Law Times

Page 14 February 26, 2018 • Law Times www.lawtimesnews.com CASELAW Supreme Court of Canada Estoppel ESTOPPEL IN PAIS Promissory estoppel There could be reliance on promise to convey interest by someone whose interest was uncertain Elderly mother had two adult sons, N and M, and adult daugh- ter, G. In April 2001, mother made Declaration of Trust, transferring house and other as- sets into her own and G's names in joint tenancy, and made will naming G executrix, trustee and beneficiary of half of estate, with balance to M and N if G saw fit. In 2007, M moved from England to look after mother on G's as- surance that G would sell him her one-third interest in house. M looked after mother until her death in August 2010. G took no steps to divide estate. N and M brought successful action for declarations that G held mother's home and investments in trust for estate and that M was en- titled to purchase G's one-third interest in home, and for order distributing home and invest- ments in accordance with 2002 will. Trial judge held that M acted to his detriment in mov- ing from England to look after his mother, relying on G's agree- ment to his conditions for move, and that, in doing so, M acted reasonably. Trial judge also held that M's right to purchase G's one-third interest in house was minimum required to satisfy equity. G was successful in part on appeal. Court of Appeal ruled that trial judge erred in finding that M acquired right to acquire G's share by proprietary estop- pel. Assurance given by G to M was based on uncertainty so as to undermine any claim based on proprietary estoppel. There could not be reasonable reliance on promise to convey interest by someone who did not have such interest or whose interest was uncertain. M appealed. Appeal allowed. Trial judge was correct. Proprietary estoppel was estab- lished. G made representation in promising to sell her interest in home, and M expected to en- joy right or benefit over property through that promise. M suf- fered detriment through all that he gave up to move to care for his mother. It was reasonable for M to rely on that expectation even though G did not have interest in house at time promise was made. Reasonableness is circumstan- tial. It would be out of step with equity's purpose to make hard rule that reliance on promise by party with no present interest in property can never be reason- able. That G did not own an in- terest at time of M's reliance was not barrier to the success of pro- prietary estoppel claim. As soon as G received interest in property promissory estoppel will attach. Cowper-Smith v. Morgan (2017), 2017 CarswellBC 3482, 2017 CarswellBC 3483, 2017 SCC 61, 2017 CSC 61, McLach- lin C.J.C., Abella J., Moldaver J., Karakatsanis J., Wagner J., Gas- con J., Côté J., Brown J., and Rowe J. (S.C.C.); reversed (2016), 2016 CarswellBC 1238, 2016 BCCA 200, Saunders J.A., D. Smith J.A., and Willcock J.A. (B.C. C.A.). Federal Court of Appeal Tax INCOME TAX Tax avoidance Section 97(2) not frustrated when deferred recapture untaxed so long as holding period met Taxpayer engaged in series of transactions involving roll- ing three real estate properties through tiered partnership struc- ture, increasing adjusted cost base and selling interests to tax-exempt entities without tax being paid on latent recapture and accrued gains. Minister's reassessment applied s. 100(1) of Income Tax Act on resulting capital gain giv- ing rise to taxable capital gain of $148,187,562.00 ref lecting recap- ture of $116,591,744.00 and tax- able capital gain of $32,203,408.00; $21,285,500.00 being attribut- able to depreciable property and $10,917,908.00 attributable to non-depreciable property. Tax Court judge held that transaction did not to amount to abusive tax avoidance. Minister appealed. Appeal allowed in part. Inquiry as to whether abuse was ques- tion of mixed fact and law and subject to standard of palpable and overriding error. Tax Court judge focused attention on three year holding period in s. 69(11) of Act, and concluded that s. 97(2) not frustrated when deferred re- capture went untaxed, so long as holding period met. No basis for Tax Court judge's conclusion that certainty, predictability and fair- ness in tax law required that three year limitation found in s. 69(11) be applied to s. 97(2). Allowing property taxed at 50 per cent rate to augment value of property taxed at 100 per cent would result in obvious revenue loss which is why depreciable property that gave rise to 100 per cent rate can- not be bumped. Bump pertaining to depreciable property on which CCA has been claimed would in- crease UCC and decrease latent recapture which is subject to 100 per cent rate of inclusion. Practi- cal effect was that GAAR need no longer be resorted to prevent result achieved. Result which allowed taxpayer to avoid pay- ing tax on latent recapture in the amount of $116,591,744.00 frus- trated s. 100(1)(b). Minister could not reassess taxpayer on basis that overall result achieved by circum- scribed use of bump provisions was abusive. Amounts included under s. 100(1)(a) and 100(1)(b) did not ref lect reasonable conse- quences as no abuse resulted from avoidance of taxable capital gain in of $10,917,900.00 under former and only abuse of latter pertained to avoidance of tax on recapture, agreed to be $116,591,744.00. Re- assessment referred back to Min- ister for reassessment on basis that s. 100(1) gave rise to taxable capi- tal gain of $116,591,744.00 rather than $148,187,562.00. Canada v. Oxford Proper- ties Group Inc. (2018), 2018 Car- swellNat 173, 2018 FCA 30, Marc Noël C.J., Eleanor R. Dawson J.A., and Donald J. Rennie J.A. (F.C.A.); reversed (2016), 2016 CarswellNat 4541, 2016 TCC 204, Steven K. D'Arcy J. (T.C.C. [General Procedure]). Federal Court Aboriginal Law ABORIGINAL LAW Miscellaneous Reasonable for Minister of Indigenous and Northern Affairs Canada to prevent estate from being spent on litigation in absence of evidence to support challenge to will Wills and estates. Prior to pass- ing, deceased wrote two wills. In first will, deceased left all his pos- sessions to son and named son executor of estate and in second will, son received nothing. Son wrote to Minister of Indigenous and Northern Affairs Canada objecting to second will on basis of duress, undue inf luence, testa- mentary capacity and hardship. Minister retained jurisdiction of deceased's testamentary matters and approved his will. Son ap- pealed. Appeal dismissed. Given limited resources of estate, it was reasonable for Minister to de- cide to retain jurisdiction to pre- vent estate from being spent on litigation when no evidence was provided to support son's allega- tions, and given that parties who objected to transfer did provide medical evidence from his doc- tor of capacity. Minister reason- ably interpreted Indian Act to mean that issues under section 46 were appropriately addressed in separate application to void will if Minister first approved will. Par- liament expressly created section 46 of Indian Act as distinct will challenge, which was challenge distinct from approval under sec- tion 45 pursuant to section 42. Thorne v. Canada (2017), 2017 CarswellNat 7039, 2017 CarswellNat 7570, 2017 FC 1116, 2017 CF 1116, Glennys L. McVeigh J. (F.C.). Administrative Law PREREQUISITES TO JUDICIAL REVIEW Miscellaneous Failure to satisfy costs order resulted in finding of civil contempt, warrant of committal, arrest, and imprisonment Corporation controlled by ap- plicant, NB Ltd., commenced ac- tion in Ontario Superior Court of Justice against 62 defendants. After NB Ltd.'s action was stayed, a number of defendants sought and successfully obtained costs against applicant personally be- cause of his obstructionist be- haviour in litigation. Applicant's failure to satisfy costs order ul- timately resulted in him being found in civil contempt by co- respondent, Honourable Mister Justice BS, who issued warrant of committal for applicant's arrest and imprisonment. Applicant filed complaint about Justice BS's conduct in issuing warrant with Canadian Judicial Council ("CJC"). CJC's Executive Direc- tor dismissed complaint. Appli- cant now applied under section 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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