Case Law
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Criminal Law
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Sentencing
Types of sentence
Accused receiving intermittent imprisonment for sexual assault conviction
Accused worked as model and then as modelling agent for decades. Accused was convicted of four counts of sexual assault and one count of sexual interference. Accused sexually assaulted three male complainants. Accused was 46 years old and he did not have criminal record. Accused had excellent reputation in modelling community but he was unable to work in his field because of charges, which ruined his reputation. Accused suffered from diabetes. Accused sentenced to 30 days’ intermittent imprisonment, less 2 days’ credit for time served and to 18-month conditional sentence.
R. v. Anderson (2017), 2017 CarswellOnt 3473, 2017 ONSC 1322, McWatt J. (Ont. S.C.J.).
Types of sentence
Accused receiving intermittent imprisonment for sexual assault conviction
Accused worked as model and then as modelling agent for decades. Accused was convicted of four counts of sexual assault and one count of sexual interference. Accused sexually assaulted three male complainants. Accused was 46 years old and he did not have criminal record. Accused had excellent reputation in modelling community but he was unable to work in his field because of charges, which ruined his reputation. Accused suffered from diabetes. Accused sentenced to 30 days’ intermittent imprisonment, less 2 days’ credit for time served and to 18-month conditional sentence.
R. v. Anderson (2017), 2017 CarswellOnt 3473, 2017 ONSC 1322, McWatt J. (Ont. S.C.J.).
Estates and Trusts
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Estates
Dependants’ relief legislation
Proceeds of life insurance policy for father payable to mother to extent of father’s support obligations
Deceased father SC was required by court order to maintain mother AC as irrevocable beneficiary on life insurance policy and to pay child and spousal support. Father’s new partner ED applied under Succession Law Reform Act (SLRA) for dependants’ relief. Trial judge determined that proceeds of policy were included in father’s estate and available for dependants’ claims under SLRA. Appeal judge dismissed mother’s appeal. Mother appealed. Appeal allowed. Mother was entitled to payment of policy’s proceeds to extent of father’s support obligations, past and future, existing at time of his death, and calculated in accordance with terms and duration of support orders in effect at date of death. Policy was transaction effected by father before his death within meaning of s. 72(1) of SLRA, so proceeds were deemed to form part of his net estate. Appeal judge erred in holding that mother did not fall within s. 72(7) of SLRA unless she was secured creditor with security interest in policy. Where, at time of his death, spousal or child support payor owned insurance policy that was subject to court order requiring designation of support recipient as irrevocable beneficiary, s. 72(7) of SLRA protected from claw back in s. 72(1) of SLRA that part of policy’s proceeds needed to satisfy payor’s obligations to support recipients, calculated in accordance with support orders in place at time of death. Full amount of policy’s proceeds was not automatically excluded from claw back in s. 72(1) of SLRA.
Dagg v. Cameron Estate (2017), 2017 CarswellOnt 6557, 2017 ONCA 366, David Doherty J.A., David Brown J.A., and B.W. Miller J.A. (Ont. C.A.); reversed (2016), 2016 CarswellOnt 4876, 2016 ONSC 1892, Aston J., Swinton J., and Pattillo J. (Ont. Div. Ct.).
Dependants’ relief legislation
Proceeds of life insurance policy for father payable to mother to extent of father’s support obligations
Deceased father SC was required by court order to maintain mother AC as irrevocable beneficiary on life insurance policy and to pay child and spousal support. Father’s new partner ED applied under Succession Law Reform Act (SLRA) for dependants’ relief. Trial judge determined that proceeds of policy were included in father’s estate and available for dependants’ claims under SLRA. Appeal judge dismissed mother’s appeal. Mother appealed. Appeal allowed. Mother was entitled to payment of policy’s proceeds to extent of father’s support obligations, past and future, existing at time of his death, and calculated in accordance with terms and duration of support orders in effect at date of death. Policy was transaction effected by father before his death within meaning of s. 72(1) of SLRA, so proceeds were deemed to form part of his net estate. Appeal judge erred in holding that mother did not fall within s. 72(7) of SLRA unless she was secured creditor with security interest in policy. Where, at time of his death, spousal or child support payor owned insurance policy that was subject to court order requiring designation of support recipient as irrevocable beneficiary, s. 72(7) of SLRA protected from claw back in s. 72(1) of SLRA that part of policy’s proceeds needed to satisfy payor’s obligations to support recipients, calculated in accordance with support orders in place at time of death. Full amount of policy’s proceeds was not automatically excluded from claw back in s. 72(1) of SLRA.
