Law Times

Law Times • sepTember 18, 2017 Page 13 www.lawtimesnews.com CASELAW Supreme Court of Canada Contracts CONSTRUCTION AND INTERPRETATION General principles Renewal clause allowing member pharmacists to unilaterally renew agreement with pharmacy chain Chain of pharmacies and its member pharmacists entered into contract of affiliation in 1998 for fixed term of five years. Contract contained automatic renewal clause, which was trig- gered twice, in 2003 and 2008. In 2012, failed to convince member pharmacists to move into new premises. Chain then sent mem- ber pharmacists notice of non- renewal, purporting to termi- nate contract as of January 2013. Member pharmacists brought action seeking declaration that contract had been renewed un- til January 28, 2018. Trial judge concluded that renewal clause was clear and allowed member pharmacists to automatically re- new agreement every five years. Hence, trial judge declared that contract was renewed until January 28, 2018 and chain ap- pealed. Majority of Court of Ap- peal held that contract could be renewed automatically unless member pharmacists gave no- tice to contrary. Majority added that chain had not acted in good faith, which barred it from resili- ating contract, and upheld trial judge's decision. Chain appealed to Supreme Court of Canada. Appeal dismissed. Relevant clause clearly provided that, should member pharmacists fail to send prescribed notice to chain, agreement would be deemed to have been renewed. Word "deemed" created absolute and irrebuttable presumption. Because member pharmacists actually sent no notice what- soever, agreement was deemed to have been renewed for addi- tional five-year term. To inter- pret relevant clause otherwise would be contrary to general scheme of contract of affiliation and to how it has been applied by parties. Further, nothing in Civil Code of Québec prohib- ited such contracts from having effects that could be perpetual. Therefore, trial judge made no palpable and overriding error in interpreting contract and no in- tervention was justified. Uniprix inc. v. Gestion Gos- selin et Bérubé inc. (2017), 2017 CarswellQue 6083, 2017 Car- swellQue 6084, 2017 SCC 43, 2017 CSC 43, McLachlin C.J.C., Abella J., Moldaver J., Karakat- sanis J., Wagner J., Gascon J., Côté J., Brown J., and Rowe J. (S.C.C.); affirmed (2015), 2015 CarswellQue 8578, 2015 QCCA 1427, (C.A. Que.). Federal Court of Appeal Tax GOODS AND SERVICES TAX Special rules Bankruptcy of tax debtor and s. 222(1.1) ETA not rendering deemed trust ineffective Pursuant to forbearance agree- ment, tax debtor paid sales pro- ceeds of property to defendant secured creditor C Corp.. Crown claimed deemed trust pursuant to s. 222 Excise Tax Act (ETA) because of previously unremit- ted GST and HST. Debtor made assignment in bankruptcy. Crown brought action against creditor for recovery of disposi- tions made before bankruptcy on basis of deemed trust mecha- nism. Creditor brought motion for determination of question of law, namely, whether bankrupt- cy of tax debtor and s. 222(1.1) of ETA render deemed trust un- der s. 222 of ETA ineffective as against secured creditor who re- ceived, prior to bankruptcy, pro- ceeds from assets of tax debtor that were deemed to be held in trust for Crown. Federal Court judge granted creditor's motion and answered question in affir- mative. Crown appealed. Appeal allowed. Question was answered in negative. Reasoning in prior case dealing with near-identical provisions under Income Tax Act (ITA) was dispositive of appeal. In this case, proceeds from sale of debtor's property were paid to creditor, and sub- sequently, debtor made assign- ment into bankruptcy. Pursuant to s. 222(3) of ETA, any proceeds should have been paid to Crown in priority to any security inter- est pre-bankruptcy. Proceeds were paid out of priority, which created obligation on credi- tor, independent of existence of deemed trust, to pay. There was no need for crystallizing event, as legislation established obligation to pay. Creditor's interpretation would dilute absolute priority of Crown and undermine purpose of legislation. Canada