Law Times

Page 18 September 11, 2017 • Law timeS www.lawtimesnews.com service rendered by registrant to members. Judge held that regis- trant made single supply of ser- vices that related to real proper- ty outside of Canada in respect of US and Mexico vacation homes, real property in Canada in respect of Canadian vacation homes, and things other than real property such as operating costs. Judge held that, since sin- gle supply related at least partly to things other than real proper- ty, place of supply of service was deemed, under ss. 142(1)(g) and 142(2)(g) of Excise Tax Act, to be made in Canada. Registrant appealed. Appeal allowed. GST was exigible only on portion of resort fees paid to registrant on account of services it provided in relation to vacation homes in Canada. Judge erred in his ap- plication of ss. 142(1) and 142(2) of Act when he broke single sup- ply into constituent elements to determine whether each ele- ment related to real property. Predominant element of sup- ply was use of annual resort fee to fund operation of program, and because program operated vacation homes in Canada, US and Mexico, predominant ele- ment of supply was in relation to real property in and out of Canada. Supply was split up and treated as two supplies to recog- nize distinction between bundle of services that constituted pro- gram and reality that services were operated on property-by- property basis. Services relating to operation of vacation homes in Canada were taxable supply, while services relating to op- eration of vacation homes out of Canada were non-taxable sup- ply. Registrant's proposal, that resort fee should be allocated based on ratio of membership costs associated with operation of vacation homes in Canada to total membership costs for all resorts, fairly and reasonably re- f lected nature of taxable supply. Club Intrawest v. Canada (2017), 2017 CarswellNat 3241, 2017 FCA 151, M. Nadon J.A., Eleanor R. Dawson J.A., and Jo- hanne Gauthier J.A. (F.C.A.); re- versed (2016), 2016 CarswellNat 2327, 2016 TCC 149, Steven K. D'Arcy J. (T.C.C. [General Pro- cedure]). Federal Court Immigration and Citizenship REFUGEE PROTECTION Credibility Refugee Protection Division denying status to applicant who was not credible or trustworthy Applicant, 44 year old citizen of Nigeria, made claim for refugee protection on basis that his life was at risk from cult in Nige- ria. Applicant's father had been leader of cult until he died, and after he died applicant refused to be initiated into cult. Appli- cant claimed he received threats from members of cult even after he moved his family to differ- ent cities. Applicant's claim was rejected by Refugee Protection Division (RPD) after determin- ing that applicant was not cred- ible or trustworthy based on his unfamiliarity with basic infor- mation about cult. Refugee Ap- peal Division (RAD) concurred with RPD that there was insuf- ficient credible and trustworthy evidence to find that applicant's allegations were truthful, and it confirmed RPD's decision that applicant was not convention refugee or person in need of protection. Applicant applied for judicial review. Application dismissed. RAD did not raise new issue merely by reviewing and analyzing some of docu- mentary evidence that had not been explicitly assessed by RPD as to its relevance and proba- tive value. It was applicant who raised RPD's failure on appeal to RAD, and it was disingenu- ous for him to now claim that he was denied procedural fair- ness when RAD addressed and rectified issue he identified. RAD was entitled to review and assess evidence afresh, and fact RAD saw some evidence differ- ently was not basis to challenge decision on fairness grounds when no new issue was raised. RAD did not make substantive findings beyond those of RPD without providing applicant with opportunity to make sub- missions. Decision could not be impugned on grounds of proce- dural fairness. RAD reasonably exercised and fulfilled its ap- pellate role by reviewing RPD's findings and assessing docu- mentation RPD overlooked as identified by applicant. De- terminative issue was whether applicant provided reasonable and credible evidence that cult was pursuing him, and it was reasonable for RAD to find that applicant's failure to have basic knowledge of cult's practices and rituals undermined cred- ibility of claim. Bakare v. Canada (Minister of Citizenship and Immigra- tion) (2017), 2017 CarswellNat 656, 2017 FC 267, Keith M. Bo- swell J. (F.C.). REFUGEE PROTECTION Removal Foreign nationals' rights to procedural fairness breached by failure to provide oral hearing Need for oral hearing. Foreign nationals (FNs) were mother and two children who were stateless Palestinians from West Bank. Children's father was moderate Muslim and teacher who refused to advocate for Hamas' ideology. Father went into hiding after being subject- ed to violence and threats, and FNs f led to United States after they were threatened by Hamas. FNs came to Canada but were deemed ineligible for refugee protection. FNs unsuccessfully applied for pre-removal risk as- sessment. FNs brought applica- tion for judicial review. Appli- cation granted; matter remit- ted for re-determination. FNs' right to procedural fairness was breached by failing to provide oral hearing. Section 113(b) of Immigration and Refugee Pro- tection Act stated hearing could be held if relevant minister was of opinion that hearing was required having regard to pre- scribed factors in s. 167 of Im- migration and Refugee Protec- tion Regulations. Immigration officer had clearly called into question authenticity of docu- ments and credibility of mother. Applicant's testimony was pre- sumed to be true unless there was valid reason to doubt its truthfulness. Inconsistency be- tween mother's sworn evidence and documents was very reason why oral hearing would have been warranted; inconsistency was central to decision denying protection; and outcome might have been different if mother's evidence was accepted. Majali v. Canada (Minister of Citizenship and Immigra- tion) (2017), 2017 Carswell- Nat 774, 2017 FC 275, Cecily Y. Strickland J. (F.C.). Tax Court of Canada Tax INCOME TAX Administration and enforcement Taxpayer failed to show it would be impossible for MNR to amend reply to support reassessment Taxpayer was non-profit orga- nization