Law Times - sample

Page 14 March 19, 2018 • Law TiMes www.lawtimesnews.com Agency (CRA) that it was consid- ering assessing them personally as directors for company's un- remitted GST/HST and source deductions. Each paid one-half of unremitted amounts directly to CRA and later claimed al- lowable business investment losses (ABIL) of $606,000 with respect to amounts they paid directly to CRA. Claims were denied and taxpayers appealed. Appeals dismissed. Language in demand letter was more consis- tent with company's obligation being statutory right in Income Tax Act (ITA) or Excise Tax Act or subrogated indebtedness than loan to company. It was not pos- sible to conclude on balance of probabilities that debt or other obligation owed by company to taxpayers was acquired by them for purpose of earning income. This was fatal to possible suc- cess of these appeals given that s. 40(2)(g)(ii) of ITA deems their loss to be nil on disposition of debt or other right unless it was acquired for income earning purpose. Taxpayers had not pro- vided sufficient credible, consis- tent or corroborated evidence to establish on balance of prob- abilities facts needed to support their ABIL claims and had also not established that their claims against company were debts which was required by deemed disposition rule for bad debts and by definition of ABIL. Grubner v. The Queen (2018), 2018 CarswellNat 726, 2018 TCC 39, Patrick Boyle J. (T.C.C. [General Procedure]). INCOME TAX Employment income Transfer of single amount relating to actuarial surplus taxable as payment out of or under specified pension plan Taxpayer received T4A for pay- ment of $35,614 from taxpayer's former employer as income in 2013 taxation year. Taxpayer elected to contribute funds to RRSP from surplus amount. Minister re-assessed taxpayer to include surplus amount paid to taxpayer of $35,614 that had not been previously reported. Taxpayer disputed that payment of the $35,614 was payment of pension surplus. Taxpayer maintained that situation re- sulted in double taxation on ba- sis that amount paid into RRSP was made taxable by issuance of T4A slip and would again be taxed when RRSP paid out, as RRIF, or in lump sum(s) or oth- erwise. Taxpayer appealed re- assessments. Appeal dismissed. Taxpayer's situation was transfer of single amount which relates to actuarial surplus in whole or part and so was taxable. Subject amount became amount paid to taxpayer per s. 147.3(1) of In- come Tax Act and thus included in income under s. 56(1)(a)(C), being amount received as "pay- ment out of or under a specified pension plan". Option Election Form that taxpayer signed iden- tified amount as surplus. Mangal v. The Queen (2018), 2018 CarswellNat 25, 2018 Car- swellNat 461, 2018 TCC 8, 2018 CCI 8, B. Russell J. (T.C.C. [In- formal Procedure]). Ontario Civil Cases Bankruptcy and Insolvency PROPERTY OF BANKRUPT Choses in action Any right purchaser had in deposit was property vested in trustee when she was assigned in bankruptcy Parties entered agreement of purchase and sale of condo- minium unit, under which pur- chaser advanced $293,685 plus $33,482 for upgrades. Purchaser made assignment into bank- ruptcy from which she was sub- sequently discharged. Purchaser subsequently lost her job and was unable to pay balance and therefore in breach of agreement of purchase and sale. Purchaser commenced claim against ven- dor for return of $263,685, as agreed in resale agreement of condominium unit that she had entered into vendor upon her failure to pay balance. Vendor brought counter-claim to invoke forfeiture provision of original agreement of purchase and sale to keep whole of purchaser's advance. Application judge granted relief from forfeiture to purchaser but ordered mon- ies be paid to trustee in bank- ruptcy since she failed to make full disclosure. Vendor appealed relief from forfeiture. Purchaser cross-appealed. Cross-appeal dismissed. Pursuant to s. 71 of Bankruptcy and Insolvency Act (Act) any right purchaser had in deposit was property vested in trustee when she was assigned in bankruptcy. Trustee remained undischarged as trustee and it had released none of purchaser's property. In essence, monies be- longed to trustee. It did not ad- vance principles of Act for pur- chaser to advance, following her discharge, claim that she failed to