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Criminal Law

Extraordinary remedies

Habeas corpus

Habeas corpus hearing adjourned pending outcome of bail review

Accused was detained awaiting trial on number of counts under Immigration and Refugee Protection Act in respect of advising on immigration matters as non-lawyer without authorization to do so. She was originally charged on May 7, 2014, and released on bail on July 15, 2014. On September 17, 2015 she was arrested and charged with breaching bail and committing further offences under Act. Following revocation hearing, her bail was cancelled in November 2015 and she was detained on all charges on December 8, 2015 following show-cause hearing. Preliminary hearing was commenced for each of May 2014 charges and September 2015 charges. Before receiving decision on preliminary hearings, Crown preferred direct indictment on December 11, 2016, with respect to all charges under Act. Direct indictment was filed under s. 577 of Criminal Code. Original charges, including breach of bail charges, were stayed on January 5, 2017. While detained, accused initiated multiple proceedings including two-part habeas corpus application. Proceedings commenced by accused were dismissed and she remained in custody pending trial under new indictment. Accused appealed denial of habeas corpus relief. Decision of application judge was set aside for failure to give adequate reasons and new bail review hearing was to be held forthwith. New habeas corpus hearing adjourned pending outcome of bail review. Under s. 523(1.2) of Code, previous detention order continued to apply in respect of new indictment. Purpose and effect of s. 523(1.2) of Code are to continue previous detention order and make it apply to new indictment. Any stay of original charges has no effect on ongoing status of original detention order. Accused had now spent 18 months in custody. Over 16 months had passed since her re-arrest on charges that she breached her bail. While new charges she allegedly committed while on bail were proceeding, charges that she failed to comply with bail had been stayed. Maximum sentence for five of counts with which accused was charged was two years and five years for sixth count. Accused had been in custody for further six months since dismissal of habeas corpus application and had two further bail reviews. Serious liberty issue now existed and this issue was best addressed in context of bail review. Although accused had argued issue before it did not appear to have been fully considered. More time had passed and breach of bail charges had now been stayed, and these were new factors that may well affect considerations of judge when determining issues on bail review.
R. v. Codina (2017), 2017 CarswellOnt 1109, 2017 ONCA 93, K. Feldman J.A., Paul Rouleau J.A., and K. van Rensburg J.A. (Ont. C.A.).

Criminal Law

Charter of Rights and Freedoms

Unreasonable search and seizure [s. 8]

Trial judge erred in holding that accused’s Charter rights were breached

Accused’s son was under investigation for murder. Police obtained wiretap authorization naming four “principal known persons” including accused and his son. Accused was believed to have knowledge of his son’s involvement in murder and to have blocked police access to his son during initial investigation. As result of intercepted communications, police formed belief accused was involved in drug trafficking. On arresting him, police discovered large quantity of cash and heroin in car in which accused was travelling. At trial on drug charges, accused challenged validity of wiretap authorization. Trial judge granted application, ordered exclusion of seized heroin and cash, and accused was acquitted. Crown appealed. Appeal allowed. Acquittal was set aside and new trial was ordered. Test which reviewing judge was to apply was whether, in light of record amplified on review, ITO contained sufficient reliable evidence that might reasonably be believed on basis of which authorizing justice could have concluded that conditions precedent required to be established were met. Threshold for naming person in affidavit and authorization as “known person”, within meaning of s. 185(1)(e) of Criminal Code, was not onerous. Trial judge’s ultimate conclusion that “all we have is the simple fact of a father and son relationship and nothing else” resulted from his assessment of evidence in piecemeal fashion. When evidence was assessed cumulatively, taking into account larger context, it went much further: (i) accused’s son was prime suspect in murder; (ii) son lived with accused; (iii) son worked at his father’s pizza business and continued to do so after murder; (iv) information obtained by police led them to believe two of son’s friends were present with him at time of murder; (v) day after murder, at least one of those friends visited pizza shop when son was not there, but accused was; (vi) accused was less than candid in what he told officers who visited his pizza store; and (vii) accused’s driving on two occasions strongly suggested he was aware he was under police surveillance. Trial judge erred in holding that accused Charter rights were breached because ITO did not contain sufficient evidence to meet “may assist” standard.
R. v. Hafizi (2016), 2016 CarswellOnt 19469, 2016 ONCA 933, E.E. Gillese J.A., Paul Rouleau J.A., and David Brown J.A. (Ont. C.A.); reversed (2014), 2014 CarswellOnt 8547, 2014 ONSC 3547, Robert N. Beaudoin J. (Ont. S.C.J.)

