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Motor Vehicles

Dangerous driving

Accused was repeatedly informed of dangerousness of driving

Accused drove vehicle with three passengers and got into race with another vehicle. Accused’s vehicle spun out of control and crashed. S, who was front seat passenger in accused’s car, was ejected from car and suffered serious injuries. Just prior to accident S asked accused twice to slow down but accused refused to comply. Accused was charged with three counts of dangerous driving causing bodily harm. Accused was convicted of dangerous driving related to S but was acquitted regarding other two passengers. Accused appealed conviction. Appeal dismissed. There was sufficient evidence to prove that accused’s driving was cause of S’ injuries. Even though other driver was acquitted of dangerous driving verdicts were not inconsistent. Case against accused was stronger because only accused was being repeatedly informed of dangerousness of driving.
R. v. Siddiqui (May. 13, 2016, Ont. C.A., Gloria Epstein J.A., S.E. Pepall J.A., and K.M. van Rensburg J.A., CA C60692) 130 W.C.B. (2d) 364.


Defences

MISTAKE

Accused relied on mistake of age defence

Accused, who was 40-year-old male, picked up complainants, who were two teenaged girls who were hitchhiking. One girl was 14 and one-half years old and other girl was 15 and one-half years old. Complainants expressed interest in engaging in sexual activities and accused drove to parents’ home where they had sexual intercourse. Complainants could not consent to sexual acts but trial judge allowed accused to rely on mistake of age defence and acquitted accused. Crown appealed acquittal. Appeal dismissed. There was no basis for appellate intervention with judge’s holding that accused took all reasonable steps to ascertain complainants’ ages. Furthermore, reasonable person would have been satisfied that complainants were over 16, just as complainants intended, without need for further inquiry.
R. v. Chapman (Apr. 28, 2016, Ont. C.A., E.A. Cronk J.A., M. Tulloch J.A., and K. van Rensburg J.A., CA C60515) 130 W.C.B. (2d) 403.


Contracts

Franchise agreements

Determination of who was franchisor’s associate required full factual record

US auto manufacturer’s predecessor declared bankruptcy. As part of court-supervised restructuring, manufacturer received assets of bankrupt predecessor company and bailouts from, among others, Canadian and Ontario governments. Canadian dealers brought action against manufacturer and Canadian subsidiary alleging manufacturer’s preferential financial support to US dealers constituted breach of duty of good faith in performance of franchise agreements and breach of Arthur Wishart Act (Franchise Disclosure), 2000 (Ont.). Manufacturer and subsidiary brought successful motion under R. 21 of Rules of Civil Procedure (Ont.) to strike claims. Motion judge dismissed entire claim against manufacturer without leave to amend, finding, among other things, that manufacturer was not party to franchise agreement and could not be held liable under s. 3(2) of Act or at common law for alleged breaches of franchise agreement by subsidiary. Dealers appealed. Appeal allowed with costs fixed at $20,000. It was not plain and obvious action that manufacturer was not franchisor’s associate. Motions judge approached motion as if it were motion for summary judgment and required dealers to demonstrate that they would succeed rather than requiring manufacturer to demonstrate that dealers could not possibly succeed. Interpretation of “party” in s. 3 would likely have important precedential value and answer should be decided on full record. Determination of duties owed under remedial legislation such as Act involved important questions of legal interpretation, were subject of limited jurisprudence, and required factual record. Interpretation of “party” and extent of duty in s. 3 would likely have important precedential value and answer should be decided on full record, as did question of whether level of control alleged and special obligations owed in context of franchise relationship could open door for imposition of common law duty. Determination of who was franchisor’s associate required full factual record. Motion judge concluded that manufacturer could not be “directly involved in grant of franchise” because grant of franchise occurred before manufacturer was in existence, but conclusion was based on improper treatment of document on R. 21 motion as evidence. Conclusion required trial based on full record, not R. 21 motion.
Addison Chevrolet Buick GMC Ltd. v. General Motors of Canada Ltd. (May. 3, 2016, Ont. C.A., Doherty J.A., G. Pardu J.A., and M.L. Benotto J.A., CA C60644) Decision at 254 A.C.W.S. (3d) 334 was reversed. 267 A.C.W.S. (3d) 329.