Dagg v. Cameron Estate (2017), 2017 CarswellOnt 6557, 2017 ONCA 366, David Doherty J.A., David Brown J.A., and B.W. Miller J.A. (Ont. C.A.); reversed (2016), 2016 CarswellOnt 4876, 2016 ONSC 1892, Aston J., Swinton J., and Pattillo J. (Ont. Div. Ct.).
Civil Practice and Procedure
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Costs
Costs of appeals
Costs reserved to application judge after matter sent back for redetermination
Husband applied to terminate spousal support and life insurance obligations on basis that he was planning to retire and sought to reduce obligations leading up to retirement date. Application judge found that husband’s retirement and consequent reduction in income was material change in circumstances, that parties’ assets and income would be about equal after husband’s retirement and terminated husband’s spousal support and insurance obligations effective on anticipated retirement date. Wife appealed and order was made directing amount of spousal support and insurance benefits to be sent back for redetermination. Issue arose as to costs. Wife was awarded costs in amount of $13,000 for appeal. Wife largely prevailed on main issue, namely whether spousal support and insurance benefits should be terminated or reduced. That appropriate reduction to support and insurance obligations remained open for determination by another application judge constituted unusual circumstance supporting departure from general principle that successful party on appeal be granted costs. As result, costs of application were reserved to application judge.
Schulstad v. Schulstad (2017), 2017 CarswellOnt 4797, 2017 ONCA 246, K.M. Weiler J.A., Paul Rouleau J.A., and L.B. Roberts J.A. (Ont. C.A.); additional reasons (2017), 2017 CarswellOnt 1170, 2017 ONCA 95, K.M. Weiler J.A., Paul Rouleau J.A., and L.B. Roberts J.A. (Ont. C.A.).
Costs of appeals
Costs reserved to application judge after matter sent back for redetermination
Husband applied to terminate spousal support and life insurance obligations on basis that he was planning to retire and sought to reduce obligations leading up to retirement date. Application judge found that husband’s retirement and consequent reduction in income was material change in circumstances, that parties’ assets and income would be about equal after husband’s retirement and terminated husband’s spousal support and insurance obligations effective on anticipated retirement date. Wife appealed and order was made directing amount of spousal support and insurance benefits to be sent back for redetermination. Issue arose as to costs. Wife was awarded costs in amount of $13,000 for appeal. Wife largely prevailed on main issue, namely whether spousal support and insurance benefits should be terminated or reduced. That appropriate reduction to support and insurance obligations remained open for determination by another application judge constituted unusual circumstance supporting departure from general principle that successful party on appeal be granted costs. As result, costs of application were reserved to application judge.
Schulstad v. Schulstad (2017), 2017 CarswellOnt 4797, 2017 ONCA 246, K.M. Weiler J.A., Paul Rouleau J.A., and L.B. Roberts J.A. (Ont. C.A.); additional reasons (2017), 2017 CarswellOnt 1170, 2017 ONCA 95, K.M. Weiler J.A., Paul Rouleau J.A., and L.B. Roberts J.A. (Ont. C.A.).
Tax
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Goods and Services Tax
Special rules
Taxpayer reassessed as no evidence of consent to act as agent of third party
N, who was sole shareholder of P Inc., incorporated P Inc. to carry out renovations on hotel owned by numbered company owned by N’s friend A. In February 2011, numbered company granted power of attorney to P Inc. and gave P Inc. power to act for numbered company in all matters pertaining to hotel. A signed direction to pay authorizing disbursement of CMHC funds to P Inc. and specifying that P Inc. was appointed to act for A in matters pertaining to mortgage and to manage and finish renovations. N paid renovations out of own pocket on each floor, and, once floor passed inspection, CMHC advanced funds which would be disbursed to P Inc. in accordance with direction to pay. No management agreement existed between N and A and P Inc. did not invoice A or numbered company for work. P Inc. was reassessed for net harmonized sales tax (HST) of $47,314.05 for reporting period from January 1, 2011 to March 31, 2011. In November 2012, Minister assessed P Inc. in respect of making of taxable supplies, and HST collectible was $69,492, input tax credits were $25,992.07 interest was assessed of $3,168.17 and failure to file penalty was $1,739.98. In March 2014, Minister reassessed P Inc. disallowing input tax credits previously allowed. In 2015, Minister further reassessed P Inc.’s ITCs of $22,177.95 resulting in net tax liability of $47,314.05. P Inc. appealed as to Minister’s finding of its net tax liability. Issue for determination was whether numbered company consented to P Inc. acting as its agent regarding renovations. Appeal dismissed. P Inc. was not acting as agent for numbered company for renovations since numbered company did not consent, explicitly or implicitly, to P Inc. acting in that capacity. Evidence did not establish that A expressly consented to agency relationship with P Inc. for renovations or that it gave implicit consent to do so. Only evidence submitted with respect to renovations was that P Inc. performed functions that general contractor would normally do. P Inc. failed to show that it was acting as agent for numbered company in performing these functions.
