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Family Law


In context of family law disputes, court need not find special circumstances to make costs award approaching substantial indemnity

After mother made false allegations that father had abused child, parties entered into custody agreement that was incorporated into consent order. Pursuant to agreement, father had custody of child and mother had supervised access. Agreement stipulated that if mother initiated confrontations or made comments pertaining to allegations of abuse, her access shall be suspended immediately at option of father. Agreement stipulated that father shall not relocate without first giving mother sixty days’ notice, and that father shall make best efforts to keep child in her current school. Father gave notice to mother that he intended to move with child on basis that it was better for child to grow up in community not privy to abuse allegations. Motion judge found that order did not contemplate move in question absent variation, and that there was no material change in circumstances to justify such variation. Motion judge made costs award on substantial indemnity basis and included costs in respect of earlier steps in proceeding. Father appealed motion judge’s decision, including costs disposition. Appeal dismissed. Costs for earlier appearances were properly before motion judge, having been adjourned from those appearances. Award of substantial indemnity costs by motion judge was not improper exercise of discretion. In context of family law disputes, court need not find special circumstances to make costs award approaching substantial indemnity.
Forrester v. Dennis (Mar. 16, 2016, Ont. C.A., Gloria Epstein J.A., S.E. Pepall J. J.A., and C.W. Hourigan J.A., CA C61051) 265 A.C.W.S. (3d) 154.

Conflict of Laws

Choice of law

Given strength of connections between company and Ontario, it could not be said company was engaged in “libel tourism”

Company was incorporated in US but sold cloud-based business automation software from offices around world, including Alberta office. Company had annual revenue of $5,160,400 in Canada and $3,783,474 in Ontario. Blogger wrote 18 blog posts or articles about company from home in Quebec and posted them on websites in San Francisco and Ireland and made them accessible through Twitter feeds. In 2015, blog was viewed over 105,000 times in over 160 jurisdictions, with 10,588 of viewers or readers located in Canada, presumably many of whom were in Ontario. Company brought action against blogger in Ontario alleging defamation. Blogger brought motion for order staying action. Motion dismissed. Given company’s business presence, customers and reputation in Ontario, test for jurisdiction was satisfied. Alleged tort was committed in Ontario. There was real, substantial connection between action and Ontario. There was no other forum in better position to dispose fairly and efficiently of litigation. Blogger failed to discharge burden of demonstrating that court should decline to exercise its jurisdiction and displace forum chosen by plaintiff. Suggestion that Quebec or US state where company did most of its business were more appropriate forums ignored fact that forum depended not on where blog was written but where it was read. Given strength of connections between company and Ontario, it could not be said company was engaged in “libel tourism.”
Sciquest Inc. v. Hansen (Mar. 14, 2016, Ont. S.C.J., Lederman J., CV-15-00535613) 265 A.C.W.S. (3d) 263.


Income tax

Shares of corporation were not shares of “eligible corporation” and did not qualify as investment for registered retirement savings plans

Taxpayer agreed to purchase 150,000 class B shares of corporation for $1.00 each Taxpayer opened RRSP account and transferred amount of $117,139.00 to that account Taxpayer directed RRSP to purchase 117,000 shares at $1 per share for total purchase price of $117,000 for her RRSP account. Corporation’s only activities in 2001 were purported purchase of Barbadian corporation’s shares and purchase of $200,000 in marketable securities, and only activities in 2002 were purported purchase and disposition of Barbadian corporation’s shares, and purchase of other long term investments. Minister reassessed taxpayer under Income Tax Act (Can.), finding RRSP investment was not qualified investment and including $117,000.00 in taxpayer’s income. Taxpayer appealed. Appeal dismissed. Class B shares of corporation were not qualified investment. Corporation had 91 per cent of its assets invested in shares of Barbadian corporation which was not related eligible corporation. Taxpayer did not show that fair market value of shares issued from treasury was less than what she agreed to pay for. Taxpayer recognized that she did not conduct any due diligence concerning corporation and she did not recall consulting investment advisor concerning investment. Documents showed that taxpayer’s RRSP acquired shares although exact date of acquisition was subject of disagreement -- Shares of corporation were not shares of “eligible corporation” within meaning of s. 5100(1) of Income Tax Regulations (Can.). Shares of Barbadian company represented over 93 per cent of corporation’s assets. Principal purpose of the business carried on by corporation in Canada was to derive income from property or from deriving gains from disposition of property, so that it did not use all or substantially all of its property in “qualifying active business.” As Barbadian corporation was incorporated under laws of Barbados, received International Business Licence from government of Barbados and filed its tax returns for the 2001 and 2002 taxation years reporting that it was resident of Barbados, it was not “Canadian corporation” and, therefore, was not “eligible corporation”, as defined in s. 5100(1) of Regulations, and its shares were not shares of related eligible corporation. Class B shares were not qualified investment pursuant to s. 4900(12) of Regulations as they were not shares of small business corporation. Business carried on by corporation was “specified investment business”, principal purpose of which was to derive income from property without having more than five full-time employees. Determination of whether particular investment is qualified investment for RRSPs is complex and perilous exercise out of reach for vast majority of Canadian taxpayers Impossible for taxpayer to make determination at time of acquisition of shares due to lack of information available.
Chiasson v. R. (Apr. 21, 2016, T.C.C. [Informal Procedure], Réal Favreau J., 2014-3217(IT)I) 265 A.C.W.S. (3d) 259.



