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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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Tax

Income tax

Administration and enforcement

Question was whether application for extension of time brought as soon as circumstances permitted

In 2010, taxpayer sold condominium property that he had acquired three years previously. He declared gain from sale in 2010 income tax return as capital gain. In 2014, Minister reassessed taxpayer’s return, treated gain from sale of condominium property as income and assessed penalty. Taxpayer filed notice of objection. On January 12, 2016, Minister confirmed reassessment and sent notice of confirmation to taxpayer. Bookkeeper who had been assisting taxpayer referred taxpayer to chartered accountant who communicated with Canada Revenue Agency to persuade them that confirmation of reassessment was error. Within short time, CRA advised that file had been closed and that taxpayer would have to file notice of appeal to Tax Court of Canada (TCC). Accountant asked taxpayer to obtain relevant documentation for appeal, which took taxpayer beyond 90 day limitation period for filing notice of appeal. TCC dismissed taxpayer’s application for extension of time for appeal. Taxpayer appealed. Appeal allowed. Relevant issue was taxpayer’s use of time between expiry of 90 day appeal period and filing date of application for extension of time. TCC did not direct its mind to appropriate period when it considered whether taxpayer’s appeal had been brought as soon as circumstances permitted. TCC asked whether circumstances permitted taxpayer to file notice of appeal during 90 day period rather than asking whether, once period expired, he brought application for extension of time as soon as circumstances permitted. Case was one in which Federal Court of Appeal should render decision which TCC ought to have given. Having incurred expense of hearing in TCC and appeal, taxpayer ought to be spared necessity of further hearing on question. Evidence was that taxpayer spent period between expiry of 90 day period and filing of his application for extension of time gathering documentary evidence. Evidence suggested that application for extension of time was brought as soon as necessary documents were in hand and application for extension of time were made as soon as circumstances permitted. It was just and equitable to grant application..
Bygrave v. Canada (2017), 2017 CarswellNat 2687, 2017 FCA 124, J.D. Denis Pelletier J.A., Wyman W. Webb J.A., and D.G. Near J.A. (F.C.A.).

Administrative Law

Practice and procedure
On application for certiorari

Applicant, not party to original proceedings, not granted standing to apply for judicial review

Applicant EB was not party to original proceedings before Public Service Labour Relations and Employment Board. Applicant brought application for judicial review on basis that Board member involved in decision failed to satisfy legal residency requirement and Board member released decision beyond time permitted by law. Application dismissed. Applicant was not granted standing to apply for judicial review. Applicant was not directly affected by proceedings before Board within meaning of s. 18.1(1) of Federal Courts Act. Applicant was not party to Board proceedings, was not member or employee of union involved in Board proceedings, and had no relationship with individual respondent grievors before Board. Applicant offered no evidence suggesting that Board’s decision affected her legal rights, imposed legal obligations upon her, or prejudicially affected her. Applicant did not have public interest standing. Assuming applicant raised serious justiciable issue, this was not situation where issue of significance was evasive of review. Parties involved in proceedings did not apply for judicial review, which suggested that they chose to accept decision, and granting standing to applicant would disrupt that choice. It was not wise use of judicial resources to grant applicant standing in these circumstances.
Bernard v. Close (2017), 2017 CarswellNat 769, 2017 FCA 52, David Stratas J.A., Boivin J.A., and Woods J.A. (F.C.A.); application for judicial review refused (2016), 2016 CarswellNat 915, 2016 CarswellNat 916, 2016 PSLREB 18, 2016 CRTEFP 18, Kate Rogers Member (Can. P.S.L.R.E.B.).

Tax

Income tax

Administration and enforcement

Taxpayer’s motion to have settlement agreement declared invalid was dismissed

Settlement. Taxpayer appealed from Minister’s reassessments under Income Tax Act. Settlement negotiations occurred between Minister and taxpayer’s counsel. Counsel sent email to taxpayer setting out Minister’s latest counter-offer, to which taxpayer responded “accepted ok”. Taxpayer’s counsel signed out-of-court settlement document and Notice of Discontinuance on his behalf. Notice of Discontinuance was to be held in trust until Minister issued reassessments reflecting settlement. Reassessments were issued in line with settlement. Taxpayer took position that Notice of Discontinuance could not be filed since he had never given his counsel mandate to settle and that he still wanted his day in court. Counsel withdrew from acting for taxpayer. Taxpayer’s motion to have settlement agreement set aside and declared invalid was dismissed, Minister’s motion to enforce settlement was granted, and appeals were quashed. Taxpayer appealed. Appeal dismissed. Tax Court Judge did not commit any legal error or any palpable and overriding error in her analysis of governing legal principles and appreciation of evidence given terms of agreement and counsel’s authority to sign settlement documents. Email sent by counsel outlined settlement reached and all modifications which she was able to negotiate on his behalf. Modifications so described were accepted without any form of ambiguity by taxpayer’s responding email. By sending this email, taxpayer conferred express mandate on counsel to execute agreement on his behalf. Counsel, as counsel of record, was entitled to provide “consent in writing” referred to in s. 169(3) of Act for purposes of executing settlement agreement. No fault could be found with Tax Court judge’s conclusions as to agreement’s validity and enforceability of Minister’s reassessments.
Granofsky v. Canada (2017), 2017 CarswellNat 2562, 2017 FCA 119, Noël C.J., A.F. Scott J.A., and Boivin J.A. (F.C.A.); affirmed (2016), 2016 CarswellNat 3783, 2016 CarswellNat 5269, 2016 TCC 181, 2016 CCI 181, Johanne D’Auray J. (T.C.C. [General Procedure]).