Persepolis Contracting Inc. v. The Queen (2017), 2017 CarswellNat 2477, 2017 TCC 89, Sylvain Ouimet J. (T.C.C. [Informal Procedure]).
Special rules
Taxpayer reassessed as no evidence of consent to act as agent of third party
N, who was sole shareholder of P Inc., incorporated P Inc. to carry out renovations on hotel owned by numbered company owned by N’s friend A. In February 2011, numbered company granted power of attorney to P Inc. and gave P Inc. power to act for numbered company in all matters pertaining to hotel. A signed direction to pay authorizing disbursement of CMHC funds to P Inc. and specifying that P Inc. was appointed to act for A in matters pertaining to mortgage and to manage and finish renovations. N paid renovations out of own pocket on each floor, and, once floor passed inspection, CMHC advanced funds which would be disbursed to P Inc. in accordance with direction to pay. No management agreement existed between N and A and P Inc. did not invoice A or numbered company for work. P Inc. was reassessed for net harmonized sales tax (HST) of $47,314.05 for reporting period from January 1, 2011 to March 31, 2011. In November 2012, Minister assessed P Inc. in respect of making of taxable supplies, and HST collectible was $69,492, input tax credits were $25,992.07 interest was assessed of $3,168.17 and failure to file penalty was $1,739.98. In March 2014, Minister reassessed P Inc. disallowing input tax credits previously allowed. In 2015, Minister further reassessed P Inc.’s ITCs of $22,177.95 resulting in net tax liability of $47,314.05. P Inc. appealed as to Minister’s finding of its net tax liability. Issue for determination was whether numbered company consented to P Inc. acting as its agent regarding renovations. Appeal dismissed. P Inc. was not acting as agent for numbered company for renovations since numbered company did not consent, explicitly or implicitly, to P Inc. acting in that capacity. Evidence did not establish that A expressly consented to agency relationship with P Inc. for renovations or that it gave implicit consent to do so. Only evidence submitted with respect to renovations was that P Inc. performed functions that general contractor would normally do. P Inc. failed to show that it was acting as agent for numbered company in performing these functions.
Persepolis Contracting Inc. v. The Queen (2017), 2017 CarswellNat 2477, 2017 TCC 89, Sylvain Ouimet J. (T.C.C. [Informal Procedure]).
Tax
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Income tax
Administration and enforcement
Canada Revenue Agency not requiring taxpayer’s consent to copy records
In April 2014, Canada Revenue Agency (CRA) advised taxpayer, by letter, that his income tax returns for 2006 to 2010 taxation years, which were under objection, and his returns for 2011 and 2012 taxation years, which were not yet assessed, were under review. CRA listed specific records it required to carry out audit. Taxpayer would only allow one auditor to enter premises and no other person. CRA decided not to proceed with audit at that time as it was not confident that taxpayer would allow audit to proceed without interference. CRA then notified taxpayer, by letter that s. 231.1 of Income Tax Act provided it with authority to inspect requested records and that taxpayer failed to comply with CRA’s request to submit records. CRA advised that failure to submit records requested by specified date would result in CRA seeking compliance order pursuant to s. 231.7 of Act. Federal Court Judge ordered taxpayer to provide information and documents pursuant to s. 231.7 of Act. Taxpayer appealed. Appeal dismissed. There was no reviewable error in Judge’s finding that taxpayer did not provide required access, assistance or information sought by CRA under Act. Contrary to taxpayer’s understanding, CRA did not require taxpayer’s consent to copy his records. Taxpayer could not dictate how CRA conducted audit or frustrate CRA’s ability to carry out its statutory duties by refusing entry to second auditor or insisting on videotaping audit process. There were no grounds to set aside compliance order.