Aboriginal Peoples

Property

Motion judge’s finding was palpable and overriding error

C group of companies operated marina located on premises owned by landlord 212 Inc.. C group became insolvent. Receiver was appointed and continued to operate marina. When marina’s lease expired, 212 Inc. leased location to new tenant and brought motion to establish its right to occupation rent from receiver. Motion judge determined receiver was not obligated to pay occupation rent. 212 Inc. appealed. Appeal allowed. Receiver occupied marina and was liable to pay occupation rent. Receiver deprived 212 Inc. of its rights of use of premises in manner that constituted occupation. Motion judge’s finding to contrary was palpable and overriding error. Where deprivation of use is tantamount to actual occupation, liability to pay occupation rent is engaged. Motion judge erred by focusing primarily on “deprivation of use”, when there was admitted possession and evidence of actual occupation, and by conflating “deprivation of use of premises” in real property sense with “deprivation of use” in more general cost/benefit or economic sense. Presumption in favour of obligation to pay rent had not been rebutted, and no equitable considerations applied.
Crate Marine Sales Ltd., Re (June 3, 2016, Ont. C.A., Alexandra Hoy A.C.J.O., R.A. Blair J.A., and L.B. Roberts J.A., CA C61243) Decision at 259 A.C.W.S. (3d) 278 was reversed. 267 A.C.W.S. (3d) 272.


Taxation

Goods and Services Tax

Registrant was required to pay Goods and Services Tax on annual resort fee

Canadian Developer created registrant CI to facilitate administration of vacation homes in resorts in Canada, US and Mexico as part of vacation home ownership program. Canadian Developer transferred its interests in Canadian vacation homes, and US Developer transferred its interests in vacation homes in US and Mexico, to registrant pursuant to bare trust agreements in consideration of occupancy rights. Developers sold resort points for right to occupy time in vacation homes to point purchasers. Members of registrant, including point purchasers and Developers, paid annual resort fee to registrant, which funded annual costs of registrant, and included vacation home operating costs, costs of operating program, and corporate costs of registrant. Registrant billed point purchaser annually for full amount and developers monthly for portion of fee. Minister of National Revenue assessed registrant in respect of its monthly reporting period for October for each year from 2002 to 2007 on basis that annual resort fee was subject to Goods and Services Tax (GST) as consideration for taxable supply of intangible personal property. Registrant appealed. Appeal dismissed. Registrant was required to pay GST on annual resort fee. There was no agency relationship between registrant and each member in respect of vacation homes expenses. Annual resort fee was paid as consideration for supply of service rendered by registrant to members as registrant agreed to use funds to pay operation costs. Registrant made single supply of services that related directly or indirectly to real property situated outside of Canada, real property situated in Canada, and things other than real property such as operating costs. Since single supply made by registrant related at least partly to things other than real property, place of supply of service was deemed, under ss. 142(1)(g) and 142(2)(g) of Excise Tax Act (Can.), to be made in Canada since registrant performed annual services partially in Canada. GST applied to all of annual resort fee paid by members. Amount assessed by Minister was less than what should have been assessed given that registrant’s net tax for each October included GST on full amount of annual resort fee payable by purchasers who owned resort points on September 30 and GST on one-twelfth of annual resort fee payable by Developers. Canada Revenue Agency used method to determine registrant’s net tax for its October reporting periods that was not consistent with definition of net tax in s. 225(1) of Act and did not comply with ss. 152 and 168 of Act.
Club Intrawest v. R. (June 9, 2016, T.C.C. [General Procedure], Steven K. D’Arcy J., 2012-3401(GST)G) 267 A.C.W.S. (3d) 473.


