Law Times

Page 18 April 9, 2018 • lAw Times www.lawtimesnews.com Tax Court of Canada Tax INCOME TAX Administration and enforcement Negligence of counsel not constituting reason for granting extension of time to appeal Five taxpayers participated in donation programme in 2002 or 2003 taxation years and claimed corresponding donation tax credits for those years. Each tax- payer was reassessed by Minister of National Revenue in respect of donation arrangement and each objected to reassessment. After considerable delay, each reassess- ment was confirmed by Minister and each taxpayer had 90 days from date of mailing of Notice of Confirmation within which to file Notice of Appeal but each failed to do so. Each taxpayer filed application for order ex- tending time to file Notice of Ap- peal pursuant to s. 167 of Income Tax Act. Applications dismissed. Parties agreed that ss. 167(5)(a) and (b) were not in issue as each of applications was filed within one year extended time limit and there were reasonable grounds for underlying appeal of dona- tion arrangement. Taxpayers had bona fide intention to appeal within 90-day period limited by s. 169(1). Taxpayers were not dili- gent in following up on efforts of P Corp. to file appeals. P Corp. was negligent in discharging its duties to its clients. Taxpayers had not adequately explained why ap- peals were filed beyond 90-day limit and why they were delayed beyond that time limit. Applica- tions were not filed as soon as circumstances permitted. Negli- gence or carelessness of agent or counsel did not constitute just and equitable reason for granting extension of time to appeal. Amrite v. The Queen (2018), 2018 CarswellNat 122, 2018 Car- swellNat 594, 2018 TCC 11, 2018 CCI 11, Rommel G. Masse D.J. (T.C.C.). INCOME TAX Tax credits Child not qualified dependent when not residing with taxpayer Taxpayer and common law partner had child, and shortly after taxpayer was diagnosed with multiple sclerosis. Parties separated. Commencing later in June 2013, child had 40 per cent of time with taxpayer and with mother 60 per cent. Minister made four redeterminations, de- nying taxpayer Child Tax Benefit (CCTB) and GST credit. Minister confirmed redetermination over taxpayer's objection and tax- payer appealed. Appeal allowed in part. For earlier of two periods (July 2012 to June 2013) taxpayer was "shared-custody parent" and hence "eligible individual". Within that period taxpayer was not cohabiting with child's mother, did reside with child on an equal or near equal basis rela- tive to mother and did primar- ily fulfil responsibility for care and upbringing of child when residing with child Monday to Wednesday and every second weekend. For subsequent period July 2013 to June 2014 when tax- payer moved to parents' Thorn- hill home, and weekly schedule then shifted to only from Friday late afternoon to Sunday early evening, taxpayer no longer lived with child on equal or near equal basis. Taxpayer entitled to CCTB, but only from July 2012 to June 2013. Minister denied GST credit on assumption that child did not reside with taxpayer during rel- evant period, thus child was not a "qualified dependent" of taxpayer within meaning of s. 122.5(1) of Income Tax Act. As taxpayer was a s. 122.6 "eligible individual" by reason of being "shared-custody parent" taxpayer was entitled to GST/HSTC for period January 2013 to April 2013. Taxpayer not entitled to CCTB for July 2013 to June 2014, nor GST credit from July 2013 to April 2014. Furlan v. The Queen (2018), 2018 CarswellNat 136, 2018 Car- swellNat 595, 2018 TCC 25, 2018 CCI 25, B. Russell J. (T.C.C. [In- formal Procedure]). Ontario Civil Cases Alternative Dispute Resolution RELATION OF ARBITRATION TO COURT PROCEEDINGS Stay of court proceedings Inclusion of arbitration agreement in contracts not making them unconscionable Defendants were part of group of companies known as "Uber" whose computer software appli- cations had transformed trans- portation business, most particu- larly taxi and limousine business, and restaurant delivery business. Plaintiff entered into several con- tracts with Uber for use of appli- cations for purpose of delivering food from restaurants to con- sumers. Contracts provided they were governed by law of Nether- lands and included agreement to arbitrate disputes in Netherlands. Plaintiff alleged he and oth- ers who used Uber applications were employees of Uber and were entitled to benefits of Employ- ment Standards Act, 2000 (ESA). Plaintiff brought proposed class proceeding against defendants for declaratory and other relief. Defendants brought motion for order staying proceeding in favour of arbitration in Nether- lands. Motion granted. Interna- tional Commercial Arbitration Act, 2017 applied rather than Ar- bitration Act, 1991 since agree- ments were both commercial and international, though outcome would have been same under latter Act. General rule was that challenge to arbitrator's jurisdic- tion should be first resolved by arbitrator. Under what is known as competence-competence prin- ciple, if there is arguable or prima facie case that arbitrator has juris- diction, court should defer issue of jurisdiction to arbitrator. ESA did not expressly oust arbitration agreements, and issue of whether employment claims were arbi- trable was issue subject to com- petence-competence principle. Inclusion of arbitration agree- ment in contracts did not make them unconscionable, so plaintiff failed to bring case within court's very limited jurisdiction to refuse stay where parties had agreed to submit their dispute to arbitra- tion. Heller v. Uber Technologies Inc. (2018), 2018 CarswellOnt 1090, 2018 ONSC 718, Perell J. (Ont. S.C.J.). Business Associations CHANGES TO CORPORATE STATUS Winding-up Commissioning report on fair market value contrary to parties' agreement Applications arose out of break- down of relationships between group of companies managed and owned by family. One ap- plication sought declaration that certain corporations were in partnership, order dissolving partnership, and ancillary relief, or, alternatively, order winding up corporations. Other applica- tion sought declaration of op- pressive conduct and compensa- tion, or, alternatively, contribu- tion or indemnity in respect of tax