Beima v. Minister of National Revenue (2017), 2017 CarswellNat 1805, 2017 FCA 85, Stratas J.A., D.G. Near J.A., and de Montigny J.A. (F.C.A.).
Administration and enforcement
Canada Revenue Agency not requiring taxpayer’s consent to copy records
In April 2014, Canada Revenue Agency (CRA) advised taxpayer, by letter, that his income tax returns for 2006 to 2010 taxation years, which were under objection, and his returns for 2011 and 2012 taxation years, which were not yet assessed, were under review. CRA listed specific records it required to carry out audit. Taxpayer would only allow one auditor to enter premises and no other person. CRA decided not to proceed with audit at that time as it was not confident that taxpayer would allow audit to proceed without interference. CRA then notified taxpayer, by letter that s. 231.1 of Income Tax Act provided it with authority to inspect requested records and that taxpayer failed to comply with CRA’s request to submit records. CRA advised that failure to submit records requested by specified date would result in CRA seeking compliance order pursuant to s. 231.7 of Act. Federal Court Judge ordered taxpayer to provide information and documents pursuant to s. 231.7 of Act. Taxpayer appealed. Appeal dismissed. There was no reviewable error in Judge’s finding that taxpayer did not provide required access, assistance or information sought by CRA under Act. Contrary to taxpayer’s understanding, CRA did not require taxpayer’s consent to copy his records. Taxpayer could not dictate how CRA conducted audit or frustrate CRA’s ability to carry out its statutory duties by refusing entry to second auditor or insisting on videotaping audit process. There were no grounds to set aside compliance order.
Beima v. Minister of National Revenue (2017), 2017 CarswellNat 1805, 2017 FCA 85, Stratas J.A., D.G. Near J.A., and de Montigny J.A. (F.C.A.).
Immigration and Citizenship
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Citizenship
Application for grant of or retention of citizenship
Citizenship application placed on hold pending cessation proceedings
Applicant Sri Lankan citizen was granted refugee protection and became permanent resident. Applicant returned to Sri Lanka for extended stays. Minister of Citizenship and Immigration commenced cessation proceedings against applicant under s. 108(2) of Immigration and Refugee Protection Act (IRPA) on basis that applicant had re-availed himself of Sri Lanka’s protection. Applicant applied for Canadian citizenship, but processing of that application was suspended due to ongoing cessation proceedings. Applicant’s application for mandamus order requiring processing of citizenship application was granted with award of costs. Minister appealed. Appeal allowed. If there was final determination that applicant’s refugee protection had ceased, then he would lose permanent residence and become inadmissible under IRPA. Minister had power under s. 13.1 of Citizenship Act to place hold on citizenship applications where there were admissibility concerns under IRPA and both ss. 40.1 and 44 of IRPA labelled cessation as admissibility issue. Minister’s interpretation to effect that s. 13.1 of Citizenship Act allowed him to suspend processing of citizenship application for permanent resident whose refugee status had been challenged for cessation was reasonable and reflected Parliament’s intention. Minister did not have public legal duty to continue processing applicant’s application notwithstanding that cessation proceedings had yet to be determined and so test for mandamus was not met. While costs awards were highly discretionary decisions, intervention was warranted. Fact that conflicting jurisprudence existed at time that application was suspended undermined application judge’s finding that Minister acted in bad faith. Minister acted legally and there was no basis in record for finding of bad faith or subterfuge.
Canada (Minister of Citizenship and Immigration) v. Nilam (2017), 2017 CarswellNat 696, 2017 FCA 44, Near J.A., Richard Boivin J.A., and Rennie J.A. (F.C.A.); reversed (2016), 2016 CarswellNat 3621, 2016 FC 896, James Russell J. (F.C.).
