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Case Law is a sample selection from the weekly summaries of notable unreported civil and criminal court decisions published in Law Times newspaper.

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Taxpayer correct in considering he realized capital gain

Taxpayer received payment for surrender of options pursuant to share appreciation right (“SAR”). Taxpayer reported payment as capital gain. Minister re-assessed on basis payment either income from employment or employee benefit, shareholder benefit, or income from venture in nature of trade. Taxpayer appealed. Appeal allowed. Section 7 of Income Tax Act (Can.), meant to provide complete code for taxing of benefits arising under or because of stock option agreement. Section 7(3) meant to exclude benefits arising from non-arm’s length exercise and disposition of options. Surrender payment not properly characterized as “salary, wages and other remuneration”. SAR not separate property from options. Taxpayer did not treat options in same way as trader would. Nothing in record to suggest that taxpayer acquired options with intent of disposing of them or underlying shares for cash. Taxpayer held options until shortly before they expired. Payment not shareholder benefit. Taxpayer gave up something of equal value. Surrender payment reflected monetary value of options. Taxpayer correct in considering that he realized capital gain corresponding to amount of Surrender payment received as proceeds of disposition for his options.
Rogers Estate v. R. (Nov. 25, 2014, T.C.C. [General Procedure], Robert J. Hogan J., File No. 2012-1845(IT)G) 246 A.C.W.S. (3d) 724.

Aboriginal Peoples


Nation’s power with respect to election did not originate from federal act or prerogative

Appellant Nation, not-for-profit corporation, held election to elect board of directors, including Grand Chief and Deputy Grand Chief. Individual appellants were elected Grand Chief, Deputy Grand Chief and directors. Respondent was not elected and he applied for judicial review in Federal Court. Appellants brought motion to strike out application on basis that Federal Court did not have jurisdiction. Federal Court judge dismissed motion on ground that Nation, in holding election, acted as federal board, commission or other tribunal and it had jurisdiction to entertain judicial review application. Appellants appealed. Appeal allowed. Federal Court erred in law in articulation and application of test applied to answer jurisdictional issue. Proper questions to be answered were what jurisdiction or power was being exercised and what was source of jurisdiction or power. Nation was conducting election of board of directors. Source of Nation’s power was bylaw of Nation. Nation’s powers in respect of election did not originate from federal Act or prerogative. In conducting election, Nation was not exercising powers conferred by or under Act of Parliament or by or under order made pursuant to Crown prerogative and it was not acting as federal board. Federal Court lacked jurisdiction to conduct application for judicial review. Application for judicial review was dismissed.
Pokue v. Innu Nation (Nov. 21, 2014, F.C.A., Eleanor R. Dawson J.A., Wyman W. Webb J.A., and A.F. Scott J.A., File No. A-202-14) Decision at 239 A.C.W.S. (3d) 272 was reversed.  246 A.C.W.S. (3d) 493.

Human Rights Legislation


Commission’s dismissal of complaint was unreasonable

Applicant purchased home and secured mortgage from respondent bank. Bank later called in mortgage. Applicant alleged that bank discriminated against him on basis of physical disability and that bank only called in loan after learning that cannabis grew in home. Cannabis was being grown in home under federal licence for medical reasons. Applicant complained to Human Rights Commission that bank engaged in discrimination contrary to Canadian Human Rights Act. Commission dismissed applicant’s complaint under s. 41 of Act. Applicant applied to quash commission’s decision. Federal Court Judge found that commission’s decision was reasonable and dismissed application for judicial review. Applicant appealed. Appeal allowed. Federal Court Judge reviewed commission’s decision as if proper investigation had been conducted and assumed no further investigation was required. Real issue was whether it was reasonable for commission to determine that it was plain and obvious that complaint must fail. There was live contest in record before commission, which could not be resolved until it was further investigated under s. 43 of Act. Commission must have engaged in weighing process, which it could not do during s. 41 of Act stage. Only after investigating matter under s. 43 of Act could commission assess evidence and determine whether inquiry was warranted. Commission’s dismissal of complaint under s. 41 of Act was unreasonable.
McIlvenna v. Bank of Nova Scotia (Sep. 17, 2014, F.C.A., Nadon J.A., Trudel J.A., and David Stratas J.A., File No. A-306-13) Decision at 229 A.C.W.S. (3d) 826 was reversed.  246 A.C.W.S. (3d) 159.

Employment Insurance


Violence in workplace cannot be sanctioned by entitlements to benefits

Respondent slapped co-worker after she insulted members of his family. Respondent lost employment. Umpire found that misconduct did not exclude respondent’s entitlement to employment insurance. Arbitrator confirmed decision. Employment Insurance Commission applied for judicial review of arbitrator’s decision. Application granted. Umpire’s decision quashed, and matter remitted for redetermination based on finding that respondent was not entitled to benefits. To constitute misconduct, behaviour had to be willful. Umpire concluded that respondent’s violent act was not deliberate. Fact that respondent acted on impulse was not relevant to decision as to whether there was misconduct. Violence in workplace could not be sanctioned by entitlements to benefits. Purpose of law was to protect workers who lost employment involuntarily, not those who were unemployed because of their fault.
Canada (Procureur général) c. Kaba (Sep. 11, 2013, F.C.A., Noël J.A., Johanne Trudel J.A., and Mainville J.A., File No. A-33-13) 245 A.C.W.S. (3d) 854.

