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Caselaw is a weekly summary of notable civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts.

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Charter of Rights

Cruel and unusual treatment or punishment

Mandatory minimum sentences declared of no force or effect

Accused was convicted of living on avails of prostitution of female person under age of 18 years, procuring under 18-year-old female to prostitution, and obtaining sexual services from female person who was under age of 18 years. First and third count carried minimum custodial sentences. Accused brought motion for declaration that mandatory minimum sentences be of no force and effect. Motion granted. Section 212(2) and (4) of Criminal Code were declared of no force or effect. Sentences would be out of line for persons within reasonably foreseeable hypothetical situation. Violation of s. 12 of Canadian Charter of Rights and Freedoms was established. Hand in hand with that consideration was denial of fundamental justice. Section 1 of Charter could not save impugned sections because they were far beyond acceptability to society.
R. v. Badali (Feb. 1, 2016, Ont. S.C.J., B. Glass J., 12-06456G) 127 W.C.B. (2d) 634.


Corporations

Shares

Judge’s conclusion that put-right option was part of bilateral contract contained in asset purchase agreement was reasonable

Respondents were victimized by fraudster and obtained judgments against her. Corporation controlled by appellants purchased respondents’ judgments. Respondents in exchange received two promissory notes and shares of corporation. Asset purchase agreement (“APA”) contained put-right option that provided respondents could compel appellants to purchase shares. Respondents attempted to exercised put-right option but appellants did not purchase shares. Respondents brought action and obtained summary judgment. Judge on summary judgment motion held that respondents successfully exercised option contained in APA. Appellants appealed. Appeal dismissed. Motion judge’s conclusion that put- right option was part of bilateral contract contained in APA was reasonable and supported by evidence. There was no basis to interfere with judge’s conclusion that respondents substantially complied with notice requirement in APA. Judge’s conclusion that respondents’ failure to provide certificate under s. 116 of Income Tax Act (Can.) did not vitiate appellants’ obligation to buy shares was reasonable. Judge’s interpretation of release agreement was reasonable. Appellants were not prejudiced by judgment squarely within terms of relief claimed in statement of claim.
Flintoff v. Crown William Mining Corp. (Jan. 29, 2016, Ont. C.A., S.E. Pepall J.A., G. Pardu J.A., and L.B. Roberts J.A., CA C60449) Decision at 254 A.C.W.S. (3d) 826 was affirmed. 263 A.C.W.S. (3d) 378.


Contracts

Franchise agreements

Restrictive covenant not ambiguous

MEDIchair, franchisor, operated franchise stores that sell and lease home medical equipment. One franchise location in Peterborough was owned and operated by DME. DME’s latest franchise agreement was 2005 Franchise Agreement. Appellants purchased DME’s franchise and agreed to be bound by 2005 Franchise Agreement, including restrictive covenant which applied on termination and prevented them from operating similar store for 18 months within 30-mile radius of their store or nearest franchise store. MEDIchair franchise system sold to Centric which also purchased Motion Specialties, group of corporate stores similar to MEDIchair, including one in Peterborough. Appellants claimed Centric focused on Motion stores and number of MEDIchair stores declined. Appellants did not renew franchise agreement, instead removing MEDIchair signage and continuing to operate. Arthur Wishart Act requires franchisor to provide prospective franchisee with disclosure document before franchise agreement signed except where grant of franchise not effected by or through franchisor. MEDIChair successfully applied to enforce restrictive covenant. Application judge found that MEDIchair exempt from disclosure requirement. Appellants’ appeal allowed. No error in finding that MEDIchair exempt from disclosure. MEDIchair merely gave required approval, took transfer fee and obtained covenants and guarantee. Restrictive covenant not ambiguous. Appellants extracted same restrictive covenant from former owner of DME. Courts regularly address restrictive covenants where standard is “similar” business. No basis to interfere with conclusion that “similar” not ambiguous in context of MEDIchair’s business. Courts give restrictive covenants presumption of validity when negotiated as part of sale of a business. Focus is whether there is legitimate or proprietary interest of franchisor that is entitled to protection of covenant. MEDIchair had legitimate or proprietary interest to protect goodwill in MEDIchair system. Purpose of covenant was to protect that interest for limited time and within defined territory. MEDIchair not entitled to protect its interest in franchise system as whole. By deciding not to operate in Peterborough, MEDIchair effectively acknowledged it had no legitimate or proprietary interest to protect within defined territorial scope of covenant.
MEDIchair LP v. DME Medequip Inc. (Feb. 29, 2016, Ont. C.A., K. Feldman J.A., MacPherson J.A., and B.W. Miller J.A., CA C60733) Decision at 257 A.C.W.S. (3d) 104 was reversed. 263 A.C.W.S. (3d) 287. 