Regulatory scheme applicable to marine transportation security has low standard and based on assessing possibilities

Applicant was longshore worker whose marine transportation security clearance was cancelled. Transport Canada received Law Enforcement Record Check from RCMP that indicated applicant had no known criminal convictions, but had been seen shaking hands with member of Hell’s Angels, was arrested for aggravated assault after leaving scene of fight but not charged, was identified as passenger of vehicle with member of Hell’s Angels, was arrested but not charged with threatening to shoot up bar and displayed violent behaviour to police, was arrested but not charged with mischief and was suspected of being on drugs at time, and was with known criminals in latter two incidents. Transport Canada advised applicant of concerns and applicant responded by explaining he was not affiliated with Hell’s Angels and only shook hand of man he had previously met to be polite, was helping cousin who was being beaten, did not recall being stopped while passenger in vehicle, bar incident arose from misunderstanding, and mischief incident occurred when he was intoxicated and fell into window. Minister accepted Advisory Board’s recommendations that applicant’s response did not dispel its concerns about his judgment, trustworthiness and reliability, and cancelled his security clearance. Application for judicial review. Application dismissed. Minister’s reasons were terse and would have benefitted from more comprehensive analysis of applicant’s submissions, but applicant’s real complaint was weight Minister gave to his submissions and its preference for LERC report. Regulatory scheme was intended to screen out candidates who presented unacceptably high security risk, and standard was low and based on assessing possibilities. Minister would rely on wide range of information, and it did not have to be reliable and verifiable to standard required for conviction. Cumulative effect of incidents identified in LERC report was more than sufficient to raise serious concerns about applicant’s judgment, trustworthiness and reliability. While applicant had no criminal record, this was not benchmark required to justify Minister’s decision, and applicant did not respond to concerns he was associating with known criminals. LERC report was considered reliable and Minister’s decision entitled to deference.
Sidhu v. Canada (Minister of Transport) (Jan. 8, 2016, F.C., Simon Fothergill J., T-2257-14) 265 A.C.W.S. (3d) 179.


Goods and Services Tax

Assessment returned to minister on basis that purchaser was entitled to GST/HST new housing rebate in respect of townhouse

Minister assessed purchaser under Excise Tax Act (Can.), disallowing claimed GST/HST new housing rebate for purchase of townhouse. Purchaser’s appeal was dismissed. Purchaser appealed. Appeal allowed. Tax Court judge found that purchaser intended to use townhouse as her primary place of residence but that she was not entitled to rebate as condition in s. 254(2)(g)(i)(A) of Act was not satisfied because she never occupied property. Tax Court judge erred in law by failing to consider where purchaser qualified for rebate by satisfying s. 254(2)(g)(ii) of Act, which was alternate means for satisfying condition in s. 254(2)(g) of Act. Minister acknowledged that purchaser satisfied s. 254(2)(g)(ii) of Act but argued that purchaser still did not qualify for rebate. Minister argued that Tax Court judge erred in law by relying solely upon purchaser’s evidence about her intent without considering objective manifestations of purpose. Evidence of objective manifestations was adduced by minister through purchaser’s oral testimony, which made Tax Court judge’s reference to “after hearing evidence of purchaser” at least somewhat ambiguous. Applying presumption that Tax Court judge knew and understood applicable law, it was not clear that Tax Court judge made palpable and overriding error in finding purchaser’s testimony sufficiently credible to overcome circumstantial evidence suggesting lack of requisite intent. More troubling was Tax Court judge’s statement during closing argument that he did not need to hear from minister’s counsel but issue of purchaser’s intent was squarely raised in minister’s pleadings and purchaser was cross-examined on minister’s assumptions about intent. Issue of intent was in play such that minister was heard on this issue. Tax Court judge’s judgment would be set aside and judgment that should have been made would be pronounced, with assessment returned to minister on basis that purchaser was entitled to GST/HST new housing rebate in respect of townhouse.
Ranjbar v. R. (Apr. 15, 2016, F.C.A., Eleanor R. Dawson J.A., D.G. Near J.A., and Richard Boivin J.A., A-344-15) 265 A.C.W.S. (3d) 258.

