Law Times

Law Times • augusT 21, 2017 Page 15 www.lawtimesnews.com CASELAW sale of rock salt to US corpo- ration, and made voluntary disclosure to Canada Revenue Agency (CRA) that adjusted its income upward for those years. Company was reassessed for its 2002 through 2006 taxation years. Company and related US corporation applied to relevant competent authorities, request- ing commensurate reduction in income recognized in United States. Competent authorities reached two agreements which were memorialized in two separate letters, and Canadian Competent Authority (CCA) asked company to accept terms of letters, which it did. Letters each set out terms of settlement reached by CCA and US Com- petent Authority (USCA) re- garding adjustments to be made under art. IX of Canada-United States Tax Convention (Con- vention). CRA audited com- pany and reassessed to further increase company's income from sale of rock salt to related US corporation. Company ap- pealed. Appeal allowed. Reas- sessments were inconsistent with settlement agreements, which were binding on Minis- ter, and were referred back for reconsideration on basis that company's income from sale of rock salt was to be determined so as to be consistent with agreements. Language used in letters clearly described terms of mutual agreement proce- dure (MAP) reached by CCA and USCA. There was no doubt reasonable person reading CCA letters would conclude CCA made offer to company to accept terms of CCA's MAP agreement with USCA and that company accepted that offer. Fact that adjustments to company's income in reassess- ments resulted from voluntary disclosure and fact that CRA chose not to audit those adjust- ments before issuing first reas- sessments did not alter fact that MAP agreement between CCA and USCA necessarily deter- mined transfer price of relevant transactions ref lected in adjust- ments to company's income. MAP agreements were binding on Minister as mutual agree- ments reached under Con- vention and Minister was not permitted to assess in manner inconsistent with agreements. By reassessing company to in- crease income attributed to Canada from relevant transac- tions, Minister breached Cana- da's obligations under Conven- tion by failing to give continu- ing effect to MAP agreements reached with United States under Convention. Effect of provisions of Convention were to be given paramountcy over effect of provisions of Income Tax Act. Subjective intention of Minister was not relevant to whether agreement was entered into by Minister and company. Sifto Canada Corp. v. R. (2017), 2017 CarswellNat 758, 2017 TCC 37, John R. Owen J. (T.C.C. [General Procedure]). Ontario Civil Cases Aboriginal Law FAMILY LAW Children in need of protection Child made Crown ward with no access to parents Child was apprehended at birth by children's aid society and had remained in foster care on consistent basis since that time. Society commenced protection application requesting order for Crown wardship without ac- cess to parents. In its wardship application, society brought motion for summary judgment. Metis father applied success- fully to challenge s. 3(1) of Child and Family Services Act as vio- lating s. 15 of Canadian Char- ter of Rights and Freedoms on basis that its definitions of In- dian, Native person and Native child did not extend to Metis children. Definitions of Indian, Native person, and Native child in Act were declared in valid and declaration of invalidity was suspended until August 11, 2017. Child, for all purposes re- lating to protection application, was to be treated as if he were Indian, Native person or Native child within meaning of s. 3(1) of Act. Once designation of Na- tive status was made pursuant to relevant order, society made efforts to see if any members of Metis community would par- ticipate in litigation or provide family with placement option, without success. No kinship plan was put forward by parents once it was determined that maternal grandmother was in- appropriate placement. By time trial started, child had been in care for total of 21 months. At trial, father asserted that child and his other two children who had already been made Crown wards and adopted in earlier proceedings were subject of major breaches of their con- stitutional rights as aboriginal people. Application granted. Child was made Crown ward with no access. Mere claim that someone is Native does not allow court to consider rel- evant factors within legislative scheme, without some evidence of what is important to this family, this child, and Aborigi- nal community that child is said to be member of. There was no evidentiary record on basis of which to assess and balance im- portance of preservation of Ab- original heritage of child when considering all other factors set out in Act. Father did not dem- onstrate sufficient gains in his ability to parent despite having services available to him since at least 2012. Child had been in care of same foster home since his release from hospital in June 2015 and was thriving despite difficult start to life. It was in child's best interests to be made Crown ward. Parents did not provide evidence that access to child would be meaningful or beneficial. Parents did not show that they could parent child without serious risk of harm to him and access to father would impair adoption of child. Catholic Children's Aid So- ciety of Hamilton v. H. (G.) (2017), 2017 CarswellOnt 4044, 2017 ONSC 742, R.J. Harper J. (Ont. S.C.J.). Civil Practice and Procedure LIMITATION OF ACTIONS Actions in contract or debt Issue of whether union had capacity to be sued was unsettled Respondent employee was ter- minated from employment with appellant union. Employee brought action against union, for wrongful dismissal. Direc- tors of union were added as defendants, on consent. Union pleaded that they were not proper party to action, based on Rights of Labour Act. Em- ployee did not amend claim by obtaining representation order. Union defended action. Af- ter limitation period expired, union moved to dismiss action based on contention that they were not suable entity. Motion was dismissed, as court found that motion was not brought in timely manner. Issue of whether union had capacity to be sued