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February 12, 2018

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Law Times • February 12, 2018 Page 15 CASELAW tion. Taxpayer brought applica- tion for judicial review seeking to have decision rejecting voluntary disclosure set aside and to have court direct CRA to process disclosure application. CRA agreed that decision should be set aside, but brought un-named motion accepting only first part of taxpayer's claimed relief. Pro- thonotary dismissed CRA mo- tion. CRA appealed. Appeal dismissed. Prothonotary cor- rectly dismissed motion due to deficiencies in pleadings, which were vague. Prothonotary cor- rect in admitting taxpayer's affi- davit and ruling CRA's affidavit inadmissible under rule 369(3). Prothonotary only responded to motion that applied for consent to judgment from taxpayer that did not exist. Hearing on merits of application for judicial review could deal with possibility of "directed verdict" or impossibil- ity of obtaining conclusion that CRA claimed was by nature a mandamus, because conditions were not fulfilled. CRA's claim for $5,000 costs dismissed and taxpayer awarded $1,000. Appeal was reckless. Borel Christen c. Canada (Revenu national) (2017), 2017 CarswellNat 6994, 2017 Car- swellNat 6995, 2017 FC 1022, 2017 CF 1022, Yvan Roy J. (F.C.). Tax Court of Canada Tax GOODS AND SERVICES TAX Exempt supplies Guidance counsellor's licence to practice psychotherapy insufficient for classification as practitioner Registrant was guidance coun- sellor who retrained and pro- vided psychotherapy services. Minister assessed registrant for GST and penalties on basis that registrant's services were taxable and not excluded health servic- es. Registrant appealed. Appeal dismissed with exception of de- letion of penalties. Comparison of French and English versions of Excise Tax Act led to conclu- sion that in order to be quali- fied as psychology practitioner, person must practice profession of psychology. To be practitio- ner required not only offering services but being member of Order of Psychologists of Que- bec. Mere holding of licence was not sufficient to bring reg- istrant within exemption and so GST payable. Penalties de- leted as registrant had exercised reasonable diligence including accountant's advice and that of health network. Power to relieve against penalties not restricted to Minister. Court had juris- diction to relieve against penal- ties where reasonable diligence shown. Filiatrault c. La Reine (2017), 2017 CarswellNat 6729, 2017 CarswellNat 6884, 2017 TCC 232, 2017 CCI 232, Guy R. Smith J. (T.C.C. [Informal Procedure]). INCOME TAX Administration and enforcement Tax Court rules not permitting taxpayers to be represented by chartered accountant on tax appeal Representation. Individual and corporate taxpayers brought motions to be represented by chartered accountant in general procedure tax appeal. Motions dismissed. Pursuant to R. 30(1) of Tax Court of Canada Rules (General Procedure), individ- ual taxpayers could represent themselves or retain lawyer. Rule did not give court discre- tion to allow agent to represent individual. Rule 30(2) of Rules stated that where party to pro- ceeding was not individual, that party shall be represented by counsel except with leave of court and on any conditions it may determine. Section 17.1 of Tax Court of Canada Act pro- vided that parties may appear in person or be represented by counsel. Words "in person" meant "physically present". Corporation, being creation of law with no physical substance, could not be physically present in court. Traditional common law interpretation was that cor- poration could not appear in person. Tax Court of Canada's implied power to control its own process could not be used to allow representation in man- ner specifically prohibited by Act. Previous decisions of Tax Court applied R. 30(2) of Rules in manner that allowed officers, directors or shareholders to rep- resent corporation in general procedure appeals, but conf lict with s. 17.1(1) of Act was not brought to Tax Court's atten- tion in those cases so they were not of assistance. Section 17.1(1) of Act did not allow corporation to appear in person. In general procedure, only option available to corporation was to be repre- sented by counsel. Corporate taxpayers' motions were dis- missed because accountant was not lawyer and s. 17.1(1) of Act prevented anyone other than lawyer from representing cor- poration in general procedure. Masa Sushi Japanese Res- taurant Inc. v. The Queen (2017), 2017 CarswellNat 6705, 2017 TCC 239, David E. Graham J. (T.C.C. [General Procedure]). Ontario Civil Cases Bankruptcy and Insolvency PROPERTY OF BANKRUPT Family law issues Wife not permitted to advance equalization of property claim after having declared bankruptcy Parties entered into minutes of settlement that provided hus- band would assume ownership of matrimonial home as well as related debts and expenses, and pay wife $40,000 in exchange for release of her property divi- sion and spousal support claims. Following year, wife made as- signment into bankruptcy and was automatically discharged from bankruptcy nine months later. Wife now claimed she was denied independent legal advice and was under duress, and settlement was unfair. Wife brought application to set aside minutes of settlement so that she could advance claims for equalization of property, spou- sal support and constructive trust. This was trial on issue of wife's right to claim equaliza- tion of property after having declared bankruptcy. Wife was not permitted to advance equal- ization of property claim. While nothing in Family Law Act or Bankruptcy and Insolvency Act specifically prevented spouse from making claim for equal- ization of family property after bankruptcy, property of bank- rupt vested in trustee. Right to claim equalization of property fell within broad statutory defi- nition of property under s. 2 of Bankruptcy and Insolvency Act. Wife's right to claim equal- ization vested with trustee, was not assigned back to her and did not re-vest with her upon dis- charge from bankruptcy. While certain property, such as some equity in matrimonial home and RRSPs, were excluded from bankruptcy, as separating spouse, wife had claim to one- half value of husband's assets, but not proprietary interest in them. Wife had not applied to set aside assignment into bank- ruptcy, which was discretionary