Application for grant of or retention of citizenship
Citizenship application placed on hold pending cessation proceedings
Applicant Sri Lankan citizen was granted refugee protection and became permanent resident. Applicant returned to Sri Lanka for extended stays. Minister of Citizenship and Immigration commenced cessation proceedings against applicant under s. 108(2) of Immigration and Refugee Protection Act (IRPA) on basis that applicant had re-availed himself of Sri Lanka’s protection. Applicant applied for Canadian citizenship, but processing of that application was suspended due to ongoing cessation proceedings. Applicant’s application for mandamus order requiring processing of citizenship application was granted with award of costs. Minister appealed. Appeal allowed. If there was final determination that applicant’s refugee protection had ceased, then he would lose permanent residence and become inadmissible under IRPA. Minister had power under s. 13.1 of Citizenship Act to place hold on citizenship applications where there were admissibility concerns under IRPA and both ss. 40.1 and 44 of IRPA labelled cessation as admissibility issue. Minister’s interpretation to effect that s. 13.1 of Citizenship Act allowed him to suspend processing of citizenship application for permanent resident whose refugee status had been challenged for cessation was reasonable and reflected Parliament’s intention. Minister did not have public legal duty to continue processing applicant’s application notwithstanding that cessation proceedings had yet to be determined and so test for mandamus was not met. While costs awards were highly discretionary decisions, intervention was warranted. Fact that conflicting jurisprudence existed at time that application was suspended undermined application judge’s finding that Minister acted in bad faith. Minister acted legally and there was no basis in record for finding of bad faith or subterfuge.
Canada (Minister of Citizenship and Immigration) v. Nilam (2017), 2017 CarswellNat 696, 2017 FCA 44, Near J.A., Richard Boivin J.A., and Rennie J.A. (F.C.A.); reversed (2016), 2016 CarswellNat 3621, 2016 FC 896, James Russell J. (F.C.).
Criminal Law
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Extradition proceedings
Extradition from Canada
USA granted extradition of accused on charges relating to international fraud investigation
USA alleged that accused participated in fraudulent scheme in which victims in the United States were induced by false representations to send funds to bank or wire transfer facility in Lagos, Nigeria. USA sought extradition of accused on charges relating to international fraud investigation. Application allowed. Accused was committed into custody pursuant to section 29 of Extradition Act, to await surrender for offence set out in Authority to Proceed. Record of the Case (“ROC”) and Supplementary record of the Case (“SROC”) contained admissible evidence that person who collected wire transfers of funds sent by PB was accused, that victims in United States were induced to send these funds via wire transfer by false representations, that PB was associated with and was receiving instructions from one JH who also instructed accused, that Western Union and MoneyGram transfers went from victims to PB and then to accused, and that number of direct transfers went from fraud victims to accused via MoneyGram and Western Union. All of this evidence supported prima facie case that accused possessed money obtained by or derived from indictable offence. In addition, evidence in ROC and SROC established identity of accused as person who possessed wire transfers derived from fraud and whose extradition was sought by USA. Passport obtained by bank in Lagos, Nigeria contained name and birthdate of accused. Booking photo taken by police upon accused’s arrest was same person as person before court. There was evidence available for trial on all of essential elements of offence for which he was sought . Based on material in record, jury properly instructed could convict accused of parallel Canadian offence . Test for committal was therefore met.
United States of America v. Omoruyi (2017), 2017 CarswellOnt 3823, 2017 ONSC 1480, E.M. Morgan J. (Ont. S.C.J.).
Extradition from Canada
USA granted extradition of accused on charges relating to international fraud investigation
USA alleged that accused participated in fraudulent scheme in which victims in the United States were induced by false representations to send funds to bank or wire transfer facility in Lagos, Nigeria. USA sought extradition of accused on charges relating to international fraud investigation. Application allowed. Accused was committed into custody pursuant to section 29 of Extradition Act, to await surrender for offence set out in Authority to Proceed. Record of the Case (“ROC”) and Supplementary record of the Case (“SROC”) contained admissible evidence that person who collected wire transfers of funds sent by PB was accused, that victims in United States were induced to send these funds via wire transfer by false representations, that PB was associated with and was receiving instructions from one JH who also instructed accused, that Western Union and MoneyGram transfers went from victims to PB and then to accused, and that number of direct transfers went from fraud victims to accused via MoneyGram and Western Union. All of this evidence supported prima facie case that accused possessed money obtained by or derived from indictable offence. In addition, evidence in ROC and SROC established identity of accused as person who possessed wire transfers derived from fraud and whose extradition was sought by USA. Passport obtained by bank in Lagos, Nigeria contained name and birthdate of accused. Booking photo taken by police upon accused’s arrest was same person as person before court. There was evidence available for trial on all of essential elements of offence for which he was sought . Based on material in record, jury properly instructed could convict accused of parallel Canadian offence . Test for committal was therefore met.
United States of America v. Omoruyi (2017), 2017 CarswellOnt 3823, 2017 ONSC 1480, E.M. Morgan J. (Ont. S.C.J.).
