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Page 14 February 5, 2018 • Law Times www.lawtimesnews.com CASELAW hearing was held, with direction issued to taxpayer to bring mo- tion for extension of time to ap- peal reassessment of 2007 taxa- tion year by specified deadline. Taxpayer retained counsel as was also directed and then, after another period of self-represen- tation, retained current counsel. Taxpayer applied for extension of time to appeal taxation years 2007 to 2012. Application dis- missed. As taxpayer did not file objections to latest reassessment of 2011 taxation year or to reas- sessment of 2012 taxation year, there was no jurisdiction to en- tertain application for extension of time to file notice of appeal. Application respecting 2007 to 2010 taxation years was made within legislative timelines so taxpayer had complied with s. 167(5)(a) of Act but taxpayer was also required to address three factors relevant to grant- ing extension. Submissions by taxpayer's counsel about fail- ure, omissions and negligence on part of various prior counsel engaged, unsupported by tax- payer's testimony or indepen- dent evidence, did not establish he was unable to act or instruct another to act in his name. While there was insufficient evidence to establish this first condition under s. 167(5)(b) of Act, taxpayer did meet second condition of bona fide inten- tion to appeal but was unable to meet remaining factors for grant of extension. There was insufficient evidence to meet taxpayer's onus of establishing that it would be just and equi- table to grant extension, that he made application as soon as cir- cumstances permitted, and that there were reasonable grounds for appeal. Gionet v. The Queen (2017), 2017 CarswellNat 2605, 2017 CarswellNat 3681, 2017 TCC 97, 2017 CCI 97, Diane Campbell J. (T.C.C.). INCOME TAX Business and property income Taxpayer knowingly misrepresenting reported income or grossly negligent subject to penalties Corporate taxpayer had four shareholders and was in busi- ness of importing and exporting textile products manufactured in Pakistan by non-arm's length entity NE. Manufactured prod- ucts were shipped directly from Pakistan to taxpayer's custom- ers. Taxpayer maintained ac- count where it recorded invoices received from NE, payments made to NE by taxpayer, and payments received by NE di- rectly from customers. Taxpayer claimed overseas management expenses, incurred pursuant to service and funding agreement between taxpayer and NE, in tax returns. In reassessments for two taxation years, Minister of National Revenue disallowed claimed business expenses on basis that expenses did not re- late to distribution or shipment of merchandise to customers and that taxpayer did not pay expenses to earn business in- come. Minister applied gross negligence penalties. Taxpayer appealed. Appeal dismissed. Books and records maintained by taxpayer were deficient. Tax- payer did not provide documen- tation to substantiate amounts in each category of expenses in "other expenses" claim and did not explain how they were incurred for purpose of earn- ing income from its business. Minister established that tax- payer's misrepresentation was attributable to taxpayer's neglect or carelessness. Taxpayer oper- ated international trade business and used accountant to prepare financial statements and tax re- turns. Taxpayer knowingly mis- represented its reported income or had been grossly negligent by not paying attention to claimed expenses. Amounts subject to penalty were material to report- ed income. Celeste Resources Canada Inc. v. The Queen (2017), 2017 CarswellNat 6439, 2017 Car- swellNat 6726, 2017 TCC 200, 2017 CCI 200, Réal Favreau J. (T.C.C. [Informal Procedure]). INCOME TAX Exemptions Portion of settlement allotted as retirement allowance was taxable Individual worked for company M in their Montreal office. Indi- vidual was fired by M in Decem- ber 1990. Following dismissal by M, individual brought oppres- sion remedy against group in 1991. 1994 settlement between parties determined that com- pany was to acquire 24 shares that individual owned in M. In- dividual agreed to be employed again by M and signed contract. In 2003, merger between com- panies K and M formed KM group. Individual alleged KM did not respect terms of his em- ployment contract and did not care about promises made by M when signing contract. In- dividual was fired in July 2006 by company KM. According to individual, KM implemented series of shenanigans to justify his dismissal. Individual com- menced second oppression rem- edy, and in alternative, damages and injunction against KM. Settlement was reached accord- ing to which, KM, in exchange for release, agreed to pay con- fidential amount of individual. Individual testified that accord- ing to settlement, half of confi- dential amount was allotted to as retirement allowance and was taxable. Other half was granted as damages and was not taxable. Minister of National Revenue alleged entire amount was tax- able as retiring allowance pur- suant to s. 248 of Income Tax Act; or that amount was tax- able as loss of income as result of non-compliance with terms of contract by KM. Individu- al appealed. Appeal allowed. Amount paid by company had dual purpose; it was not solely related to individual's dismissal. Release signed by individual in exchange for amount waived not only his employment, but also all remedies, including op- pression remedy, which could also serve as action for damages and applicable interest. Testi- monies all pointed to fact that neither M, nor subsequently, KM group, kept their promises to individual. Individual was given competitive advantages which were later removed; he was fired not once, but twice. For individual, this was collapse of life, form of harassment and humiliation. While confiden- tial amount was higher than amounts awarded by Quebec courts, it was clearly established that judicial scales did not inf lu- ence amount paid to individual. This was also true in respect of amount of leave-off allowance paid off to individual. Confi- dential amount represented non-taxable tort damages. Abenaim c. La Reine (2017), 2017 CarswellNat 6587, 2017 CCI 223, Johanne D'Auray J. (T.C.C. [General Procedure]). Ontario Civil Cases Civil Practice and Procedure DISCOVERY Medical examination Condition imposed on examining doctors to author own reports and conduct own research Conditions. Plaintiff brought action for damages for