remedy applied sparingly, and was advised by trustee to seek legal advice but did not. Court lacked jurisdiction to undo bankruptcy and circumstances surrounding bankruptcy were not relevant to issue of whether equalization claim vested with trustee. Remaining issues were directed to trial management conference. Kinsella v. Mills (2017), 2017 CarswellOnt 21152, 2017 ONSC 7093, C.D. Braid J. (Ont. S.C.J.). COSTS Persons entitled to or liable for costs Intervenor liable for costs of main application given direct interest in outcome of proceeding Applicant union brought appli- cation to challenge constitution- ality of Restoring Mail Delivery for Canadians Act. Intervenor employer CP Corp. was granted leave to intervene as added par- ty with no condition regarding costs. Application judge granted application and held that Act unjustifiably violated ss. 2(d) and (b) of Canadian Charter of Rights and Freedoms. Judge dismissed union's motion to address outstanding remedial issue. Parties made submis- sions on whether intervenor was entitled to or liable for costs. Intervenor was liable for its pro- portionate share of union's costs of proceeding on partial indem- nity basis of $54,000, and was entitled to its costs of remedial motion on partial indemnity basis of $26,000. General rule is that intervener is neither li- able for nor entitled to costs in public and private interest con- texts, but there are exceptions. Intervenor was liable for costs of main application. Intervenor, as employer, had direct inter- est in outcome of proceeding. Since intervenor was not acting purely in public interest, court could deviate from general rule. Intervenor's involvement was extensive and it provided differ- ent and helpful perspective by addressing employer's interests. Intervenor was not successful on application and anticipated that it could be entitled to or liable for costs. Intervenor was entitled to its costs of remedial motion. Intervenor had direct and private interest in remedial motion, provided different and helpful perspective, and was successful. Parties expended time and resources over and above preparation for main ap- plication so separate costs deter- mination was appropriate. Canadian Union of Postal Workers v. Her Majesty in Right of Canada (2017), 2017 CarswellOnt 18884, 2017 ONSC 6503, Firestone J. (Ont. S.C.J.); additional reasons (2017), 2017 CarswellOnt 2947, 2017 ONSC 292, Firestone J. (Ont. S.C.J.). DEFAULT PROCEEDINGS Application to set aside default judgment Parties' transfer of family home set aside as fraudulent conveyance Following separation, common law spouses, P and N, entered agreement pursuant to which N transferred his interest in joint- ly-owned family home, valued at $350,000, to P and she assumed responsibility for all expenses associated with home, including mortgage. Transfer registered in spring 2016 referred to transfer for consideration of $137,115.94, amount representing one-half of outstanding mortgage. One month later, judgment credi- tor, who had obtained and filed arbitration awards against N totaling $33,961.66 prior to separation, brought action to set transfer aside under Fraudu- lent Conveyances Act. P and N were noted in default. Creditor was granted default judgment declaring transfer null and void and directing N to be reinstated as registered owner. In spring 2017, P brought motion to set default judgment aside. Motion dismissed. P had no adequate explanation for her failure to defend action. Her claim that she had relied on N's assurances that documents served by credi- tor were none of her concern and her claim that she believed she had retained counsel to deal with matter were inconsistent. P was unable to establish she had brought motion without delay after learning of judgment. Her claim she had not learned of de- fault judgment until early 2017 was not supported by evidence regarding delivery of docu- ments. N had been deemed to admit allegations in statement of claim, including that he had transferred interest in prop- erty with intent to defeat, hin- der, delay or defraud creditors. While there was no suggestion P had notice or knowledge of N's fraudulent intent, or that she had not been acting in good faith, her suggestion that as- sumption of existing mortgage and agreement to take primary responsibility for care of chil- dren constituted good consid- eration for N's abandonment of share of equity in home provid- ed only weak defence. It had in- sufficient merit to warrant order setting default judgment aside. Labourers' International Union of North America, local 183 v. Pearcey et al (2017), 2017 CarswellOnt 19613, 2017 ONSC 7377, D.A. Broad J. (Ont. S.C.J.). SUMMARY JUDGMENT Evidence on application Plaintiffs entitled to summary judgment for deficiencies on power of sale Plaintiffs were in business of holding investments and providing mortgages. Parties brought motions dealing with three different actions on four different properties, mortgages on which were in default. Sale of each property resulted in defi- ciencies. Plaintiffs brought mo- tion against defendant build- ers for summary judgment for liquidated damages due under mortgages registered against properties previously owned by defendants, pre-judgment and post-judgment interest, dismissal of defendants' coun- terclaim, and associated costs. Defendants brought motion for partial summary judgment holding plaintiffs liable for damages for breach of oral con- tract. Plaintiffs' motion granted; defendants' motion dismissed. Evidence was extensive and comprehensive, and was suf- ficient for court to make find- ings of fact, draw inferences, and apply law to facts to render final summary judgment. Fair and just determination could be reached on merits. Plaintiffs were entitled to summary judg- ment for deficiencies on power of sale on all four properties. Defendants failed to establish existence of oral agreement and were not entitled to partial sum- mary judgment. Plaintiffs did not lead defendants to suppose that they would not enforce strict rights under mortgages. Plaintiffs were entitled to judg- ment against defendants in amount of $771,704, plus pre- and post-judgment interest. Defendants' counterclaim and motion dismissed. Magenta Mortgage Invest- ment Corporation, et al. v. Ashlar Construction Ltd., et al. (2017), 2017 CarswellOnt 17149, 2017 ONSC 6621, A. Doyle J. (Ont. S.C.J.).

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