Bankruptcy and Insolvency

Companies’ Creditors Arrangement Act

Arrangements

Canadian debtors’ plan of compromise and arrangement was sanctioned

Global telecommunications company with corporate entities in many jurisdictions (debtors) became insolvent. Canadian debtors were granted Companies’ Creditors Arrangement Act protection. Dispute arose regarding $7.3 billion held in escrow after sale of debtors’ assets (allocation dispute), which involved protracted litigation in Canada and U.S. with various parties from multiple jurisdictions. Parties executed settlement and support agreement (Agreement). Monitor brought motion to sanction Canadian debtors’ plan of compromise and arrangement (Plan) and to release escrowed sale proceeds in accordance with Agreement. Motion granted. Plan sanctioned. Release of sale proceeds authorized in manner set out in Agreement. Plan was fair and reasonable. Plan received approval from 99.7 percent of creditors and called for payment to creditors on pari passu basis, which was bedrock of Canadian insolvency law. Objections to approval of Plan by long-term disability (LTD) beneficiaries were dismissed. LTD claimants were bound to prior agreement that their claims were to rank as unsecured claims that shared pari passu with other unsecured claims against Canadian debtors and that any claim for priority treatment had been released. Plan was not contrary to ss. 7 and 15 of Charter of Rights and Freedoms with respect to LTD claimants.
Nortel Networks Corp., Re (2017), 2017 CarswellOnt 1120, 2017 ONSC 700, Newbould J. (Ont. S.C.J. [Commercial List]).

Tax

Income tax

Tax credits

Claim for scientific research and experimental development tax credit was disallowed

Taxpayer was natural health product company, whose president was naturopathic doctor. Doctor formulated three new natural health products for taxpayer, evaluating condition to be treated, conducting systematic review of others’ clinical studies and literature, corresponding with other professionals and calculating ingredients by drawing on his expertise. Doctor did not run clinical trials due to expense and because they were not required for licensing of natural health products. Taxpayer claimed scientific research and experimental development (SR&ED) tax credit for activities related to such formulation. Minister reassessed taxpayer under Income Tax Act, disallowing SR&ED credits. Taxpayer appealed. Appeal dismissed. There was scientific uncertainty in three projects to develop these products mimicking existing pharmaceuticals and, in two projects’ reformulation to use existing pharmaceutical, in identifying supplemental natural ingredients to lessen adverse side effects. Doctor hypothesized formulations but there was no testing performed to assess effectiveness or any other aspect of these products. Products were reformulated only in response to Health Canada either not approving hypothesized formula or removing restriction on doctor’s preferred ingredient. Absence of any testing resulted in uncertainty as to whether any of formulations represented any form of advancement of scientific knowledge. Newly hypothesized formulation could not on its own be considered either knowledge or advancement of knowledge. Jurisprudence had clearly and consistently interpreted definition of SR&ED as requiring some testing of hypotheses for there to be systematic investigation or search carried out by means of experiment or analysis, although such testing did not necessarily have to be in form of clinical testing. Taxpayer’s activities did not satisfy definition of SR&ED.
Life Choice Ltd. v. R. (2017), 2017 CarswellNat 219, 2017 TCC 21, Patrick Boyle J. (T.C.C. [Informal Procedure]).

Intellectual Property

Patents

Actions for infringement

This was not proper case to apportion defendants’ profits
Plaintiff patent owner owned patent which claimed drug perindopril. Federal Court held that patent was infringed by defendants through manufacture in Canada and sale of perindopril tablets. Plaintiffs elected to recover profits defendants earned by reason of their infringing activities. Federal Court determined amount of defendants’ profits which were attributable to infringing activity. This required Federal Court to consider manufacture and sale of perindopril tablets in Canada as well as their sale abroad. With respect to export sales, Federal Court rejected argument that defendants’ profits should be reduced by taking into account availability of non-infringing alternatives, and argument that their profits should be reduced on basis that portion was attributable to non-infringing services they provided. Defendants appealed. Appeal allowed in part. Federal Court erred in law by rejecting relevance at law of any available non-infringing perindopril and failed to adequately consider evidence adduced as to ability and willingness of three suppliers to provide non-infringing perindopril. Issue would be remitted to Federal Court. While Federal Court committed extricable error of law in its interpretation of contracts between defendants and certain affiliates, it did not err in its ultimate conclusion that this was not proper case to apportion defendants’ profits.
Apotex Inc. v. ADIR (2017), 2017 CarswellNat 217, 2017 FCA 23, Eleanor R. Dawson J.A., Boivin J.A., and Woods J.A. (F.C.A.); reversed (2015), 2015 CarswellNat 2838, 2015 CarswellNat 7793, 2015 FC 721, 2015 CF 721, Jocelyne Gagné J. (F.C.).