Customs and Excise


Canadian International Trade Tribunal did not commit any error in its analysis that “through bill of lading” was required for goods to benefit from General Preferential Tariff treatment

Company purchased 1,678 contained of various sized, made in China. When containers were shipped from China, company did not obtain through bills of lading or any other shipping documents. Canada Border Services Agency (CBSA) determined that containers did not qualify for General Preferential Tariff (GPT) treatment under Customs Tariff (Can.) because they were not shipped from China to Canada on through bill of lading. Canadian International Trade Tribunal dismissed company’s appeal from decision of CBSA. Tribunal did not review documentation that company had obtained after containers were shipped. Company appealed. Appeal dismissed. Company misunderstood that tribunal had accepted its proposed definition of “through bill of lading.” Although tribunal referred to two definitions proposed by company, it did not specifically adopt them in any part of its reasons. Because tribunal found failed to obtain through bills of lading or any other shipping documents, it was not necessary for tribunal to define through bill of lading. There were simply no shipping documents at all, and this was questions of fact and not subject to review on appeal. Tribunal, however did not commit any error in its analysis with respect to determination that through bill of lading was required in order for goods to benefit from GPT treatment.
Containerwest Manufacturing Ltd. v. Canada (President of Border Services Agency) (Apr. 11, 2016, F.C.A., David Stratas J.A., Wyman W. Webb J.A., and Mary J.L. Gleason J.A., A-351-15) 265 A.C.W.S. (3d) 100.

Sale of Land

Covenants for title

Section 29 of the Historical Resources Act (Alta.) limits positive covenants that may run with land

Lougheed owned building designated Municipal Historical Resource. To compensate Lougheed for any decrease in value and rehabilitation expenses, City agreed to pay Lougheed $3.4 million in 15 annual installments (Incentive Payments). “Incentive Agreement” imposed restrictions on Lougheed and registered by caveat on title. Lougheed borrowed money from Equitable Trust. Loan was secured by, inter alia, assignment of Incentive Agreement. Lougheed subsequently obtained additional financing from Heritage Capital, assigning its right to Incentive Payments as security. When Lougheed defaulted on Equitable Trust’s loan, Equitable Trust commenced action to enforce its security. Building advertised for judicial sale. Lougheed applied for declaration that Incentive Payments were not an interest in land and not included in assets being sold in judicial sale. Master issued requested declaration and chambers judge upheld master’s declaration, finding that s. 29(3) of Historical Resources Act (Alta.) did not operate such that Incentive Payments could run with land as positive covenant. Majority of Court of Appeal allowed Equitable Trust’s appeal, finding that Act creates sui generis covenants that displace common law rule that positive covenants do not run with land. Heritage Capital Corporation’s appeal allowed. Section 29 of Act does not completely displace common law rule that positive covenants do not run with land but rather limits positive covenants that may run with land to those that are in favour of person or organizations listed at s. 29(1), namely: Minister, council of municipality in which land is located, Alberta Historical Resources Foundation or historical organization approved by Minister. Exception to common law rule should be limited by precise language of provision and underlying purpose of Act. Chambers judge properly interpreted Act. Although City fell within s. 29(1) list of organizations, covenant to pay Incentive Payments was not in its favour. As result, Incentive Payments did not become an interest that runs with land by virtue of Act. Nor did Incentive Agreement reveal intention that Incentive Payments would run with land. There was no basis on which to disturb chambers judge’s findings with respect to contractual interpretation of Incentive Agreement. Chambers judge’s conclusion that Incentive Payments were not sold in judicial sale was supported by evidence. No indication in any sale documents that court intended to sell, or purchaser intended to buy, Incentive Payments.
Heritage Capital Corp. v. Equitable Trust Co. (May. 6, 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., 36301) Decision at 248 A.C.W.S. (3d) 224 was reversed. 265 A.C.W.S. (3d) 254.



Effect of renewal agreement was to reserve higher charge on arrears than that imposed on principal money not in arrears, contrary to Interest Act

