Law Times

Law Times • may 14, 2018 Page 15 www.lawtimesnews.com within requisite timeframe of objection and appeal procedures that were available to her. Objec- tion and appeal procedures in Act constituted complete appeal procedure. Taxpayer could not argue that failure to consider notice of objection that was not filed on timely basis took mat- ter out of statutory scheme in Act and out of expertise of Tax Court of Canada. Newton v. Canada (Nation- al Revenue) (2018), 2018 Car- swellNat 1221, 2018 CarswellNat 1443, 2018 FC 343, 2018 CF 343, Michael D. Manson J. (F.C.). Tax Court of Canada Tax INCOME TAX Tax credits Payment made with investment intent not gift Taxpayer attended presenta- tions by O corporation on off- shore banking and investing, and by GI organization on its charitable work in developing countries. Taxpayer signed up for investment account with O corporation and made invest- ments. Taxpayer gave $153,230 to organization as bank draft in amount of $100,000 US. Taxpay- er claimed charitable donation tax credit for $153,230. Minister of National Revenue disallowed tax credit deduction on basis that donation did not constitute gift within meaning of s. 118.1 of Income Tax Act because tax- payer gave amount with invest- ment intent, not donative intent. Minister asserted that taxpayer entered into arrangements with organization and O corporation that would provide him with re- turn on amount given to organi- zation. Taxpayer appealed. Ap- peal dismissed. Adverse infer- ence was drawn against taxpayer for failing to call principals of organization and corporation. Unusually large amount given, taxpayer's lack of donation his- tory, and his lack of understand- ing and inquiry of what organi- zation did, made it improbable that this was gift with donative intent. Taxpayer gave amount to organization with intent of re- ceiving receipt and with invest- ment intent such that he antici- pated financial return. Amount was paid to organization as component of interconnected arrangement between taxpayer, organization and corporation. Taxpayer had investment intent when he paid amount to organi- zation, so it was not gift within meaning of s. 118.1 of Act and he was not entitled to deduction. Jensen v. The Queen (2018), 2018 CarswellNat 1153, 2018 TCC 60, K. Lyons J. (T.C.C. [General Procedure]). Taxpayer negligent in claiming charitable donations for which he had no receipts Minister re-assessed taxpayer for taxation years and disal- lowed charitable donations on ground that receipts issued by charities O and R were defective as not meeting requirements of s. 3501 of Income Tax Regula- tions and receipts lacking for other claimed donations. Tax- payer appealed. Appeal dis- missed. Addresses on receipts issued did not match registered addresses for charities. Receipts did not indicate where or when they were issued. Taxpayer re- lied on accountant to obtain receipts on basis fee dependent on refund obtained. Taxpayer did not see receipts. Taxpayer's assertion as to gifts in kind was not sufficient to meet burden of proof, which was on taxpayer. Taxpayer had claimed charitable donations for which he had no receipts and could not provide names. Taxpayer's conduct was highly negligent. Ruremesha c. La Reine (2018), 2018 CarswellNat 1139, 2018 CarswellNat 1268, 2018 TCC 57, 2018 CCI 57, Réal Fa- vreau J. (T.C.C. [Informal Pro- cedure]). Ontario Civil Cases Bankruptcy and Insolvency AVOIDANCE OF TRANSACTIONS PRIOR TO BANKRUPTCY Fraudulent preferences Payments void as transfers at undervalue when no commercial basis for transactions N Inc. operated as re-seller of data communications equip- ment. Respondent S Inc. was incorporated to help out N Inc.. Receiver was appointed in April 2015 and N Inc. was assigned into bankruptcy in July 2015. Trustee noticed that N Inc. re- ceived two separate payments from S Inc. in 2013 and 2014 totalling $497,000. Following payments, N Inc. made number of payments to S Inc. in period immediately preceding receiv- ership totaling over $1,055,581. There was no documentation to explain reason for payments. Trustee claimed transactions were transfers at undervalue to extent of excess monies received by S Inc. over and above monies paid by S Inc. to N Inc.. Trustee brought motion for declara- tion that transactions between N Inc. and S Inc. were trans- fers at undervalue and order that S Inc. pay estate of N Inc. amount of $334,841. Motion granted. There was no generally accepted commercial basis for transactions. N Inc. and S Inc. were not acting at arm's length. By entering into transactions, N Inc. intended to defraud or delay major creditor by falsify- ing receivables and payables in order to mislead creditor, who was monitoring N Inc.'s finan- cial position closely. Payments by N Inc. to S Inc. were void as transfers at undervalue. S Inc. ordered to pay estate amount of $334,841. National Telecommunica- tions v. Stalt (2018), 2018 Car- swellOnt 5360, 2018 ONSC 1101, L.A. Pattillo J. (Ont. S.C.J.). Civil Practice and Procedure CLASS AND REPRESENTATIVE PROCEEDINGS Representative or class proceedings under class proceedings legislation Reasonable to believe that adverse costs award could be overwhelming to representative plaintiff Plaintiff alleged that defendants researched, designed, manufac- tured, and installed defeat device in certain diesel engine vehicles, which rendered elements of ve- hicles' emission control systems inoperative or less effective out- side laboratory test conditions. Plaintiff also alleged that vehicles polluted far in excess of levels permitted under Canadian law. Plaintiff commenced action against defendants for roles in al- leged conduct. Plaintiff brought motion for order approving third party litigation funding agree- ment. Motion granted. It was reasonable to believe that adverse costs award in proceeding could be overwhelming to representa- tive plaintiff. Funding agreement was necessary to provide plaintiff and class members with access to justice. Plaintiff received inde- pendent legal advice on nature and terms of funding agreement, as well as obligations and poten- tial liability. Funding agreement was fair and reasonable and did not interfere with plaintiff 's right to instruct counsel. Marriott v. General Motors of Canada