Intellectual Property

Copyright

Licences

Board erred in ignoring expert evidence

Copyright Board of Canada certified royalty rates to be collected by Canadian Copyright Licensing Agency for reproduction of works in its repertoire by school institutions during two tariff periods. Board applied “volume times value” methodology, pursuant to which volume of compensable copying was multiplied by estimated value of each page of copied work for one of four genres included in agency’s repertoire: books, periodicals, newspapers and consumables. Agency brought application for judicial review. Application granted in part. Only reviewable error concerned coding errors on repertoire; this matter was to be remitted for reconsideration. Board erred in ignoring expert evidence provided by agency to correct and clarify breadth of repertoire as described in volume study. In circumstances of this case, it was not unreasonable for board to infer that copying of one or two pages of book did not constitute reproduction of “substantial part of work” within meaning of s. 3 of Copyright Act. Board did not disregard burden of proof. Board’s purpose was to come to its own “impression” of what was fair in best manner possible considering that both parties had agreed to use aggregate data to establish volume of copying during relevant period. Board did not breach its duty to act fairly. Board used methodology that was simply practical and mathematical way of reflecting relative weight given by board to various factors used to form its “impression.” Board’s overall determination that large portion of exposures were fair was not unreasonable. Board followed previous cases where only quantitative proportion of work was considered, and there was no error in board’s reasoning in this respect. Board did not err with respect to character of dealing, in fair dealing analysis. In explaining why looking at aggregate volume of copies was not helpful to its assessment of whether copies were widely distributed, board reasonably applied Supreme Court of Canada’s teachings in particular cases. Board did not err with respect to effect of dealing. In terms of realistic alternatives, this factor did not support finding of unfairness given that agency’s evidence on this point was greatly limited in scope and detail. Agency did not establish board’s assessment of amount of exposures that should be excluded for compensability on basis of fair dealing pursuant to s. 29 of Act was unreasonable.
Canadian Copyright Licensing Agency v. British Columbia (Ministry of Education) (2017), 2017 CarswellNat 163, 2017 FCA 16, M. Nadon J.A., Eleanor R. Dawson J.A., and Johanne Gauthier J.A. (F.C.A.).

Criminal Law

Offences

Breaking and entering and related offences

Trial judge’s mistakes warranted appellate intervention

Accused was convicted of break and enter with intent to commit indictable offence, two counts of break and enter and committing indictable offence, and three counts of possessing break-in instruments. Charges arose from three break-ins at fast-food restaurant. Crown’s similar fact evidence application in relation to two break-ins, in which safe was broken into and money stolen, was allowed. In respect of third break-in, no theft was committed because perpetrator was unable to access safe. DNA and witness evidence implicated accused. Accused appealed convictions. Appeal allowed. Trial judge erred with respect to use he made of accused’s criminal record and his evaluation of evidence was flawed in material respects. Trial judge concluded that several aspects of accused’s testimony strained belief, including his explanation for his DNA being on balaclava worn by perpetrator. Essentially, trial judge reasoned that if accused were truly innocent and was in wrong place at wrong time, his decision to remain in alley where suspect van was parked was undermined by his “criminal past and life experiences”. Trial judge’s use of accused’s criminal record went well beyond limited use permitted by Canada Evidence Act. Trial judge considered that accused had cast on his right arm at time of break-ins, but rejected his submission that due to his injury, he could not swing axe or use any of tools used in break-ins. Trial judge ignored relevant evidence that he was required to consider before rejecting accused’s evidence on that point. Trial judge also misapprehended evidence in saying that there were glass particles on accused’s shirt and running shoes. Trial judge’s misuse of accused’s criminal record, and cumulative effect of his mistakes in assessing evidence, warranted appellate intervention. New trial ordered.
R. v. Marini (2017), 2017 CarswellOnt 519, 2017 ONCA 46, Karen M. Weiler J.A., S.E. Pepall J.A., and G.T. Trotter J.A. (Ont. C.A.); reversed (2014), 2014 CarswellOnt 416, 2014 ONSC 86, E. Gareau J. (Ont. S.C.J.).