Taxation

Income tax

Imposition of gross negligence penalty upheld on appeal

As result of introduction from his long-time friend, taxpayer had Fiscal Arbitrators organization prepare his 2009 tax return in such way as to claim very large fictitious business losses, which would result in refund of taxes for 2006 through 2009 taxation years. Canada Revenue Agency (CRA) disallowed losses and imposed gross negligence penalty pursuant to s. 163(2) of Income Tax Act (Can.). Taxpayer appealed imposition of penalties. Appeal dismissed. Taxpayer’s 2009 tax return contained false statements, as he never owned or operated business. Taxpayer did not knowingly make false statements since he was not aware of what was in his return. Taxpayer did make, or participate in, assent to, or acquiesce in making of, false statements amounting to gross negligence. Taxpayer was not so lacking in education, intelligence or experience as to claim ignorance. There were ample warning signs that should have aroused taxpayer’s suspicions, such as not knowing organization, paying exorbitant fee to organization, lack of explanations by organization regarding preparation of return, and large magnitude of refund. False statements were blatant and readily detectable, had taxpayer looked at return. Taxpayer did not make genuine effort to comply with law or to respond to CRA’s letters. Taxpayer chose to remain blissfully ignorant and place his complete trust in organization, which amounted to wilful blindness.
Daszkiewicz v. R. (Feb. 12, 2016, T.C.C. [General Procedure], Rommel G. Masse D.J., 2013-492(IT)G) 263 A.C.W.S. (3d) 527.


Constitutional Law

Charter of Rights

Marihuana for Medical Purposes Regulations (Can.) infringed s. 7 and not justified under s. 1

Plaintiffs each had medical requirement for marihuana. Marihuana for Medical Purposes Regulations (Can.) (MMPR) control use of marihuana for medical purposes. They limit patient to single government-approved contractor and eliminate ability to grow one’s own marihuana or to engage one’s own designated producer. Plaintiffs challenged MMPR, claiming that restrictions they impose on access to marihuana for medical purposes violates their s. 7 of Canadian Charter of Rights and Freedoms. MMPR declared invalid as contrary to s. 7 of Charter. Prohibition against marihuana engages s. 7 liberty interests in two distinct ways: right not to have one’s physical liberty endangered by risk of imprisonment and right to make decisions of fundamental personal importance. Choice of medication, including cannabis, to alleviate effects of illness with life-threatening consequences is decision of fundamental personal importance. Security of person is engaged by establishment of regulatory regime that restricts access to marihuana. Security of person encompasses personal autonomy involving control over one’s bodily integrity and being free from state interference. MMPR prohibit cultivation of marihuana for oneself or purchase from supplier not registered as licensed producer (LP). If one cannot access LP for any reason, that person’s security is engaged as there would be no access to medication, resulting in physical or psychological suffering. Limitations imposed by MMPR are not in accordance with principles of fundamental justice. Objectives of MMPR are reduction of risk to public health and safety and to improve way in which person who needs marihuana gains access to cannabis. Restrictions in MMPR bear no connection to objectives. MMPR force plaintiffs to choose between medication and other basic necessities without rational connection to objectives. Government costs savings, while legitimate policy goal, could not trump plaintiffs’ Charter rights. Law is arbitrary and overbroad. Infringement of s. 7 not justified under s. 1. Plaintiffs demonstrated that cannabis can be produced safely and securely with limited risk to public safety and consistently with promotion of public health. There were simple measures that could be taken to minimally impact s. 7 interests. Operation of declaration of invalidity of MMPR suspended to permit Canada to enact new or parallel medical marihuana regime.
Allard v. Canada (Feb. 24, 2016, F.C., Michael L. Phelan J., T-2030-13) 263 A.C.W.S. (3d) 358