Civil Practice and Procedure
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Costs
Offers to settle or payment into court
Bankrupt’s consultants ordered to pay costs after rejecting settlement offer
Bankrupt re-sold telephone equipment. In May 2012, bankrupt began paying consultant, C, and C’s company $10,000 per month. In November 2013, bankrupt began receiving loans from new lender it reported as revenue. In March 2015, bankrupt’s old lender brought application for bankrupt’s receivership. In April 2015, receiver and manager were appointed. In July 2015, bankrupt was assigned into bankruptcy. At October 2015 examination under s. 163 of Bankruptcy and Insolvency Act (BIA), C testified he had no contact with and could not name any of bankrupt’s customers or suppliers. Trustee in bankruptcy brought successful motion for order requiring C and C’s company to repay $159,330 transferred during year prior to March 2014 (relevant period) to estate of bankrupt under s. 96 of BIA. Hearing was held to determine costs. C and C’s company were jointly and severally liable to pay trustee its costs fixed in amount of $15,356.99 inclusive of disbursements and taxes. Trustee’s offer to settle proceeding for $100,000 met procedural requirements of Rule 49 of Rules of Civil Procedure. There was no basis to depart from usual approach of ordering costs payable to winner or from enhancement of costs provided under Rule 49. Trustee beat amount of its offer and was entitled to costs to day of offer on partial indemnity basis and thereafter on substantial indemnity basis. Trustee’s lawyer’s rates and hours were well within reasonable range. Small increase as penalty for time spent responding to late filed material and for cross-examination without leave was properly included in bill of costs.
National Telecommunications Inc., Re (2017), 2017 CarswellOnt 5573, 2017 ONSC 2376, F.L. Myers J. (Ont. S.C.J. [Commercial List]); additional reasons (2017), 2017 CarswellOnt 3184, 2017 ONSC 1475, F.L. Myers J. (Ont. S.C.J. [Commercial List]).
Offers to settle or payment into court
Bankrupt’s consultants ordered to pay costs after rejecting settlement offer
Bankrupt re-sold telephone equipment. In May 2012, bankrupt began paying consultant, C, and C’s company $10,000 per month. In November 2013, bankrupt began receiving loans from new lender it reported as revenue. In March 2015, bankrupt’s old lender brought application for bankrupt’s receivership. In April 2015, receiver and manager were appointed. In July 2015, bankrupt was assigned into bankruptcy. At October 2015 examination under s. 163 of Bankruptcy and Insolvency Act (BIA), C testified he had no contact with and could not name any of bankrupt’s customers or suppliers. Trustee in bankruptcy brought successful motion for order requiring C and C’s company to repay $159,330 transferred during year prior to March 2014 (relevant period) to estate of bankrupt under s. 96 of BIA. Hearing was held to determine costs. C and C’s company were jointly and severally liable to pay trustee its costs fixed in amount of $15,356.99 inclusive of disbursements and taxes. Trustee’s offer to settle proceeding for $100,000 met procedural requirements of Rule 49 of Rules of Civil Procedure. There was no basis to depart from usual approach of ordering costs payable to winner or from enhancement of costs provided under Rule 49. Trustee beat amount of its offer and was entitled to costs to day of offer on partial indemnity basis and thereafter on substantial indemnity basis. Trustee’s lawyer’s rates and hours were well within reasonable range. Small increase as penalty for time spent responding to late filed material and for cross-examination without leave was properly included in bill of costs.
National Telecommunications Inc., Re (2017), 2017 CarswellOnt 5573, 2017 ONSC 2376, F.L. Myers J. (Ont. S.C.J. [Commercial List]); additional reasons (2017), 2017 CarswellOnt 3184, 2017 ONSC 1475, F.L. Myers J. (Ont. S.C.J. [Commercial List]).