Criminal Law

Offences

Assault

Totality of evidence allowed trial judge to reach conclusion

Accused was convicted at judge-alone trial, on charge of aggravated assault. Accused claimed that judge did not properly analyze evidence of disreputable witnesses. Accused claimed trial judge misapprehended evidence of complainant and his witness. Accused claimed that trial judge made inconsistent findings as to complainant’s perception of incident. Accused finally claimed that trial judge’s finding that witness was not assailant, while accused was, was improper. Accused appealed from conviction. Appeal dismissed. Trial judge did not rely on disreputable witnessed to determine that stabbing took place by accused. Trial judge properly considered these witnesses’ evidence to determine that accused was one of assailants. This evidence was corroborated by complainant’s blood being found on accused’s pants. Other witnesses’ evidence was properly construed by trial judge. This evidence did not name accused as assailant, but excluded another person as one of assailants. This was corroborated by testimony of complainant. Trial judge properly accepted complainant’s testimony, to establish number and gender of assailants. Totality of evidence allowed trial judge to reach conclusion that accused was active participant in assault.
R. v. Pashazahiri (2017), 2017 CarswellOnt 570, 2017 ONCA 60, K.M. Weiler J.A., S.E. Pepall J.A., and G.T. Trotter J.A. (Ont. C.A.).

Professions and Occupations

Barristers and solicitors

Negligence

Negligence claim against lawyer was ordered to proceed to trial

Lawyer G represented plaintiffs in settlement of tort and accident benefit claims. Plaintiffs retained lawyer C with respect to issues with retainer of G. Plaintiffs brought claims against C, which were dismissed on summary judgment motion. Motion judge found that plaintiffs retained C to represent them only with respect to assessment of G’s accounts, and that they did not retain C in relation to any possible negligence action against G. Judge found that C advised plaintiffs to seek legal advice on negligence issue. Judge found that C did not owe plaintiffs duty of care to either pursue or provide them with legal advice about possible negligence action, including limitation period. Plaintiffs appealed. Appeal allowed; trial ordered. Judged erred in determining that C met burden to establish that there was no genuine issue for trial on issue of duty of care to advise as to limitation period. Where it is alleged that lawyer’s duty of care arises out of and extends beyond retainer, court must meticulously examine all relevant surrounding circumstances, including form and nature of client instructions and sophistication of client, to determine whether duty is owed beyond four corners of retainer. This was not done in present case. Judge did not explain how she was able to conclude that C did not owe plaintiffs duty to advise about existence of limitation period. There was change over course of C’s assessment retainer of his views about competency of G’s representation; C advised plaintiffs that in assessment proceeding they should allege G had been negligent; and, C advised plaintiffs that they might have negligence claim against G. Judge did not take into account all material facts.
Meehan v. Good (2017), 2017 CarswellOnt 1351, 2017 ONCA 103, Janet Simmons J.A., David Brown J.A., and L.B. Roberts J.A. (Ont. C.A.).

Financial Institutions

Issuance of credit
Miscellaneous

Creditor’s action against bank for declaration that it had priority over funds was dismissed

Overdrafts. Creditor financed its sale of debtor with vendor take back note that was secured by general security agreement covering debtor’s assets. Debtor started using services of bank H after creditor refused to subordinate its security to bank H. Debtor opened two related chequing accounts in different currencies and obtained company credit card. Accounts did not allow overdrafts, but debtor frequently went into overdraft and provided funds to cover overdrafts before cheques were at risk of being dishonoured. After debtor went bankrupt, creditor brought action against bank H for declaration that it had priority over funds in accounts used to pay overdrafts and credit card debt and for payment of amounts alleging owing. Creditor brought motion for summary judgment, and bank brought cross-motion for summary judgment dismissing action. Motion dismissed; cross-motion granted. Creditor had not established bank H had extended credit to debtor by way of overdrafts. Overdrafts were created when bank made decision to cover cheque that put account into negative balance. Under bank H’s system, decision to create overdraft could not be made until day after cheque was posted to account. Until such time as bank H made decision to honour or return cheque, it was not providing any credit to debtor or assuming any risk on debtor’s behalf. Debtor always covered cheques with its own funds before bank H made decision to honour cheque, and interest charges were in nature of penalty rather than proof of loan.
Kari Holdings Inc. v. HSBC Bank Canada (2017), 2017 CarswellOnt 566, 2017 ONSC 437, Conway J. (Ont. S.C.J.).
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