v. Callidus Capi- tal Corporation (2017), 2017 CarswellNat 3599, 2017 FCA 162, J.D. Denis Pelletier J.A., D.G. Near J.A., and Donald J. Rennie J.A. (F.C.A.); reversed (2015), 2015 CarswellNat 4410, 2015 CarswellNat 8223, 2015 FC 977, 2015 CF 977, Glennys L. McVeigh J. (F.C.). INCOME TAX Administration and enforcement Taxpayer's suggestion that Tax Court judge pre-judged facts was without merit Taxpayer, who was studying to be denturist, was also taxi driver and owned rental properties. Taxpayer reported income of $3,857 and $1,807 for 2003 and 2004 taxation years respectively. During audit, CRA undertook net worth analysis and conclud- ed that taxpayer had failed to report over $150,000 of income earned in those years. Minister reassessed taxpayer under In- come Tax Act on this basis and imposing gross negligence pen- alties. Taxpayer's appeal, seeking to reduce unreported income by taking alleged loan from his father of $90,000 into account, was dismissed. Taxpayer ap- pealed. Appeal dismissed. Tax Court judge did not make pal- pable and overriding error in rejecting taxpayer's evidence that his father loaned him total of $90,000 so as to reduce de- termination of income under net worth analysis. Tax Court's judge's conclusion that there was not sufficient reliable evidence to substantiate loans was based on rejection of testimony by tax- payer and father. Taxpayer's sug- gestion that net worth analysis should not have been conducted in this case did not have merit. Apparent suggestion that entire assessment should be reviewed was not raised in Tax Court and it would be unfair to allow it be raised now where Minister had no opportunity to lead evidence. Where Tax Court judge found testimony of accused and father was not credible, it was open to him to conclude that there was insufficient reliable evidence re- garding loans. Tax Court judge's conclusion was not absurd in light of taxpayer's full-time stud- ies as it was certainly possible for full-time student to have source of significant income and was consistent with his credibility findings. Tax Court judge's rea- sons were clear and detailed and, when read as whole, told taxpay- er why he lost and why his testi- mony was found to be unreliable. Reasons were well within stan- dards of adequacy. Taxpayer's suggestion that Tax Court judge pre-judged facts was without merit, as impugned comments were merely attempt to ensure that he knew case he had to meet. Sarmadi v. Canada (2017), 2017 CarswellNat 2790, 2017 FCA 131, Stratas J.A., Webb J.A., and Woods J.A. (F.C.A.); af- firmed (2015), 2015 CarswellNat 10732, 2015 CarswellNat 1921, 2015 TCC 133, 2015 CCI 133, Réal Favreau J. (T.C.C. [General Procedure]). Federal Court Immigration and Citizenship REFUGEE PROTECTION Practice and procedure in refugee claims Applicant not refugee where no evidence of subjective fear or that he reavailed himself of protection Applicant, citizen of Ethiopia, sought protection in Canada on basis of his Amhara ethnic- ity, his political views and his desertion from military. Refu- gee Protection Division (RPD) dismissed applicant's claim for protection as convention refu- gee or person in need of protec- tion on basis that applicant was not credible, he failed to provide evidence of subjective fear and that applicant reavailed himself of protection when he returned to Ethiopia. Refugee Appeal Di- vision (RAD) dismissed appeal. Application dismissed. If appli- cant had problem with alleged inadequate interpretation, that should have been raised at first available opportunity before RPD. There was no breach of procedural fairness arising from manner in which interpreter discharged mandate. RAD did not err in consideration of issue of reavailment, as that term was 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 WestlawNext Canada. To subscribe, please access carswell.com or call 1-800-387-5164. REACH ONE OF THE LARGEST LEGAL AND BUSINESS MARKETS IN CANADA! AVAILABLE ONLINE AND IN PRINT With more than 300,500 page views and 100,000 unique visitors monthly canadianlawlist.com captures your market. 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