Bankruptcy and Insolvency
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Property of bankrupt
Family law issues
Bankrupt not liable to former spouse as evidence not establishing fraudulent misrepresentation
Bankrupt and former spouse (former spouse) bought home together in 2006. Same year, bankrupt’s interest in home was deemed impressed with trust for unremitted source deductions. Parties separated in late 2006. Between December 2008 and February 2009, bankrupt received 2008 Assessment indicating he owed CRA over $70,000 and gave it to lawyer, expecting it to be disclosed to former spouse in matrimonial proceedings. Proceedings were settled with February 2009 consent order requiring bankrupt to transfer interest in home to former spouse, which he did. Before transfer was registered, CRA certified bankrupt’s tax debt and registered $30,562.73 lien against his half interest in home. Bankrupt made assignment into bankruptcy and was discharged. In 2011, former spouse brought claim against bankrupt for $80,562 in general damages and $50,000 in punitive damages, alleging reliance on bankrupt’s non-disclosure of tax debt in December 2008 financial statement. Trial judge held that bankrupt committed civil fraud and materially misrepresented, concealed or failed to disclosure important facts he knew or ought to have known would likely affect how former spouse negotiated consent, or did so with willful disregard for consequences of doing so, and that former spouse would not have made consent had she known of tax debt. Bankrupt appealed. Appeal allowed; action dismissed; lower judgments set aside. It was not open to trial judge to find that bankrupt made representation that he had no liability to CRA and, so, no basis for finding he made false representation. As such, there was no evidence bankrupt knew former spouse intended to rely on any representation or that bankrupt intended that former spouse rely on absence of debts and liabilities in financial statements as representation he had no liability to CRA. There was no evidence either party knew CRA could register lien against bankrupt’s interest in home. There was no evidence bankrupt deliberately tried to mislead former spouse about true state of affairs, from which trial judge could infer fraudulent intent, or that former spouse relied on lack of reference to bankrupt’s debts and liabilities to CRA in financial statements when consenting in February 2009. Trial judge erred in law in failing to analyze evidence as it related to test for fraudulent misrepresentation, approaching case on basis of fraudulent non-disclosure. Application of correct test would have led to conclusion that former spouse failed to prove on balance of probabilities all four of elements of tort of fraudulent misrepresentation and that claim did not survive bankruptcy and had to be dismissed.
Moore v. Morris (2017), 2017 CarswellOnt 5551, 2017 ONSC 1980, Kiteley J., Swinton J., and M.L.J. Edwards J. (Ont. Div. Ct.).
Family law issues
Bankrupt not liable to former spouse as evidence not establishing fraudulent misrepresentation
Bankrupt and former spouse (former spouse) bought home together in 2006. Same year, bankrupt’s interest in home was deemed impressed with trust for unremitted source deductions. Parties separated in late 2006. Between December 2008 and February 2009, bankrupt received 2008 Assessment indicating he owed CRA over $70,000 and gave it to lawyer, expecting it to be disclosed to former spouse in matrimonial proceedings. Proceedings were settled with February 2009 consent order requiring bankrupt to transfer interest in home to former spouse, which he did. Before transfer was registered, CRA certified bankrupt’s tax debt and registered $30,562.73 lien against his half interest in home. Bankrupt made assignment into bankruptcy and was discharged. In 2011, former spouse brought claim against bankrupt for $80,562 in general damages and $50,000 in punitive damages, alleging reliance on bankrupt’s non-disclosure of tax debt in December 2008 financial statement. Trial judge held that bankrupt committed civil fraud and materially misrepresented, concealed or failed to disclosure important facts he knew or ought to have known would likely affect how former spouse negotiated consent, or did so with willful disregard for consequences of doing so, and that former spouse would not have made consent had she known of tax debt. Bankrupt appealed. Appeal allowed; action dismissed; lower judgments set aside. It was not open to trial judge to find that bankrupt made representation that he had no liability to CRA and, so, no basis for finding he made false representation. As such, there was no evidence bankrupt knew former spouse intended to rely on any representation or that bankrupt intended that former spouse rely on absence of debts and liabilities in financial statements as representation he had no liability to CRA. There was no evidence either party knew CRA could register lien against bankrupt’s interest in home. There was no evidence bankrupt deliberately tried to mislead former spouse about true state of affairs, from which trial judge could infer fraudulent intent, or that former spouse relied on lack of reference to bankrupt’s debts and liabilities to CRA in financial statements when consenting in February 2009. Trial judge erred in law in failing to analyze evidence as it related to test for fraudulent misrepresentation, approaching case on basis of fraudulent non-disclosure. Application of correct test would have led to conclusion that former spouse failed to prove on balance of probabilities all four of elements of tort of fraudulent misrepresentation and that claim did not survive bankruptcy and had to be dismissed.
Moore v. Morris (2017), 2017 CarswellOnt 5551, 2017 ONSC 1980, Kiteley J., Swinton J., and M.L.J. Edwards J. (Ont. Div. Ct.).