Taxation

Income tax

Lump sum payment from workers’ compensation board constituted income

In 1969, taxpayer was injured while working, which caused continuing pain. Taxpayer made claim to workers’ compensation board in 2011 on basis of new diagnosis of complex regional pain syndrome. Taxpayer received award of $39,123.95, retroactive to 1969, and lump sum of $53,816 in 2012. Taxpayer did not include lump sum amount in his income claiming it was award of damages for pain suffered. Minister of National Revenue determined that taxpayer was to repay Old Age Security Pension in amount of $3,269 that he received in 2012, on basis that his income for 2012 included lump sum payment, making his total income $109,634. Tax Court judge dismissed taxpayer’s appeal and held that lump sum received from board should have been included in taxpayer’s income for purposes of ss. 56(1)(v) and 180.2(1) of Income Tax Act (Can.). Taxpayer appealed. Appeal dismissed. Judge was correct in holding that lump sum payment constituted income. Even if lump payment was made on account of non-economic loss, it would still constitute income within meaning of s. 56(1)(v) of Act. Policies of board did not determine whether non-economic loss compensation payments constituted income for purpose of Act. Section 56(1)(v) of Act was sufficiently broad to encompass non-economic loss payments received by injured workers under provincial workers’ compensation legislation to compensate them for pain and suffering. Lump sum payment received by taxpayer was compensation and was made in respect of compensable injury or disability, within meaning of s. 56(1)(v) of Act.
Butler v. R. (Feb. 26, 2016, F.C.A., Johanne Gauthier J.A., Donald J. Rennie J.A., and Mary J.L. Gleason J.A., A-166-15) Decision at 249 A.C.W.S. (3d) 898 was affirmed. 263 A.C.W.S. (3d) 533.


Taxation

Income tax

Arguable that Parliament intended to recognize split gifts, wherever made, in line with civil law

Appellant claimed tax credits with respect to alleged gifts made to registered charity pursuant to s. 118.1 of Income Tax Act (Can.) (ITA). Some gifts were made from personal funds and some were funded by loans tied to the gifts. Appellant claimed he was entitled to full amount of claimed tax credits or, alternatively, to tax credits claimed in respect of portion of gifts that exceeded the value of any consideration he would have received in the process. Alternative argument invoked civil law of Quebec even though no purported donations were made in that province. Tax Court judge allowed motion by respondent to strike out alternative plea, rejecting argument that appellant could resort to civil law of Quebec. Interpretation Act (Can.) (IA) ensures that civil law is not applied in rest of Canada and that common law not applied in Quebec when private law concepts of two legal systems are called into play. Tax Court judge found support in 2002 amendments to ITA allowing a tax credit for certain ‘gifts’ that would be invalid under private law solely because taxpayer received benefit in return for making the gift. He held that by providing result more clearly reflecting civil law concept of remunerative gift, 2002 amendment “legislatively dissociates the common law meaning of gift from the federal legislation”. He held that common law meaning of “gift” has been clearly established and common law does not recognize as a gift a transfer of property for partial consideration. Appellant’s appeal allowed. Explanatory Notes to 2002 ITA amendments state that there have been certain decisions made under common law where it has been found that transfer of property to charity was made partly in consideration for services and partly as gift. Notes suggest that state of jurisprudence in common law provinces was not as certain as Tax Court judge held. Nor has jurisprudence clearly rejected split gifting. It could not be said with certainty that meaning of “gift” prior to 2002 amendments excluded notion of split gift in common law provinces and that effect of amendments was to change that state of affairs. Quest for uniformity in application of ITA not, in itself, sufficient reason for disregarding applicable private law. IA recognizes role of civil law and common law in application of federal legislation which necessarily entails possibility of diverging results. Appellant argued that Parliament intended to recognize split gifts, wherever made, in line with civil law. It would have been open to Parliament to do so and it was arguable this was what Parliament intended. Tax Court judge should not have struck out impugned plea.
French v. R. (Feb. 29, 2016, F.C.A., Marc Noël C.J., A.F. Scott J.A., and Yves de Montigny J.A., A-102-15) Decision at 249 A.C.W.S. (3d) 222 was reversed. 263 A.C.W.S. (3d) 534.


