- sures that could be taken to mini- mally impact s. 7 interests. Oper- ation of declaration of invalidity of MMPR suspended to permit Canada to enact new or paral- lel medical marihuana regime. Allard v. Canada (Feb. 24, 2016, F.C., Michael L. Phelan J., T-2030- 13) 263 A.C.W.S. (3d) 358. Tax Court of Canada Taxation INCOME TAX Imposition of gross negligence penalty upheld on appeal As result of introduction from his long-time friend, taxpayer had Fiscal Arbitrators organiza- tion prepare his 2009 tax return in such way as to claim very large fictitious business losses, which would result in refund of taxes for 2006 through 2009 taxation years. Canada Revenue Agency (CRA) disallowed losses and im- posed gross negligence penalty pursuant to s. 163(2) of Income Tax Act (Can.). Taxpayer ap- pealed imposition of penalties. Appeal dismissed. Taxpayer's 2009 tax return contained false statements, as he never owned or operated business. Taxpayer did not knowingly make false state- ments since he was not aware of what was in his return. Taxpayer did make, or participate in, as- sent to, or acquiesce in making of, false statements amounting to gross negligence. Taxpayer was not so lacking in education, intelligence or experience as to claim ignorance. There were ample warning signs that should have aroused taxpayer's suspi- cions, such as not knowing or- ganization, paying exorbitant fee to organization, lack of explana- tions by organization regarding preparation of return, and large magnitude of refund. False state- ments were blatant and readily detectable, had taxpayer looked at return. Taxpayer did not make genuine effort to comply with law or to respond to CRA's let- ters. Taxpayer chose to remain blissfully ignorant and place his complete trust in organization, which amounted to wilful blind- ness. Daszkiewicz v. R. (Feb. 12, 2016, T.C.C. [General Proce- dure], Rommel G. Masse D.J., 2013-492(IT)G) 263 A.C.W.S. (3d) 527. Ontario Civil Cases Contracts FRANCHISE AGREEMENTS Restrictive covenant not ambiguous MEDIchair, franchisor, oper- ated franchise stores that sell and lease home medical equip- ment. One franchise location in Peterborough was owned and operated by DME. DME's latest franchise agreement was 2005 Franchise Agreement. Appel- 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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