was unsettled. Employee moved successfully to amend statement of claim, adding individual ap- pellants as representatives of union. Union and individual appellants appealed from this judgment. Appeal dismissed. Motion judge was correct in finding that union used defence as tactical ploy. Rules of proce- dure were designed to avoid use of technical f laws as grounds to dismiss actions. Union was properly seen as sum of its members. Lawrence v. IBEW, Local 773 (2017), 2017 CarswellOnt 5650, 2017 ONCA 321, Robert J. Sharpe J.A., P. Lauwers J.A., and C.W. Hourigan J.A. (Ont. C.A.). PLEADINGS Application to strike Leave to amend after striking out portions of statement of defence should be denied only in clearest cases Employees N and F were of- ficers of employer when em- ployer's sole shareholder passed away. N and F were interested in purchasing employer, but it was sold to group headed by non- party. Relationship between employer and employees dete- riorated. Employer also started having concerns about infor- mation technology services provided by independent con- tractor. N was terminated after several months, and F consid- ered himself to have been con- structively dismissed. Employer commenced action against em- ployees, contractor, friend of F, and related companies for relief relating to removal or destruc- tion of employer's documents and unfair competition. N and F commenced counterclaim for damages for wrongful dis- missal and constructive dis- missal respectively. Employer brought motion for order strik- ing out parts of statement of defence and counterclaim. Mo- tion granted in part. Defences of abuse of process and lack of clean hands were struck with- out leave to amend. Other parts of statement of defence and counterclaim were struck with leave to amend only if amend- ments properly related to coun- terclaims. N and F appealed. Appeal allowed. Motion judge ought to have granted leave to amend after striking from state- ment of defence and counter- claim defence of "clean hands" and counterclaim of "abuse of process", and number of para- graphs. Leave to amend should be denied only in clearest of cases. Motion judge did not ex- plicitly explain why he refused leave to amend. In absence of any articulated basis on which leave was denied and in absence of any prior amendment, N and F should not be deprived of op- portunity to amend their plead- ings. Order of motion judge was varied by adding words "with leave to amend". TSI International Group Inc. v. Formosa (2017), 2017 CarswellOnt 4255, 2017 ONCA 261, Juriansz J.A., Lauwers J.A., and Hourigan J.A. (Ont. C.A.); varied (2016), 2016 CarswellOnt 8958, 2016 ONSC 3750, LeMay J. (Ont. S.C.J.). (Ont. C.A.); af- firmed (2016), 2016 CarswellOnt 10963, 2016 ONSC 4538, LeMay J. (Ont. S.C.J.). SUMMARY JUDGMENT Requirement to show no triable issue In oppression claim, effect of "acts or omissions" rather than intention of directors is key Defendant T controlled de- fendant pharmacy, as well as two other defendant compa- nies. Assets of pharmacy were sold. Plaintiff, former employee and shareholder of pharmacy, brought successful action for wrongful dismissal and phar- macy's failure to pay negotiated settlement agreement, but judg- ment was not paid. Pharmacy declared $315,000.00 dividend in favour of T (Dividend), and transferred funds between de- fendant companies. Plaintiff brought second action, claiming oppression under Ontario Busi- ness Corporations Act (OBCA) and alleging T transferred mon- ies among defendants to de- feat, hinder, delay or prejudice payment to plaintiff. Plaintiff brought motion for summary judgment. Motion granted in part. There were genuine is- sues for trial under Fraudulent Conveyances Act (FCA) and Assignments and Preferences Act (APA) and regarding phar- macy's financial status at time of declaration of Dividend, but no genuine issue for trial in terms of oppression claim. It was not established on balance of prob- abilities that plaintiff 's motion for summary judgment on her claims under FCA and APA in- volving issue of T's intent had been made out. On evidence, it could not be determined wheth- er there were requisite "reason- able grounds for believing", as stated in s. 38(3) of OBCA, so that pharmacy was not able to declare and pay Dividend. In oppression claim, effect of "acts or omissions" referred to in s. 248 of OBCA rather than intention of directors is key. T's transfers of substantial amounts of money out of pharmacy's account and his declaration and payments of Dividend left nothing in respect of plaintiff 's claims. Actions or omissions of T, as director of pharmacy and as controlling mind of other defendants, were unfairly preju- dicial and unfairly disregarded plaintiff 's interests. El-Hawary v. Tam (2017), 2017 CarswellOnt 6283, 2017 ONSC 2602, L. Ratushny J. (Ont. S.C.J.). 1758704 Ontario Inc. v. Priest (2017), 2017 CarswellOnt 4405, 2017 ONSC 1809, G.M. Mulligan J. (Ont. S.C.J.). Real Property DRAINAGE Drain award legislation Actions of residing in home, paying bills not making individual owner pursuant to Drainage Act Acting Drainage Referee (ADR) denied individual standing un- der Drainage Act. Individual acknowledged he was not reg- istered owner of land affected by drainage works. Property was owned by individual's wife. Individual appealed denial of standing. Appeal dismissed. Individual sought adjournment of appeal on grounds he did not receive defendant's factum until date of hearing in court. ADR's interpretation of "owner" was consistent with interpretation in case law. ADR was reason- able in concluding individual's actions (residing in home, pay- ing bills or transferring prop- erty to further his estate plan) did not make individual owned as contemplated by Act. Protec- tion of Public Participation Act (PPPA) had no application to facts in case. ADR did not err in refusing to stay defendant's motion pending completion of individual's appeal. Individual failed to demonstrate decision of ADR was unreasonable. In- dividual's adjournment was refused. Free v. County of Norfolk et al. (2017), 2017 CarswellOnt 8925, 2017 ONSC 3571, Mathe- son J., Trimble J., and Sheard J. (Ont. Div. Ct.).

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