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Page 14 December 4, 2017 • Law Times www.lawtimesnews.com CASELAW doubt that s. 15(1) argument had no merit as asserted discrimina- tion was not based on any enu- merated or analogous ground. Taxpayer's new argument based on s. 6(2) of Charter would not be dealt with, as it was not raised before Tax Court judge or developed in his memoran- dum. Tax Court judge explained to taxpayer that there was no right to discovery under infor- mal procedure and concluded that he had not been diligent in seeking adjournment for retain- ing counsel or seeking relevant advice even from court web- site. Order relating to discovery schedule as if taxpayer was pro- ceeding through general proce- dure was issued in error arising from many appeals involving tax preparer's clients, as he had instead elected to proceed under informal procedure. It was not unfair for Tax Court judge to proceed without giving taxpayer right to discover documents that were mostly evidencing mate- rial facts listed in notice of ap- peal. Tax Court judge did not treat taxpayer unfairly or make reviewable error in denying ad- journment request. Tax Court judge used stronger language that was appropriate in dealing with questioning about affidavit but later clarified that what was meant was that affidavit's argu- ments were nonsensical. Lan- guage in itself was not sufficient, in particular circumstances of this case and taxpayer's argu- ments, to support conclusion of reasonable apprehension of bias. Grier v. Canada (2017), 2017 CarswellNat 2789, 2017 FCA 129, John Gauthier J.A., Yves de Montigny J.A., and J. Woods J.A. (F.C.A.). INCOME TAX Tax avoidance General anti-avoidance rule did not apply as Minister did not demonstrate that transaction was abusive CVC acquired Netherlands public corporation, indirectly acquiring Canadian subsid- iary. CVC indirectly stripped surplus from Canadian sub- sidiary without paying with- holding tax, using taxpayer, as holding company, to facilitate outcome. Transaction took ad- vantage of relieving exemption in s. 212.1(4) of Income Tax Act. Minister of National Revenue assessed taxpayer, finding that transaction violated General Anti-Avoidance Rule (GAAR) and attracted withholding tax. Tax Court judge dismissed tax- payer's appeal and determined that avoidance transaction was abuse of Act. Taxpayer ap- pealed. Appeal allowed. GAAR did not apply to these transac- tions because Minister did not demonstrate that transaction was abusive. There was alterna- tive means by which same result could have been achieved with- out triggering any tax or violat- ing GAAR if shares of Canadian subsidiary would have been sold to arm's length purchaser. Pur- pose of s. 212.1 of Act was not to prevent removal from Canada, by arm's length purchaser of Ca- nadian corporation, of surplus accumulated by Canadian cor- poration before acquisition of control. In this case, avoidance transactions were part of series of transactions by which control of Canadian subsidiary was in- directly acquired in arm's length transaction. Whether surplus of Canadian subsidiary was re- moved by completing alternative transactions or by completing transactions as done in this case, same surplus was removed from Canada and did not frustrate purpose of s. 212.1 of Act. Trans- actions did not frustrate s. 212.1 of Act as it was written at time of transaction, so amendments, enacted nine years after transac- tions, could not be used to find that avoidance transaction was abusive. Technical notes, budget information, and comparison between ss. 84.1 and 212.1 of Act only addressed non-arm's length sales of shares. Univar Holdco Canada ULC v. The Queen (2017), 2017 CarswellNat 5539, 2017 FCA 207, J.D. Denis Pelletier J.A., Wyman W. Webb J.A., and D.G. Near J.A. (F.C.A.); reversed (2016), 2016 CarswellNat 11075, 2016 CarswellNat 2472, 2016 TCC 159, 2016 CCI 159, Val- erie A. Miller J. (T.C.C. [General Procedure]). Federal Court Privacy and Freedom of Information FREEDOM OF INFORMATION Federal legislation Access to Information Act requiring access requests to be made to relevant government institution Applicant was criminologist whose research required mak- ing requests of federal agencies to use requested documents in research and as part of his re- search on how such requests are processed and governed. He had interest in penal policy. Appli- cant made request under Access to Information Act addressed to Access to Information co-ordi- nator at Department of Public Safety (DPS) seeking documents relating to Correctional Services Canada review panel. DPS and Commissioner of Corrections were presided over by Minister of Public Safety and Emergency Preparedness (Minister). Precip- itating event causing applicant to file access request was refusal of Secretariat of review panel to allow applicant to interview panel members before comple- tion of report. Upon being ad- vised that there were no relevant records in department, appli- cant filed complaint with office of Information Commissioner, and, 18 months later, office of Information Commissioner advised that thorough investi- gation of departmental records had been completed. Additional information contained in letter of Office of Information Com- missioner indicated that Cor- rectional Services Canada may have control of records respon- sive to request and that although Public Safety should have con- sidered transferring request to Correctional Services Canada in accordance with s. 8 of Act, this was not done. Applicant argued that since both DPS and Correc- tional Services Canada operated under same portfolio, Minister in charge of portfolio had con- trol of documents as defined by case law under Act (portfolio argument). Applicant applied for judicial review. Application dismissed. Whether standard of review was one of correctness or whether it was independent as- sessment of evidence, question was whether or not DPS con- trolled records. To apply control argument at portfolio level was to ignore scheme of Act. Based on wording of legislation, partic- ularly, definition of government institution, and case law, it could not be found that Minister's con- trol of portfolio of government agencies was determinative and to find otherwise was misinter- pretation of Act. Ability to con- trol record at portfolio record was not determinative of matter as portfolio was not government institution. Act