disclose to trustee and then try to keep proceeds for herself. Scicluna v. Solstice Two Limited (2018), 2018 Carswel- lOnt 2634, 2018 ONCA 176, Doherty J.A., David M. Paciocco J.A., and I.V.B. Nordheimer J.A. (Ont. C.A.); affirmed (2017), 2017 CarswellOnt 9520, 2017 ONSC 3674, Carole J. Brown J. (Ont. S.C.J.). Business Associations SPECIFIC MATTERS OF CORPORATE ORGANIZATION Shareholders Size of plaintiff 's shareholdings was relevant factor on motion for leave to bring derivative action Plaintiff owned less than .015 per cent of shares of defendant pub- licly-traded corporation. Plain- tiff 's motion for leave to bring derivative action in name of corporation pursuant to s. 246 of Business Corporations Act was dismissed. Plaintiff appealed. Appeal dismissed. Motion judge found that derivative action did not appear to be in interests of corporation, and motion judge did not err in his overall focus on maximization of value of corporation. Motion judge used language of s. 246, referring to "interests of corporation", and expressed opinion there was no significant difference in lan- guage of s. 246 and language of "best interests" in federal legis- lation; there was no error. Mo- tion judge considered benefit of shareholder oversight, and other appropriate and relevant factors. Motion judge did not improperly consider size of plaintiff 's share- holdings, absence of participa- tion by other shareholders and existence of alternative personal action; these were all relevant factors. Decision was discretion- ary, there was no error of law or principle, there was no palpable and overriding error of fact, and deference was owed. Melnyk v. Acerus Pharma- ceuticals Corporation (2018), 2018 CarswellOnt 3115, 2018 ONSC 1353, Swinton J., Lin- hares de Sousa J., and Kurke J. (Ont. Div. Ct.); affirmed (2017), 2017 CarswellOnt 2622, 2017 ONSC 1285, H.J. Wilton-Siegel J. (Ont. S.C.J.). Civil Practice and Procedure COSTS Scale and quantum of costs Substantial indemnity costs not justified in every case where proprietary estoppel made out Commercial tenant's lease agree- ment with landlord included clause allowing her to renew for further five year term on three months' notice. When there was less than three months left in term, landlord advised that it would require vacant possession of premises at expiry date. Tenant brought successful application for declaration that lease was re- newed on basis that landlord was estopped from requiring strict compliance with terms of renewal provision. Trial judge accepted tenant's evidence of multiple ver- bal interactions with landlord's principals in which they told her that she did not need to provide written notice of renewal as cor- roborated and consistent with later recordings of conversations with principal. Trial judge held that principals' assurances were sufficient for doctrine of propri- etary estoppels as principals en- couraged tenant to believe land- lord would renew lease and she relied on that to her detriment, in- cluding by buying inventory from their business. Hearing was held to determine costs. Tenant was awarded costs on partial indem- nity basis of $22,500, inclusive of HST and disbursements. Tenant was wholly successful on applica- tion and entitled to costs but this was not appropriate case for sub- stantial indemnity costs as sought by tenant. There was no evidence of misconduct in litigation. Find- ing that landlords sought to take unconscionable advantage of tenant was made in context of test for proprietary estoppel. To conclude that such finding alone justified substantial indemnity costs, presumption that substan- tial indemnity costs were justified in every case where proprietary estoppel was made out, which was inconsistent with general prin- ciple that substantial indemnity costs are reserved for rare cases. Nor did offer justify elevated level of costs, even for day of hearing. While offer could be considered under Rule 49.13, it was delivered at almost very last minute pos- sible, and without enough time for landlords to properly con- sider it. Costs claimed by tenant were excessive. Material was not voluminous, cross-examinations were targeted and short, and legal issues were discrete. Landlords could not have fairly or reason- ably expected to have been ex- posed to partial indemnity costs award of $32,300.72 