Tax
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Income tax
Capital gains and losses
Taxypayer’s securities trading gains reassessed as income
Taxpayer maintained two investment accounts at company, one for Canadian and one for U.S. dollar positions. Taxpayer’s strategy was to invest in diversified securities that had potential for 30 percent returns. In early 2009, taxpayer liquidated holdings in both accounts and converted them in cash to supposedly pay off mortgage. Taxpayer, however, purchased and sold stocks costing about $2.5 million. Taxpayer’s total gain was $550,000. Taxpayer reported his gains and losses on these positions as capital gains in his 2009 income tax return. Canada Revenue Agency (CRA) reassessed to include full amount in income. Taxpayer appealed. Appeal dismissed. Reassessment characterizing gains as income gains was not incorrect. Taxpayer was trading in securities as business activity, or at least was buying and selling securities as part of adventure in nature of trade. Taxpayer’s primary intention when purchasing securities was to sell them at profit as soon as reasonable return could be realized. Taxpayer spent considerable time each day monitoring markets beyond what he said was required for his employment. Nature of gains realized by taxpayer buying and selling securities in his investments accounts bore close similarity to what he was doing in his investment dealer positions for decades. Taxpayer was buying and selling throughout year, and his holding periods were clearly short and often very, very short. On balance of probabilities, taxpayer did not satisfy Court about his mortgage paydown plans. There were no bank documents showing when taxpayer committed to renew mortgage. Surely at some point in first part of taxpayer’s 2009 reinvestment activities, he realized that he was picking securities for quickest target cumulative return. Combined results of not being able to conclude taxpayer’s investment strategy was unchanged in 2009 or that he liquidated in 2009 in order to pay off mortgage, and not having been given detailed evidence regarding prior years meant Court only considered actual activity in his accounts in 2009. Taxpayer’s expertise extended to what he regarded as trading activities; whilst his securities trading activities in 2009 may not have risen to level of him carrying on business of trading securities, they appeared to handily meet all of requirements to have been considered adventure or concern in nature of trade. Taxpayer was not treated differently or singled out because his investments were in securities.
R. v. Foote (2017), 2017 CarswellNat 1729, 2017 TCC 61, Patrick Boyle J. (T.C.C. [General Procedure]).
Capital gains and losses
Taxypayer’s securities trading gains reassessed as income
Taxpayer maintained two investment accounts at company, one for Canadian and one for U.S. dollar positions. Taxpayer’s strategy was to invest in diversified securities that had potential for 30 percent returns. In early 2009, taxpayer liquidated holdings in both accounts and converted them in cash to supposedly pay off mortgage. Taxpayer, however, purchased and sold stocks costing about $2.5 million. Taxpayer’s total gain was $550,000. Taxpayer reported his gains and losses on these positions as capital gains in his 2009 income tax return. Canada Revenue Agency (CRA) reassessed to include full amount in income. Taxpayer appealed. Appeal dismissed. Reassessment characterizing gains as income gains was not incorrect. Taxpayer was trading in securities as business activity, or at least was buying and selling securities as part of adventure in nature of trade. Taxpayer’s primary intention when purchasing securities was to sell them at profit as soon as reasonable return could be realized. Taxpayer spent considerable time each day monitoring markets beyond what he said was required for his employment. Nature of gains realized by taxpayer buying and selling securities in his investments accounts bore close similarity to what he was doing in his investment dealer positions for decades. Taxpayer was buying and selling throughout year, and his holding periods were clearly short and often very, very short. On balance of probabilities, taxpayer did not satisfy Court about his mortgage paydown plans. There were no bank documents showing when taxpayer committed to renew mortgage. Surely at some point in first part of taxpayer’s 2009 reinvestment activities, he realized that he was picking securities for quickest target cumulative return. Combined results of not being able to conclude taxpayer’s investment strategy was unchanged in 2009 or that he liquidated in 2009 in order to pay off mortgage, and not having been given detailed evidence regarding prior years meant Court only considered actual activity in his accounts in 2009. Taxpayer’s expertise extended to what he regarded as trading activities; whilst his securities trading activities in 2009 may not have risen to level of him carrying on business of trading securities, they appeared to handily meet all of requirements to have been considered adventure or concern in nature of trade. Taxpayer was not treated differently or singled out because his investments were in securities.
R. v. Foote (2017), 2017 CarswellNat 1729, 2017 TCC 61, Patrick Boyle J. (T.C.C. [General Procedure]).
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