Aboriginal Peoples

Crown relationship

Expropriation under s. 35 of Indian Act (Can.) did not require Band’s consent

Pipeline right-of-way through reserve of Indian Band was granted in 1955 to third-party company, through indenture. Respondent Minister of Indian Affairs and Northern Development consented to assignment of indenture to respondent company, executing assignment consent agreement. Applicant Band and its chief applied for judicial review. Application dismissed. Minister owed fiduciary duty to Band in deciding whether to consent to assignment of indenture and it also owed duty of good faith to company arising under indenture. Duty of good faith owed to company was subordinate to fiduciary duty owed to Band. Test used in expropriation under s. 35 of Indian Act (Can.) applied to assignment of interest that arose from expropriation. Minister must first determine that assignment of instrument was in public interest and then must ensure that Band’s interest in reserve was only minimally impaired. Minister did not have fiduciary duty until second stage of analysis, where consultation with Band was required. Section 35 did not require Band’s consent. Expropriation was made in proper manner for lawful purpose and was in public interest. Minister’s consent to assignment was continuation of initial recognition of public interest arising from expropriation. Minister’s consent to assignment was minimal impairment of Band’s use and enjoyment of its land. Assignment of indenture did not increase impairment of Band’s use of reserve land. Minister engaged Band many times during administrative proceeding. Minister discharged fiduciary duty owed to Band. Minister’s decision to consent to assignment of indenture was justifiable, transparent and intelligible and it met standard of reasonableness.
Coldwater Indian Band v. Canada (Minister of Indian Affairs and Northern Development) (May. 30, 2016, F.C., E. Heneghan J., T-133-15) 267 A.C.W.S. (3d) 255.

Taxation

Income tax

Canada Revenue Agency officials did not act maliciously and unlawfully

Accused was payroll bookkeeper enlisted by disabled patients to make proper tax deductions. Accused’s clients had accrued liabilities to Canada Revenue Agency (CRA) exceeding one million dollars. Accused was charged under Criminal Code (Can.) with fraud, making false or deceptive statements in tax return, and tax evasion. Accused brought action against CRA for damages for negligence, breaches of Canadian Charter of Rights and Freedoms, misfeasance in public office, defamation, and malicious prosecution. Federal Court judge dismissed action on basis that none of causes of action were established. Judge held that, because prosecution of accused had not been concluded, tort of malicious prosecution was not available to him. Judge found no evidence to support pleading of defamation. Judge held that CRA officials did not act maliciously and unlawfully or violate accused’s Charter rights when they tried to collect payroll remittance arrears from him. Judge found CRA’s conduct was fair, responsible, reasonable and lawful and was sensitive to concern that its actions not disrupt provision of respite care to those who needed it. Accused appealed. Appeal dismissed. Judge did not make any errors, reasons were clear, and allegation of bias was dismissed. Judge’s comments were instances of good trial management, not bias. If there were instances of bias or unfairness, accused’s counsel should have objected at initial hearing. There were no grounds to set aside judge’s costs award.
Hennessey v. R. (June 15, 2016, F.C.A., Johanne Trudel J.A., David Stratas J.A., and Richard Boivin J.A., A-215-14) Decision at 242 A.C.W.S. (3d) 827 was affirmed. 267 A.C.W.S. (3d) 479.