Employment

General

Members of school board’s executive committee could be examined

Following his dismissal, union’s teacher filed grievance before an arbitrator and sought request to examine executive committee’s commissioners of executive who had decided in camera to dismiss him. School board objected to the examination on basis of principle of deliberative secrecy. Arbitrator dismissed Board’s objections and allowed examination of executive committee’s members regarding their deliberations and their decision to dismiss teacher. On motion for judicial review, Superior Court quashed arbitrator’s decision and barred any testimony by members of the executive committee. Majority of Court of Appeal restored arbitrator’s decision and allowed examination of executive committee’s members. School board appealed. Appeal dismissed. Principle that motives of legislative body are “unknowable” and deliberative secrecy do not apply to a public employer, Board in this case, that decides to take disciplinary action against employee, even if an in camera meeting is ordered. Here, it was reasonable for arbitrator to rule that he needed to know what had taken place in camera in order to determine whether executive committee’s deliberations had been thorough. Hence, three members of Board’s executive committee could be examined. Further, it was wrong to say that discussions held by members of executive committee in camera were shielded by deliberative secrecy. Furthermore, arbitrator had exclusive jurisdiction to determine whether any questions that might be asked were relevant. Reasons for arbitrator’s decision were transparent and intelligible, and justification given for it was sufficient. Arbitrator’s decision fell within a range of possible acceptable outcomes which were defensible in respect of facts and law. Therefore, there was no justification for Court to intervene.
Commission scolaire de Laval c. Syndicat de l’enseignement de la région de Laval (Mar. 18, 2016, S.C.C., McLachlin C.J.C., Abella J., Karakatsanis J., Wagner J., Gascon J., Côté J., and Brown J., 35898) Decision at 242 A.C.W.S. (3d) 103 was affirmed. 263 A.C.W.S. (3d) 396.


Charter of Rights

Search and seizure

Judge was not under any obligation to raise issue of s. 8 breach on his own motion

Police officer stopped accused and he smelled strong odour of alcohol on accused’s breath. Accused failed roadside test and she was arrested for driving over 80. Accused’s two breath samples were over limit. These two samples were taken more than two hours after offence. At trial, accused brought no application under Canadian Charter of Rights and Freedoms and she called no evidence. Accused’s only attack on Crown was that samples were not taken as soon as practicable. Trial judge acquitted accused because he held that Crown could not prove its case using breath readings and toxicologist’s report because it did not prove that breath samples were taken as soon as practicable. Judge raised Charter issue on his own motion. Appeal allowed. Acquittal quashed and conviction entered. Judge made finding of fact that breath samples were not taken as soon as practicable. This amounted to breach of s. 8 of Charter. However, this was relatively trivial breach for there was only delay of 46 minutes in taking breath samples. Delay did not result in any issue regarding accuracy of toxicologist’s report based on those samples. There was no evidence of bad faith of police or evidence of prejudice to accused that resulted from that delay or any impact on her Charter rights. Argument to exclude breath samples was weak. Judge was not under any obligation to raise issue of s. 8 breach on his own motion. Even if judge had obligation to consider s. 8 breach on his own motion, judge would likely have decided that it was too late for issue to be considered, given prejudice to Crown that arose from fact that there was no timely Charter application. Furthermore, had judge decided on his own motion to consider Charter application at end of case, he very likely would have decided that evidence should not be excluded. Exclusion of evidence would have brought administration of justice into disrepute. This was one of those clearest of cases where, but for error of law made by judge, only conclusion was that Crown had proven its case beyond reasonable doubt and that accused was guilty.
R. v. Li (Nov. 13, 2015, Ont. S.C.J., N.J. Spies J., 5/15) 128 W.C.B. (2d) 4.


Appeal

Grounds

Accused’s conviction for assault causing bodily harm against infant son upheld on appeal

Accused was convicted of two counts of assault causing bodily harm to his two-month-old infant son. Infant suffered 12 rib fractures. Fractures were incurred on two occasions during course of hospital stay. Accused appealed both convictions. Accused claimed that verdict on first count was unreasonable or that trial judge failed to properly apply principles of W. (D.). Regarding second count accused claimed that judge erred in her application of mens rea for assault causing bodily harm and that she misapplied test for implied consent in context of parent-child relationship. Appeal dismissed. Regarding first conviction verdict regarding first set of fractures was reasonable. There was no error in judge’s factual findings. Based on nature of fractures and due to lack of history of impact or accident, expert evidence supported conclusion that fractures were not accidentally inflicted. Judge properly found accused’s evidence to not be credible since it was inconsistent with expert evidence. Judge was therefore entitled to find that accused caused fractures to his son. W. (D.) was properly applied. Regarding second conviction even if judge accepted accused’s evidence that he attempted to administer CPR, force administered could not be excessive and defence of implied consent did not apply since accused use excessive force. Judge, therefore, did not err in law. Judge acted properly when she quoted expert evidence, for it was shorthand way of accepting that evidence
R. v. W. (B.) (Feb. 2, 2016, Ont. C.A., K.M. Weiler J.A., M. Tulloch J.A., and David Brown J.A., CA 59172) 128 W.C.B. (2d) 2.


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