liability. Parties agreed that appropriate remedy arising from breakdown of their relationships was resolution of any amounts outstanding between them and buy-out at fair market value of minority shareholdings. On ba- sis of set-off, respondents were entitled to $587,037, to be held in trust; indemnity issue remained outstanding. Expert evidence on valuation was accepted; oppos- ing submissions were rejected, being based on mere conjecture. Submission that further report on fair market value should be commissioned was contrary to parties' agreement that issue should be determined in this proceeding. Long term liabilities as shown on balance sheet, less taxes, could be used to determine fair market value. There was no limitation issue for repayment of loans; waiving of repayment had extended start of any limitation period. Paria Enterprises Inc. v. 829194 Ontario Inc. (2018), 2018 CarswellOnt 883, 2018 ONSC 124, L.A. Pattillo J. (Ont. S.C.J. [Commercial List]). SPECIFIC MATTERS OF CORPORATE ORGANIZATION Shareholders Under oppression remedy it is effect, not intent, that matters Defendant T controlled defen- dant pharmacy and two other defendant companies. Phar- macy's assets were sold. Plaintiff, former shareholder and unpaid creditor of pharmacy, alleged T transferred monies among de- fendants to defeat, hinder, delay or prejudice payment to plaintiff. Plaintiff brought action against defendants claiming oppression under Ontario Business Cor- porations Act. Plaintiff brought motion for summary judgment which was granted in part. De- fendants appealed, conceding that T and pharmacy were liable, but alleging motion judge erred in finding two other defendant companies also liable. Appeal dismissed. Once defendants conceded T and pharmacy were liable, they conceded that under oppression remedy it is effect not intent that matters, as motion judge found. Motion judge's rea- sons were sufficient to support finding that two other defendant companies were affiliates. Tam v. El-Hawary (2018), 2018 CarswellOnt 890, 2018 ONCA 70, John Laskin J.A., Robert J. Sharpe J.A., and Fair- burn J.A. (Ont. C.A.); affirmed (2017), 2017 CarswellOnt 6283, 2017 ONSC 2602, L. Ratushny J. (Ont. S.C.J.). Civil Practice and Procedure CLASS AND REPRESENTATIVE PROCEEDINGS Representative or class proceedings under class proceedings legislation Common issues included negligent enforcement of bylaw, unlawful amendments to bylaw, and unlawful tax Municipality regulated taxi in- dustry with taxi bylaw and had four licensed taxi brokers and 768 taxi plate licensees. Group of companies called "Uber" pro- vided platform for alternative to traditional taxi services, essen- tially amounting to software ap- plication that allowed individuals with personal vehicles to offer transportation for compensa- tion. Uber began operating in municipality in 2014, and mu- nicipality did not take meaning- ful action under bylaw against Uber or its users. Municipality amended bylaw in 2016 to cre- ated new category of license to allow Uber to continue to operate in Ottawa. One broker and two licensees brought action against municipality for relief to address various concerns, including al- leged negligent enforcement of bylaw, unlawful amendment of bylaw, and discrimination. Bro- ker and licensees brought motion for certification of action as class proceeding. Motion granted on terms. Approved common issues were whether municipality was negligent in enforcing bylaw over two-year period; whether amend- ments to bylaw were unlawful; whether municipality's conduct was discriminatory; whether fees collected under bylaw consti- tuted unlawful tax; and whether assessing damages in aggregate was appropriate remedy. Claims based on negligent enforcement of bylaw, unlawful amendments to bylaw, and unlawful tax, and issue of whether damages could be assessed in aggregate, were common issues since success for one class member would mean success for all class members. While 6-7 per cent of holders of taxi licenses were not members of minority groups and therefore did not have claim for discrimi- nation, proposed class members who were not members of mi- nority group shared substantial, if not identical, common ingredi- ents with all members of class on other common issues. Goals of access to justice and efficient use of judicial resources would be met by having discrimination issue determined in one proceeding, and without creating subclass for those class members who were members of minority groups. If liability is proven but determin- ing damages on aggregate basis is not found to be appropriate, then damages would be determined on individual basis. Metro Taxi Ltd. v. City of (Ottawa) (2018), 2018 Car- swellOnt 523, 2018 ONSC 509, R. Smith J. (Ont. S.C.J.). JUDGMENTS AND ORDERS Final or interlocutory Order conditionally approving funding agreement subject to changes was interlocutory order Plaintiffs were proposed repre- sentative plaintiffs in proposed class action. Proposed repre- sentative plaintiffs, proposed class counsel entered into fund- ing agreement with company. Motion judge conditionally approved funding agreement, subject to changes being made to certain terms. Proposed rep- resentative plaintiffs, proposed class counsel and company all objected to required changes and appealed conditional ap- proval order. Defendants brought motion to quash ap- peal. Motion granted; appeal quashed. Order in issue was interlocutory order and only appealable to Divisional Court with leave. Order in issue here did not finally dispose of rights of proposed class counsel and company. No substantive right was determined by conditional approval order. While result was end of litigation because pro- posed representative plaintiffs would not have funding to pur- sue their claim, that result was consequence of decision not to amend funding agreement, not necessary result of order. Houle v. St. Jude Medical Inc. (2018), 2018 CarswellOnt 1035, 2018 ONCA 88, Janet Simmons J.A., L.B. Roberts J.A., and I.V.B. Nordheimer J.A. (Ont. C.A.). PRACTICE ON APPEAL Time to appeal Claim that bank suffered no prejudice because it was insured was irrelevant Appellant B had residential mort- gage through respondent bank. B CASELAW

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