Aboriginal Peoples


Appellant’s main duty to distribute estate properly and efficiently

Appellant was appointed administrator of estate of uncle, Indian, who died intestate and whose main assets included two undivided parcels of land on reserve. Sixteen years after appellant’s appointment, estate and land remained undivided among heirs. Minister ordered appellant’s removal under s. 43 of Indian Act (Can.), for failure to fulfill duties. Appellant appealed Minister’s decision. Federal Court judge dismissed appeal. Appellant appealed. Appeal dismissed. Federal Court judge carefully assessed facts of case including right of beneficiaries to be in possession of their share of estate and length of appellant’s administration before his removal. Record supported finding of Federal Court judge that Minister had done his best to assist and support appellant. Minister received several complaints from heirs that appellant was aware of. Appellant’s main duty was to distribute estate properly and efficiently. It was reasonable for Minister to conclude that appellant was not discharging his duties and to order his removal as administrator.
Longboat v. Canada (Attorney General) (Oct. 7, 2014, F.C.A., Johanne Trudel J.A., Webb J.A., and Boivin J.A., File No. A-425-13) Decision at 234 A.C.W.S. (3d) 816 was affirmed.  245 A.C.W.S. (3d) 739.

Civil Procedure


No requirement that affirmation be made on any holy book

Plaintiff applied for judicial review of Canadian Human Rights Commission’s decision not to hear his complaint. Plaintiff attempted to file evidence with unsworn affidavits. Plaintiff was Mennonite and refused to swear affidavit on Bible that was provided by court’s registry in Winnipeg because it was not “undefiled” Bible. Plaintiff was ordered to either obtain access to “undefiled” Bible and swear on it or to make solemn affirmation to affirm his affidavit. Application for judicial review was dismissed. Plaintiff brought action against Crown seeking order declaring Federal Court Registry in Winnipeg in contempt of court, order directing court to hear application and interim order providing means of affirming or swearing his affidavit evidence that did not offend his conscience. Defendant brought motion to strike out plaintiff’s statement of claim. Prothonotary ordered plaintiff’s statement of claim to be struck out on basis that it disclosed no reasonable cause of action and was abuse of process. Plaintiff appealed. Appeal was dismissed. Plaintiff appealed. Appeal dismissed. Plaintiff misunderstood effect of “affirmation” and entire case was based on misunderstanding. Pursuant to R. 80(1) of Federal Courts Rules (Can.), affidavits were to comply with Form 80A, which indicated that affidavit may be sworn or affirmed. There was no requirement that affirmation be made on any holy book. Word “affirmation” referred to method of completing affidavit that had no religious connotation and plaintiff had no basis on which to refuse to provide necessary court documentation in support of action he commenced. Motions judge applied correct principles of law and clearly understood factual background in concluding that statement of claim disclosed no reasonable cause of action. Leave to appeal to Supreme Court of Canada was denied.
Klippenstein v. R. (Sep. 30, 2014, F.C.A., Eleanor R. Dawson Acting C.J., Karen Sharlow J.A., and David G. Near J.A., File No. A-135-14) Decision at 238 A.C.W.S. (3d) 90 was affirmed.  245 A.C.W.S. (3d) 522.



Plaintiffs could not arrest more than one ship

At marine terminal facility owned by plaintiffs, defendant’s vessel struck and damaged part of trestle that led from shore to berth. Berth became unstable until repairs were affected and parts were replaced. Plaintiffs commenced action in Supreme Court of British Columbia and arrested vessel. Parties negotiated release of vessel from arrest. Defendant issued letter of understanding (LOU) of US $26 million and in consideration of LOU plaintiffs were to agree to release vessel from arrest and to refrain from arresting any other ship defendant owned. Plaintiffs decided that clause in LOU that prevented them from arresting sister ship of vessel was not acceptable. British Columbia Supreme Court judge found that there was legally binding agreement plaintiffs entered into pursuant to which they agreed to waive right to arrest sister ships in consideration of security being provided by defendant. Judge found there was no basis to set aside agreement on ground of mistake. Judge found that, pursuant to s. 43(8) of Federal Courts Act (Can.), plaintiffs could not arrest both vessel and sister ship. Plaintiffs appealed. Appeal dismissed. Judge correctly concluded that there was no mistake that could vitiate agreement. Plaintiffs knew of uncertainties of arresting more than one ship and agreed to terms of LOU fully aware of divergent opinions on issue. Pursuant to Act, plaintiffs could not arrest more than one ship. Plaintiffs could proceed either under s. 43(2) of Act to secure arrest of offending vessel or under s. 43(8) of Act to secure arrest of sister ship. Plaintiffs elected to proceed under s. 43(2) of Act and were barred from seeking arrest under s. 43(8) of Act. By enacting s. 43(8) of Act, Parliament intended to confer on plaintiffs in Canada right to arrest sister ship in lieu of offending ship. Parliament did not intend for Federal Court to exercise jurisdiction in rem under both s. 43(2) and (8) of Act for same claim.
Westshore Terminals Limited Partnership v. Leo Ocean S.A. (Oct. 15, 2014, F.C.A., Marc Nadon J.A., Eleanor R. Dawson J.A., and Johanne Trudel J.A., File No. A-101-14) Decision at 238 A.C.W.S. (3d) 281 was affirmed.  245 A.C.W.S. (3d) 496.
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