Lougheed owned office building and granted mortgage to Equitable Trust to secure $27 million loan. Interest rate was agreed at prime interest rate plus 2.875 per cent per annum. When mortgage matured on June 30, 2008, Equitable Trust agreed to extend term by seven months. “First Renewal Agreement,” effective Aug. 1, 2008, carried per annum interest rate of prime rate plus 3.125 per cent over first six months and 25 per cent over seventh month. When First Renewal Agreement matured, parties entered into “Second Renewal Agreement” which provided per annum “interest rate” on loan of 25 per cent. It was effective Feb. 1, 2009, retroactive to one month prior to expiration of First Renewal Agreement. Second Renewal Agreement required Lougheed to make monthly interest payments at “pay rate” of greater of 7.5 per cent or prime interest rate plus 4.25 per cent. Difference between monthly payments and amount payable at stated interest rate would accrue to loan but would be forgiven if Lougheed made no default. Lougheed defaulted May 15, 2009 and Equitable Trust demanded repayment at stated rate of 25 per cent. Master found that both renewal agreements offended s. 8 of Interest Act (Can.). Chambers judge reversed master’s decision. Court of Appeal unanimously agreed that First Renewal Agreement complied with s. 8 and majority agreed that Second Renewal Agreement complied with s. 8. Lougheed’s appeal allowed. Pursuant to s. 8 of Act, mortgage agreement must not stipulate for, take, reserve or exact fine, penalty or rate of interest if effect of doing so imposes higher charge on arrears than that imposed on principal money not in arrears. Section 8 applies to discounts (incentives for performance) as well as penalties for non-performance. Inquiry is directed to effect of impugned mortgage term rather than term itself. Effect of Second Renewal Agreement was to reserve higher charge on arrears (25 per cent) than that imposed on principal money not in arrears (7.5 per cent or prime plus 5.25 per cent). Use of terms “pay rate” and “interest rate” of no consequence. 25 per cent per annum interest rate set by Second Renewal Agreement void and instead set at higher of 7.5 per cent and prime interest rate plus 5.25 per cent.
Krayzel Corp. v. Equitable Trust Co. (May. 6, 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., 36123) Decision at 242 A.C.W.S. (3d) 438 was reversed. 265 A.C.W.S. (3d) 223.

Charter of Rights

Arbitrary detention or imprisonment

Reasonable suspicion may be grounded in constellation of factors

Accused was detained by police in front of his residence for investigation of trespass and liquor-related provincial offences. Altercation ensued in which accused shoved and kicked officers and ran into residence. Police arrested accused and subsequent search of his backpack revealed handgun. At trial, accused alleged numerous infringements of his Charter rights and brought application to exclude from evidence handgun and for stay of proceedings. Trial judge dismissed application. Among other things, trial judge found that accused had been lawfully detained for brief investigation for offences under Trespass to Property Act (Ont.), and Liquor Licence Act (Ont.). Accused was convicted of various firearms and weapons offences and of assaulting police. Trial judge had found police had grounds to detain accused based upon manner in which accused had turned to first available doorway and urgently tried to gain entry by turning door handle and knocking, accused did not have key to unit that he was trying to enter, accused was carrying partially consumed bottle of liquor, smelled of alcohol, and had blood shot eyes such that it could be inferred that he had been drinking in courtyard, accused’s very nervous demeanour, including trembling hand when he produced his health card and his manner of standing with his backpack up against wall, and complaint from property manager that there were trespassers in courtyard area, particularly during evenings after 8:00 p.m., and that someone appeared to be letting them in. Accused appealed his convictions. Appeal dismissed. Actions noted may have been lawful and each of facts, if considered in isolation, may have been insufficient. However, when totality of facts was viewed together, they were capable of grounding reasonable suspicion that accused may be engaged in trespass or liquor-related offences. Reasonable suspicion may be grounded in constellation of factors, even if any one of those factors on its own would not have been sufficient.
R. v. Darteh (Feb. 22, 2016, Ont. C.A., Doherty J.A., E.A. Cronk J.A., and H.S. LaForme J.A., CA C59386) Decision at 112 W.C.B. (2d) 325 was affirmed. 128 W.C.B. (2d) 558.


Sentence appeal

Despite successful appeal for some offences, overall sentence was not affected and remained fit

Police officers executed search warrant on suspected drug operation. Police found accused JM and co-accused in basement bedroom. JM was subject to two prohibition orders since he was convicted of firearms offences. In that bedroom police found loaded handgun near JM. Handgun contained 14 bullets in magazine and one in chamber. Police found marijuana, five working cell phones, three digital scales, accounting list, ammunition and $3,000 in bundled cash. JM was convicted of possession of loaded prohibited firearm, possession of firearm knowing its possession was unauthorized, possession of prohibited device, being high capacity magazine, possession of crime proceeds, possession of marijuana for purpose of trafficking, and breaching two firearm prohibition orders. JM was sentenced to nine and one-half years’ imprisonment, less credit for pre-sentence custody. JM received eight and one-half years for possession of loaded firearm and one additional year for breaches of two prohibition orders. Sentences for other charges were to run concurrently and they did not impact on total sentence. Convictions for possession of crime proceeds and marijuana quashed and acquittals were entered. Accused appealed sentence. Appeal dismissed. Despite successful appeal for crime proceeds and marijuana offences overall sentence was not affected and it remained fit.
R. v. Mullings (Mar. 1, 2016, Ont. C.A., Robert J. Sharpe J.A., M.L. Benotto J.A., and Grant Huscroft J.A., CA C58150) 128 W.C.B. (2d) 538.

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