established for purpose of operating golf course for its members. In 2006, it disposed of parcel of land and realized gain on that disposition. Taxpayer reported disposition on its non- profit organization information return, which it filed for 2006. Taxpayer did not report gain in its T3 trust income tax and in- formation return filed for taxa- tion year ending December 31, 2006 on basis that gain was ex- empt under s. 149(5)(e)(ii) of In- come Tax Act. MNR reassessed taxpayer to include gain on dis- position of parcel on basis that it was not used exclusively for and directly in course of providing dining, recreational or sport- ing facilities provided by it for its members. Reassessment was made after normal reassessment period. Taxpayer applied for order to strike out or expunge certain paragraphs of amended reply to notice of appeal. Appli- cation granted in part. Amend- ed reply struck in its entirety as it did not disclose reasonable cause of action. Key assumption in paragraph 12(h) of reply was conclusion of mixed fact and law which did nothing more than paraphrase test found in s. 149(5)(e)(ii) of Act. Factual components of paragraph 12(h) could not be presumed true for purposes of application and sec- ond sentence of paragraph 13(b) should be struck. It was clear that remainder of amended reply did not set out sufficient facts to support conclusion that taxpayer made misrepresenta- tion due to carelessness, negli- gence or wilful default in its T3 return. Amended reply was to be struck as disclosing no rea- sonable cause of action. Para- graph 12(h) was struck as well. Amended reply could be revised without difficulty to extricate factual elements relating to tax- payer's use of parcel and to state them as factual assumptions made by Minister. To extent that there were facts otherwise relied on by MNR concerning taxpayer's use of property, those should be pleaded elsewhere in reply. MNR had 60 days from date of order to file further amended reply to notice of ap- peal. Taxpayer had not shown that it would be impossible for MNR to amend to support reas- sessment. Mont-Bruno C.C. Inc. v. Her Majesty The Queen (2017), 2017 CarswellNat 3165, B. Paris J. (T.C.C. [General Procedure]). INCOME TAX Tax credits Experimental development tax credits denied where requirement for arm's length dealings not satisfied S, US citizen and resident, ac- quired intellectual property rights to aircraft. S attempted to have aircraft certified. S al- leged that he was approached by financing corporation and Industry Canada to carry out certification work and subse- quent production of certified aircraft in Quebec, and claimed that he was advised by that he could become eligible to receive refundable scientific research and experimental development tax credits (ITCs) if develop- ment work was carried out in Canada by Canadian controlled private corporation (CCPC). S established corporate struc- ture for purpose of allowing S to gain access to ITCs. Cor- poration that initially took on certification work in Canada went bankrupt and S acquired its assets, including database pertaining to certification work for restarting certification in Canada. In 2009 S caused A Corp. to be incorporated as Nova Scotia unlimited corpo- ration. S Corp, US corporation controlled by S, became sole shareholder of A Corp. A Corp entered into agreement with S Corp to provide services to complete prototyping and cer- tification of aircraft. Intellectual property rights resulting from A Corp's work became prop- erty of S and S Corp. A Corp's prototyping and certification expenses were to be reimbursed by S Corp. A Corp was required to remit amount of refundable ITCs that it received to S Corp. Four months after execution of agreement, A Corp issued addi- tional common shares such that from that date onward, major- ity of its common shares were directly and indirectly held by persons residing in Canada. A Corp recorded full amount of refundable ITC claim for 2011 but failed to show offsetting li- ability to S Corp. Amount of A Corp's refund claim exceeded retained earnings. A Corp's fi- nancial statements for 2009 and 2010 were prepared on simi- lar basis. Material, equipment and tools acquired by A Corp and funded by S Corp were to become property of S Corp on completion of certification work. A Corp claimed refund- able ITCs for 2009 through 2011 taxation years. Minister disal- lowed refundable ITCs on ba- sis that A Corp was not CCPC. A Corp appealed. Appeal dis- missed. Requirement for arm's length dealings was not satis- fied. Evidence showed that A Corp was economically depen- dent on S and/or S Corp. It was hard to conceive that Canadian resident shareholders would have exercised voting rights in- dependently of S's wishes. Aeronautic Development Corp. v. R. (2017), 2017 Car- swellNat 759, 2017 TCC 39, Rob- ert J. Hogan J. (T.C.C. [General Procedure]). Ontario Civil Cases Administrative Law REQUIREMENTS OF NATURAL JUSTICE Bias Tribunal not unreasonable in dismissing appeal based on failure to attend Applicant was former instruc- tor at respondent university. Instructor claimed that she was not properly accommo- dated during her employment at university. Instructor also claimed harassment by one of her supervisors. Instructor filed internal complaint against uni- versity, but was not successful. Instructor filed three separate proceedings after dismissal of complaint. One proceeding was under Labour Relations Act, another was application for ju- dicial review, and third was ap- plication against university and arbitrator. All proceedings were dismissed as against instructor, with costs. Appeal hearing was scheduled at Human Rights Tribunal in 2015. Instructor claimed that she would not at- tend hearing, due to medical condition and allegations of bias. Hearing proceeded in in- structor's absence, with appeal being dismissed. Reconsidera- tion application of this decision was also dismissed. Instructor applied for judicial review of tribunal decisions. Application dismissed. Allegations of bias were completely unfounded. Allegations were made against all decision-makers, without any supporting evidence. Re- consideration decision being made by same person as origi- nal decision was proper proce- dure. No bias was present in re- consideration process. Tribunal CASELAW

• Cover