Company (2018), 2018 CarswellOnt 6254, 2018 ONSC 2535, Glustein J. (Ont. S.C.J.). COSTS Costs of particular proceedings Release pertaining to severance not bar to claim for improper conduct falling outside employment relationship Manager of thrift store (employ- ee) brought action against em- ployer and its National Director of Operations, C, for damages for negligence, intentional inf liction of emotional harm and breach of fiduciary duty, alleging sexual ha- rassment by C. Employee signed memorandum of settlement and release and received $10,000 from employer. Motion judge dis- missed C's motion for summary judgment and employee's motion for consolidation, finding that settlement pertained to severance only, that many alleged events occurred at work and might be because of employment, but that sexual harassment, intimidation and other improper conduct fell outside employment relation- ship, and release did not bar claim against C. Hearing was held to determine costs of motions, in- cluding second motion employee brought but abandoned during proceedings. Employee awarded costs on partial indemnity basis in amount of $17,161.22, inclusive of fees, disbursements and HST. Award represented 25 per cent reduction in fees to account for withdrawn motion. Employee was presumptively entitled to costs on summary judgment motion, and C on consolidation motion. Both motions were ap- propriate and or necessary. There was divided success but sum- mary judgment motion was more important and complex and re- quired much more preparation time. Employee's motion should have been settled earlier. Watson v. The Govern- ing Council of the Salvation Army of Canada (2018), 2018 CarswellOnt 5424, 2018 ONSC 2088, D.J. Gordon J. (Ont. S.C.J.); additional reasons (2018), 2018 CarswellOnt 2916, 2018 ONSC 1066, D.J. Gordon J. (Ont. S.C.J.). COSTS Particular orders as to costs Fact that motion was beneficial to both parties not sufficient reason to depart from general rule that costs follow event Parties submitted Rule 22 mo- tion to determine scope of exam- ination for discovery of corpo- rate representative. Plaintiff sub- mitted costs should be no order as to costs or, in alternative, costs should be in the cause as it was joint motion. Defendants sought their costs on partial indemnity basis. Defendants entitled to par- tial indemnity costs of motion. Defendants were successful par- ties on motion. Result on motion was not mixed. Fact that motion was beneficial to both parties not sufficient reason to depart from general rule that costs should follow event. Partial indemnity costs claimed by defendants were $9,225.57. Plaintiffs would have sought partial indemnity costs of $9,128.99 had they been success- ful on motion. Cimtel Inc. v. TSV Holdings Ltd. (2018), 2018 CarswellOnt 4971, 2018 ONSC 2081, R. Ryan Bell J. (Ont. S.C.J.); additional reasons (2018), 2018 Carswel- lOnt 1660, 2018 ONSC 894, R. Ryan Bell J. (Ont. S.C.J.). DISCOVERY Examination for discovery Non-parties actually becoming parties to one broader action when order given directing actions to be tried together Three plaintiffs commenced three separate actions for damag- es for personal injuries sustained in same motor vehicle accident even though all three had been travelling in same vehicle and were represented by same coun- sel. Actions were ordered to be tried together or one after other. Insurer was added as statutory third party. At examinations for discovery, each plaintiff refused to answer insurer's questions con- cerning impact accident had on other occupants of vehicle (other plaintiffs) on basis they were not relevant to particular proceed- ing in which they were being asked. Insurer's motions to com- pel plaintiffs to answer questions were dismissed. Insurer brought motions for leave to examine plaintiffs as non-parties with in- formation relevant to material issues under R. 31.10(1) of Rules of Civil Procedure. Motions granted. While R. 31.10 was not intended to invite fishing expe- ditions or to subject non-parties to unnecessary inconvenience and expense, it could be useful to ensure purpose and objectives of discovery were met. Fulsome dis- covery allowed parties to know and understand case they had to meet, to properly prepare for trial and, in some cases, to nar- row issues requiring trial. Given order directing actions to be tried together, non-parties here were actually parties to one broader action. Subject questions, dealing directly with question of dam- ages, were clearly relevant to is- sues that would be raised at trial. Answers would also assist in as- sessing credibility and reliability. Construing relevance in narrow manner proposed by counsel for plaintiffs would frustrate proper discovery on relevant issues and be contrary to principle of pro- portionality. Kissoon v. Aviva Insurance Company of Canada (2018), 2018 CarswellOnt 5201, 2018 ONSC 2167, C.F. de Sa J. (Ont. S.C.J.). DISPOSITION WITHOUT TRIAL Stay or dismissal of action Rights and freedoms claimed by tax objector lacked insight into shared responsibilities associated with rule of law Tax objector brought application for declaration that certain sec- tions of Income Tax Act, Excise Tax Act, Business Corporations Act, Municipal Act, 2001, and Land Titles Act violated her right to choose under s. 7 of Canadian Charter of Rights and Freedoms and international covenants, and for reimbursements of all taxes she had paid during her life. Crown brought motion to dismiss application as frivolous, vexatious and abuse of process. Motion granted and application dismissed. Application was, on its face, frivolous and vexatious. Ap- plication relied on various legal principles that were put together in manner that was unreason- able, inconsistent, contradictory and failed to justify relief sought. Objector ignored s. 1 of Charter. Rights and freedoms claimed by objector were unreasonable and lacked insight into shared respon- sibilities associated with rule of law. Dismissal of application as frivolous and vexatious was de- monstrably justified in context of free and democratic society. Walsh v. Attorney General of Canada, et al (2018), 2018 Car- swellOnt 5389, 2018 ONSC 2251, Kenneth E. Pedlar J. (Ont. S.C.J.). CASELAW

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