injuries arising out of motor vehicle acci- dent. Defendants requested that plaintiff undergo two indepen- dent medical examinations by orthopedic surgeon and neuro- psychologist. Parties agreed on seven conditions for examina- tions but plaintiff asked that re- search for, and preparation of re- port be prepared only by exam- ining doctor, and that records not be shared with third parties. Defendants claimed plaintiff failed to attend examination, resulting in cancellation fee of $3,107. Defendants brought mo- tion to compel plaintiff to attend medical examinations. Motion judge granted motion in part and ordered plaintiff to submit to examinations. Condition was imposed that examining doctors were to author own re- ports, which included that doc- tors conduct own research and review. Condition was imposed that doctors could not disclose plaintiff 's health records and in- formation to third parties. Plain- tiff was ordered to pay cancella- tion fee of $776. Parties made additional submissions for clari- fication on use of questionnaire and non-disclosure by expert. Order was made. Condition that doctors not use questionnaire in advance of assessment did not preclude use of psychometric testing forms or tests. Condition that health records and infor- mation of plaintiff shall not be disclosed by expert to any other person or entity other than de- fence counsel did not preclude expert from using administra- tive staff or using psychometrist for purpose of completing psy- chometric testing. Kushnir v. Macari (2017), 2017 CarswellOnt 8516, 2017 ONSC 3382, Helen MacLeod- Beliveau J. (Ont. S.C.J.); ad- ditional reasons (2017), 2017 CarswellOnt 1178, 2017 ONSC 307, Helen MacLeod-Beliveau J. (Ont. S.C.J.). Construction Law CONTRACTS Breach of terms of contract Defendant entitled to be separately represented at appeal Plaintiffs brought action against defendant installer for install- ing septic system that failed prematurely. Defendant health unit was later added as defen- dant. Defendants successfully moved to dismiss action during trial on basis that it was statute- barred, and costs were awarded to defendants. Plaintiffs' appeal was dismissed and defendant installer's motion for leave to ap- peal costs award was dismissed. Issues arose concerning costs. Defendant installer's costs of ap- peal and proposed cross-appeal, inclusive of HST and disburse- ments, in amount of $5,125.00, and defendant health unit's costs of appeal, inclusive of HST and disbursements, in amount of $4,237.52, to be paid by plain- tiffs within 30 days. Defendant installer obtained result on ap- peal at least as favourable as terms of his offer to settle. In cir- cumstances of case, defendant installer was entitled to his costs in relation to appeal on partial indemnity basis for period prior to date of offer and on substan- tial indemnity basis thereaf- ter. Court was not prepared to award defendant installer any costs in relation to proposed cross-appeal. There could be no doubt that defendant health unit was successful party on appeal. Defendant health unit was enti- tled to be separately represented at appeal. Frederick v. Van Dusen (2018), 2018 CarswellOnt 22, 2018 ONSC 106, R. Ryan Bell J. (Ont. Div. Ct.); additional reasons (2017), 2017 Carswel- lOnt 17500, 2017 ONSC 6681, R. Ryan Bell J. (Ont. Div. Ct.). CONTRACTS Subcontracts Counterclaim for property damage overlapping with insurance claim against builders' risk policy Covenant to insure. Govern- ment and corporation entered contract for design, construc- tion, finance and maintenance of parkway project, corporation contracted defendant for design and construction, and defen- dant subcontracted plaintiff to design and construct gird- ers. Defendant claimed girders were defective and terminated subcontract. Plaintiff brought action for damages for breach of contract. Defendant brought counterclaim for property dam- age and loss. Defendant also brought separate insurance claim against its builders' risk policy for damages including cost of repairs, replacement, re- construction and making good on property loss. While insur- ance claim was put forth on dif- ferent legal basis, losses at least partially overlapped with those in this action. Plaintiff brought motion for determination of question of law as to whether defendant was precluded at law from recovering sums claimed in counterclaim that were same as those claimed under insur- ance policy that insured defen- dant and subcontractors. Mo- tion dismissed. Whether or not subcontract was even enforce- able was in dispute, and turned on material facts that were also in dispute. Pleadings made it clear trial court would have to make findings on negotiations, contract and reliance on docu- ments, and whether there were even defects to girders. Given facts in dispute, motion under R. 21 of Rules of Civil Procedure was not feasible. While project agreement between corporation and government contained cov- enant to insure defendant and subcontractors, plaintiff was not party to agreement. Plaintiff would have to establish implied covenant in subcontract that it argued was not even enforce- able. Principles underlying bar against subrogated claims did not apply as defendant was not in position equivalent to insur- er who waived right to action. Terms of subcontract suggested allocation of risk was compli- cated matter, and it was arguable that plaintiff was intended to as- sume all risks. Freyssinet Canada Limi- tée v. Parkway Infrastructure Const. (2017), 2017 CarswellOnt 10276, 2017 ONSC 3914, E.M. Morgan J. (Ont. S.C.J.). Insurance AUTOMOBILE INSURANCE Catastrophic impairment Events, individually or cumulatively, not approaching anywhere near miscarriage of justice Plaintiffs brought action for damages for personal injury arising from motor vehicle acci- dent involving primary plaintiff. Jury awarded plaintiffs $141,500. Defendant's motion to dismiss action for failure to meet thresh- old under insurance legislation was dismissed. Plaintiff had proven on balance of probabili- ties that her accident-related in- jury, particularly somatic symp- tom disorder, created perma- nent and serious impairment of her physical and psychological functioning. Plaintiff appealed, alleging that certain events at trial led to miscarriage of jus- tice. Appeal dismissed. None of events complained of, either individually or cumulatively, approached anywhere near mis-

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