Taxation

Income tax

No basis for rejecting taxpayer’s use of mark to market accounting

Taxpayer traded in purchased and written foreign exchange option contracts to reduce exposure to foreign currencies. Taxpayer included option contracts in income, valued at end of taxation year on mark to market basis that recognized changes in market value as gain and loss, claiming losses exceeding $91 million. Minister assessed taxpayer under Income Tax Act (Can.) on basis that contracts should be included and valued only when finally realized. Taxpayer’s appeal was allowed in part, on basis that realization principle applied except for its purchased foreign exchange option contracts that were found to constitute inventory, and Crown was awarded costs. Taxpayer appealed. Appeals allowed. Tax Court judge’s finding that realization was overarching principle that applied in absence of Act provision authorizing or requiring application of different method directly contradicted precedents establishing that other methods of computing income could be used where they provided more accurate picture of income. Taxpayer made prima facie demonstration that mark to market accounting provided accurate reflection of income and Crown did not show that realization produced better picture of taxpayer’s income. There was no basis for rejecting taxpayer’s use of mark to market accounting in computing income. There was no doubt that Act allowed intangible property to be treated as inventory or that, because written options only embodied liability, they were not “property” and could not form part of “inventory”. Requirement that qualifying property be “held for sale” had to be read into definition of “inventory” under governing authority, such that taxpayer’s foreign exchange options did not qualify as inventory as they were not for sale. Purchased and written options impacted on computation of income and had to be recognized in service of goal under s. 9 of Act to provide accurate picture of that income. Taxpayer was entitled to use mark to market method of accounting to compute income derived from foreign exchange option contracts and was entitled to costs before Tax Court and appeal.
Kruger Inc. v. R. (June 22, 2016, F.C.A., Marc Noël C.J., A.F. Scott J.A., and Yves de Montigny J.A., A-296-15, A-195-16) Decisions at 252 A.C.W.S. (3d) 868 and 262 A.C.W.S. (3d) 532 were reversed. 267 A.C.W.S. (3d) 485.


Employment

Wrongful dismissal

Labour Code provisions offered statutory alternative to common law of dismissal

Employee was dismissed without cause after four-and-one-half years’ employment, and given six months’ pay. Employee brought successful unjust dismissal complaint under s. 240 of Canada Labour Code. Adjudicator found that, as matter of statutory interpretation, Code only permitted dismissals for just cause. Employer brought successful application for judicial review. Employee’s appeal to Federal Court of Appeal was dismissed. Employee appealed. Appeal allowed. Standard of review was reasonableness, and issue was whether adjudicator’s interpretation of ss. 240 to 246 of Code was reasonable. Purpose of statutory scheme was to ensure that non-unionized federal employees would be entitled to protection from being dismissed without cause under Part III of Code. Provisions offered statutory alternative to common law of dismissals, and to align protection from unjust dismissal for non-unionized federal employees with those available to unionized employees. If employer could dismiss without cause under Code by providing severance pay, no role would exist for plurality of remedies available to adjudicator.
Wilson v. Atomic Energy of Canada Ltd. (July 14, 2016, S.C.C., McLachlin C.J.C., Abella J., Cromwell J., Moldaver J., Karakatsanis J., Wagner J., Gascon J., Côté J., and Brown J., 36354) Decision at 249 A.C.W.S. (3d) 347 was reversed. 267 A.C.W.S. (3d) 349.


Courts

Jurisdiction

Dispute had sufficient connection to contract made in Ontario

Class action was certified in Ontario on behalf of terminated dealerships by defendant GMCL as result of financial crisis and auto bailout in summer of 2009 as well as against Cassels Brock, who acted as counsel for Canadian Automobile Dealers Assn., for failing to provide appropriate legal advice regarding Winding-Down Agreements (agreements) presented by GMCL. It was found that agreements were sufficiently connected with tortious claim against out of province lawyers to raise presumption of real and substantial connection between subject matter and Ontario and Ontario was most appropriate and convenient forum. Challenge to Ontario’s jurisdiction was dismissed. Quebec law firms appealed to Supreme Court of Canada. Appeal dismissed. Dispute had sufficient connection to contract made in Ontario. Local lawyers’ provision of legal advice brought them within scope of contractual relationship between GMCL and dealers.
Lapointe Rosenstein Mar­chand Melançon LLP v. Cassels Brock & Blackwell LLP (July 15, 2016, S.C.C., McLachlin C.J.C., Abella J., Cromwell J., Karakatsanis J., Wagner J., Gascon J., and Côté J., 36087) Decision at 242 A.C.W.S. (3d) 88 was affirmed. 267 A.C.W.S. (3d) 340.


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