in applica- tion that proceeded efficiently and with dispatch and that dealt with circumscribed issues. Feng v. Chen (2017), 2017 CarswellOnt 4557, 2017 ONSC 1898, J.T. Akbarali J. (Ont. S.C.J.); additional reasons (2017), 2017 CarswellOnt 3009, 2017 ONSC 1360, J.T. Akbarali J. (Ont. S.C.J.). DEFAULT PROCEEDINGS Application to set aside default judgment Fact defendant could not pay judgment was not relevant to whether default judgment should be set aside When he was 16 years old and in high school defendant P drove stolen vehicle at high speed across mall parking lot, he lost control of vehicle and seriously injured plaintiff pedestrian. P pleaded guilty to dangerous op- eration of motor vehicle causing bodily harm and was sentenced to one month in juvenile deten- tion facility. P was uninsured driver, and plaintiff was covered under defendant insurer's un- insured motorist endorsement. Insurer settled plaintiff 's claims for total of $495,000, including costs. Insurer pursued right of subrogation, and default judg- ment was granted against P for full amount of settlement. P brought motion to set aside default judgment. Motion dis- missed. P was aware of default judgment for at least seven months before he filed motion to set aside, and motion was not brought promptly. Evidence did not support P's assertion that he was never served with statement of claim. P had not shown that he had arguable defence on mer- its and that default judgment should be set aside in interests of justice. Fact P could not pay judgment was not relevant con- sideration. Default judgment was fair and just and there was no good reason to set it aside. Cordeiro v. Palma (2017), 2017 CarswellOnt 4347, 2017 ONSC 1758, Edward P. Beloba- ba J. (Ont. S.C.J.). DISCOVERY Discovery of documents Materials not received, reviewed or relied on by expert could not be ordered produced as foundational to opinion Relevance. After bringing action, plaintiff produced document re- lied on, and its representative was examined for discovery. Plain- tiff 's representative provided an- swers to undertakings and action was set down for trial. Plaintiff served expert report on damages and electronic brief that included documentation relied on by ex- pert. Continued examination of plaintiff 's representative was for limited purpose of allowing defendant's counsel to examine witness in respect of documents referred to in scope of review sec- tion of expert report. Defendant made broad and sweeping re- quest for disclosure of additional documents and information it said was relevant. Defendant brought motion for production of large number of documents. Motion dismissed. Defendant was essentially seeking order requiring plaintiff to disclose documents in its possession and possession of third parties that would have been relevant for expert to consider, but relied on no authority for proposition that materials not received, reviewed or relied on by expert could be ordered produced as founda- tional to opinion. Defendant did not establish it could not com- plete proper review of plaintiff 's damages claim without informa- tion sought. Many documents sought were relied on entirely distinct project that expert did not use as comparator and ap- peared to have little in common with subject project. Defendant did not establish relevance of third party financing arrange- ments. Even if relevance was established, request was entirely disproportionate, especially con- sidering case was ready for trial. Inzola Group Limited v. The Corporation of the City of Brampton (2018), 2018 Car- swellOnt 2310, 2018 ONSC 767, Daley R.S.J. (Ont. S.C.J.). Constitutional Law CHARTER OF RIGHTS AND FREEDOMS Scope of application Reasonableness of limits on expression in advertising best decided in province where alleged breach took place Defendant company WT was public bus service in defendant municipality of W, located in Manitoba. Defendant advertising company P was granted five–year contract whereby it was granted exclusive right to sell and place ad- vertising materials on WT buses, through P's office in Manitoba. Plaintiff T, who resided in On- tario, entered into contract in On- tario with P to run ads concern- ing public funding of religious schools on buses belonging to WT. Advertisements T wished to place on WT buses would run on CASELAW

• Cover