Law Times

Page 14 November 7, 2016 • Law Times www.lawtimesnews.com CASELAW Supreme Court of Canada Customs and Excise DUTY Classification decision of Canadian International Trade Tribunal should be restored Respondent importer sought to import hockey gloves. Canada Border Services Agency classi- fied these items as "(g)loves, mit- tens (or) mitts" under tariff item No. 62.16 and not item No. 39.26, which applies to various types of sporting equipment. Canadian International Trade Tribunal (CITT) upheld determination. CITT found goods met terms of heading No. 62.16 and that pres- ence of plastic components did not deprive them of their char- acter as gloves of textile fabric. CITT found dual classification was not applicable. Importer brought application for judicial review. Federal court of appeal held that determination did not meet standard of reasonable- ness. It held that goods had dual nature and CITT had not prop- erly applied relevant rule. Court of appeal referred matter back to CITT. Crown appealed. Appeal allowed. Court of appeal misap- prehended structure of General Rules of Customs Tariff (Can.). It did not appreciate conjunc- tive nature of application of R. 1 and R. 2 to determination of headings under which good is prima facie classifiable. Rules 1 and 2 are not mutually exclu- sive classification rules. Rule 1 simply provides that classifica- tion must be done according to headings and relevant section and chapter notes. Rule 2 deems that certain references in head- ings include unfinished goods or goods composed of different materials. Where R. 2 applies, it informs content of headings by which R. 1 directs that ap- propriate classification is to be determined. CITT's decision is reasonable if its reasons "allow reviewing court to understand why tribunal made its deci- sion and permit it to determine whether the conclusion is with- in the range of acceptable out- comes". Further, court of appeal erred in supposing that R. 2(b) can be applied to extend scope of heading to include particular good where no part of that good falls within heading. Good must be described in whole or in part by heading, even if it may ulti- mately not be classified under that heading because of its un- finished or composite nature, before R. 2 can be applied. This is consistent with process of rea- soning applied by CITT to this case, and reasonableness of its decision is unassailable on this basis. CITT's decision classify- ing gloves under heading 62.16 was reasonable. CITT neither misapplied General Rules, nor interpreted heading 39.26 and its Explanatory Note in unrea- sonable manner. Classification decision of CITT should be re- stored. Canada (Attorney Gener- al) v. Igloo Vikski Inc. (Sep. 29, 2016, S.C.C., McLachlin C.J.C., Abella J., Cromwell J., Moldaver J., Karakatsanis J., Wagner J., Gascon J., Côté J., and Brown J., 36258) Decision at 246 A.C.W.S. (3d) 594 was reversed. 270 A.C.W.S. (3d) 306. Federal Court of Appeal Aboriginal Peoples GENERAL Band's appeal under the Canadian Environmental Assessment Act, 2012 was dismissed National Energy Board was engaged in review of pipeline project. Aboriginal band was intervenor in proceedings. Project was found to be ready to proceed to assessment, was found to be designated project to be assessed under Canadian Environmental Assessment Act, 2012, and order put in place for assessment. Report was is- sued stating that project should go forward on conditions, and further round of consultation was to take place. Band claimed that board had duty to consult aboriginal persons which was not met, that board had duty under s. 18 of Act to collaborate with band as jurisdiction, that duty of fairness was breached and that consideration of ma- rine shipping activities was im- properly not considered. Band appealed orders regarding as- sessment. Appeal dismissed. Questions regarding duty to consult had not been raised at hearing and it was improper to deal with them on appeal. Issues could have been raised at trial and would also be ad- dressed by governor in council. Much of evidence before court had not been before Board. Hearing order was not final and was subject to amendment. Band had opportunity to re- spond to completeness decision which other intervenors had used, while band did not follow proper procedure. Board made offer to consult with all parties considered jurisdictions, and band failed to provide material to make jurisdictional determi- nation. Position that board had duty to consult was not raised until midway through proceed- ings. Putting issue before board would not have delayed matter. Premature for Crown to address issues when consultation was ongoing and governor in coun- cil had not made determination. Tsleil-Wautuh Nation v. National Energy Board (Sep. 6, 2016, F.C.A., Johanne Gauthier J.A., Wyman W. Webb J.A., and Mary J.L. Gleason J.A., A-386- 14) 270 A.C.W.S. (3d) 226. Corporations DIRECTORS Judge erred in concluding that taxpayers resigned as directors Taxpayers G and C were former directors of company whose af- fairs and business was managed and operated by their husbands. In 2001, taxpayers had resigna- tions prepared but never signed them. In 2008, Minister of Na- tional Revenue assessed taxpay- ers for source deductions that company failed to remit from 2000 to 2005, pursuant to s. 227.1 of Income Tax Act (Act) (Can.). Tax Court judge allowed taxpay- ers' appeals. Judge held that there were valid and effective resigna- tions by each of taxpayers, given preparation of draft letters and verbal communication of resig- nation to husbands. In alterna- tive, judge found that C had rea- sonable belief she had resigned and exercised due diligence. Minister appealed. Appeals al- lowed. Judge erred in concluding that taxpayers resigned as direc- tors. In absence of communica- tion of written resignation to company, resignation was not effective. Two-year limitation period in s. 227.1(4) of Act was triggered by date of resignation, requiring objective verification of status of directors. In finding that C exercised due diligence, judge committed error on extri- cable question of law. Director's belief that she had resigned had no correspondence to underly- ing purposes of s. 121(2) of Busi- ness Corporations Act (Ont.) and its emphasis on objectively verifiable communication of res- ignation to company. To allow subjective intention would un- dermine corporate governance. Chriss v. R. (Sep. 22, 2016, F.C.A., David Stratas J.A., D.G. Near J.A., and Donald J. Rennie J.A., A-137-15, A-138-15) Deci- sion at 244 A.C.W.S. (3d) 493 was reversed. 270 A.C.W.S. (3d) 440. Tax Court of Canada Family Law SUPPORT Father failed to engage exception in s. 118(5.1) of Income Tax Act (Can.) Taxpayer father and mother separated in 2011 and had two children under 18 years of age. Pursuant to consent order, father and mother had joint custody of children in shared parenting ar- rangement. Father had obligation to pay child support to mother for both children and mother had obligation to pay child sup- port to father for both children, resulting in set-off requiring only father to make child support pay- ments. Order specifically per- mitted mother to claim child tax credit for both children for first six months of year and father for last six months of year, and each of father and mother to claim one child as equivalent to spouse. Minister of National Revenue dis- allowed father's claimed non-re- fundable tax credits relating to eli- gible dependant and eligible child respectively. Father appealed. Ap- peal dismissed. Father failed to engage exception in s. 118(5.1) of Income Tax Act (Can.). Utiliza- tion of set-off mechanism did not render, memorialize or transform each distinct value in mathemati- cal calculation in determining final child support payment into support amount under Act. En- gagement of combined effect of s. 118(5) and (5.1) of Act required mandatory and actual periodic payments by both spouses to each other in cases of shared parenting of two or more children, demon- strated by documentary and evi- dentiary record. Harder v. R. (Sep. 14, 2016, T.C.C. [Informal Proce- dure], Randall S. Bocock J., 2014-3977(IT)I) 270 A.C.W.S. (3d) 442. 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. REACH ONE OF THE LARGEST LEGAL AND BUSINESS MARKETS IN CANADA! 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