is structured to establish separate government institutions and to require ac- cess requests to be made to rel- evant government institution. Yeager v. Canada (Minister of Public Safety and Emergen- cy Preparedness) (2017), 2017 CarswellNat 6056, 2017 Car- swellNat 958, 2017 FC 330, 2017 CF 330, E. Susan Elliott J. (F.C.). Tax Court of Canada Tax GOODS AND SERVICES TAX Rebates Appearance of building not necessarily relevant to whether substantially all of building replaced Property owner and his spouse made considerable renovations to their residential property. Minister of National Revenue rejected owner's application claiming GST new housing re- bate under Excise Tax Act, on basis that works were not suf- ficient to constitute "substantial renovation" of "all or substan- tially all of building". Owner appealed. Appeal dismissed. While owner argued that build- ing "looked like new" after reno- vation, appearance of building to naked eye was not necessarily relevant to test whether, based upon totality of renovations with careful listing of elements to be included, all or substan- tially all of building had been removed or replaced. Owner's renovations, involving removal of internal walls to combine kitchen, dining area and living room into single "great room" as well as drywall repairs, repaint- ing and re-fixturing in remain- ing rooms, did not match up even to test most favourable to granting of rebates. At best, only half of rooms of house were sub- stantially renovated. Most walls, unless torn down permanently or newly constructed, were "re- smoothed" and not removed. Renovation did not transform building beyond resemblance from its original state. CRA's analysis was sound, generous and fair, applying three method- ologies and giving owner benefit of most favourable calculation that 63 per cent of surfaces had been renovated. Owner's as- sertion that drywall should be excluded from consideration or calculation could not suc- ceed, as it was integral to walls and served primary function as modern material used as clad- ding placed upon vertical studs to be painted, papered or cov- ered decoratively. Any finding in precedent concerning drywall's inclusion in calculation was obi- ter and fully reconcilable with this approach. Whittall v. The Queen (2017), 2017 CarswellNat 5885, 2017 CarswellNat 6264, 2017 TCC 212, 2017 CCI 212, Randall S. Bocock J. (T.C.C. [Informal Procedure]). INCOME TAX Administration and enforcement Issue of whether reference to social insurance number differed depending on context required trial Taxpayer brought motion under Rule 58 of Tax Court of Canada Rules for determination of issues relating to whether "Social In- surance Number" referred to in s. 237(1) of Income Tax Act was to be distinguished from "social insurance number" found on several CRA forms. It was clear from motion material that ques- tions related directly to whether taxpayer exercised due diligence for purposes of gross negligence penalty assessed. Penalty was one of two issues to be decided as set out in taxpayer's amend- ed notice of appeal. Amended notice of appeal stated that tax- payer was no longer disputing that approximately $1,000,000 of unreported insurance sales commission related income from his company over four taxation years was properly re- assessed. In addition to penalty issue, amended notice of appeal sought to claim approximately $100,000 of expenses incurred to earn insurance sales related to income. Whether taxpayer had or not exercised relevant due diligence sufficient to satisfy penalty provision in issue was dependent upon facts and cir- cumstances including taxpayer's credibility in satisfying court that it was reasonable for him not to report income because of fact that Act and CRA forms did not consistently capitalize term "Social Insurance Number" but at times used upper case and at times used lower case, and that sometimes acronym "SIN" was used without proper definition. It may require court to go on to decide whether that confusion reasonably caused him to think he should characterize insur- ance sales commission related income as "public money" as de- fined in Financial Administra- tion Act. Motion dismissed. An- swer to taxpayer's two questions would not resolve appeal. There would still remain substantive issue of expenses that taxpayer sought to claim as deductions against his unreported income. Amount of penalty would be af- fected by any expenses allowed. Issues in taxpayer's two ques- tions could arguably meet re- quirements of Rule 58, however, issues were best left to trial judge in circumstances. Questions could not be properly decided by judge on motion in any man- ner that would reduce amount of time to hear and decide motion and remaining appeal. Taxpayer agreed that his initial answers to his questions were wrong. An- swers to them were no longer in dispute and did not need to be determined in order to resolve appeal. Marples v. The Queen (2017), 2017 CarswellNat 3270, 2017 TCC 129, Patrick Boyle J. (T.C.C. [General Procedure]). Ontario Civil Cases Bankruptcy and Insolvency PRACTICE AND PROCEDURE IN COURTS Costs Serious and failed allegations of misconduct attracting substantial indemnity cost consequences In May 2015, plaintiffs obtained default judgment against de- fendant M in action claiming damages for August 2014 defa- mation. M made assignment in bankruptcy. Plaintiffs' proof of claim was accepted by trustee. With trustee's consent, plain- tiffs sought and obtained order pursuant to s. 38 of Bankruptcy and Insolvency Act for leave to commence action against M alleging he had fraudulently conveyed interest in residential property to spouse, defendant B. On June 1, 2016, plaintiffs commenced action seeking, among other things, declaration of fraudulent conveyance and declaration B held one-half of property in resulting trust sub- ject to execution by creditors. Defendants brought successful motion for summary judgment dismissing action. Motion judge found that plaintiffs' claim arose many years after alleged fraudu- lent conveyance of M's interest in home to B and that plaintiffs had no standing as "creditors or others" under Fraudulent Con- veyances Act in respect of im- pugned transfer. Hearing was held to determine costs. Defen- dants were awarded $20,000 in costs on substantial indemnity basis, inclusive of disbursements

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