Contracts

Construction and interpretation

General principles

Testimony clearly in breach of parol evidence rule

Plaintiff entered into fixed price agreement with defendant suppliers to govern its purchase of bunkers on “time to time” basis. Plaintiff placed two spot orders with supplier for supply of bunkers to vessels, for which supplier made arrangements with third party M Ltd. for physical delivery of bunkers. Supplier invoiced plaintiff while M Ltd. invoiced supplier. After suppliers declared bankruptcy, both M Ltd. and suppliers’ receivers requested payment from plaintiff. In action by plaintiff and shipowners seeking determination as to which entity should be paid, motions by M Ltd. and receivers for summary judgment led to ruling that plaintiff pay M Ltd. its invoiced amount and pay receivers small amount equal to supplier’s mark up. Receivers appealed. Appeal allowed. Motion judge erred in accepting evidence from plaintiff’s representative that suppliers had orally agreed to accept plaintiff’s position in agreement negotiations that terms and conditions of schedule 3 of agreement would apply to all purchases including spot purchases. Representative’s testimony was clearly in breach of parol evidence rule and was not supported by any documentary evidence. Representative’s evidence did not fall within rubric of surrounding circumstances and, in its absence, motion judge would necessarily have concluded that suppliers’ general terms and conditions would have applied pursuant to agreement and to supplier’s order confirmations. Motion judge erred in law by failing to apply relevant principles of contractual interpretation. Motion judge did not turn his mind to supplier’s general terms and conditions which differed from one found in schedule 3 by requiring insistence of third party for its terms and conditions to replace supplier’s. Motion judge made no finding whether M Ltd. insisted that plaintiff be bound by its terms and conditions. There were other differences between clauses that might be material. Matter would be returned to motion judge for reconsideration in light of these reasons.
ING Bank N.V. v. Canpotex Shipping Services Ltd. (2017), 2017 CarswellNat 697, 2017 FCA 47, M. Nadon J.A., Eleanor R. Dawson J.A., and Wyman W. Webb J.A. (F.C.A.); reversed (2015), 2015 CarswellNat 4741, 2015 CarswellNat 9601, 2015 FC 1108, 2015 CF 1108, Russell J. (F.C.).

Tax

Income tax

Administration and enforcement

Chief Justice did not have power to remove file from judge

Taxpayer’s appeal was heard by one judge of Tax Court. Nearly two years later, Chief Justice of Tax Court removed file from that judge and reassigned it to another judge of Tax Court to render judgment, on consent of parties. Taxpayer appealed on ground that Chief Justice did not have power to remove file from judge who heard appeal and reassign it to another judge to render decision. Appeal allowed. Even though parties did not raise this issue at trial, it was matter that must be addressed. Chief Justice did not have power to remove file from judge who heard appeal and reassign it to another judge to render judgment, for reasons set out in similar case. Conclusion and reasons in similar case were applicable to this case. Judgment rendered by second judge was nullity and matter was referred to judge who heard tax appeal to render judgment. Findings of fact were to be made by judge who heard tax appeal.
Birchcliff Energy Ltd. v. R. (2017), 2017 CarswellNat 1821, 2017 FCA 89, David Stratas J.A., Wyman W. Webb J.A., and A.F. Scott J.A. (F.C.A.); reversed (2015), 2015 CarswellNat 10756, 2015 CarswellNat 4799, 2015 TCC 232, 2015 CCI 232, Robert J. Hogan J. (T.C.C. [General Procedure]).

Immigration and Citizenship

Appeals to Federal Court of Appeal and Supreme Court of Canada

Powers of court

Appellant’s removal deferred pending redetermination of application for permanent residence

Appellant L was permanent resident of Canada, who held citizenship of his native Guyana. L did not make application for citizenship, despite having resided in Canada since 1966. L had 9-year-old daughter, whose mother was member of First Nations group giving child Indian status. L had custody of child, due to mother’s substance abuse issues. L had criminal record, with most recent offence being 2003 conviction for assault causing bodily harm. Accused was originally subject to deportation order as result of record, with order being stayed in 2005. Order was reactivated, when it was found that L had not complied with order. After daughter was born in 2007, L lived with mother and daughter. L established own residence in 2011, so that he could have custody as awarded by court. L made pre-removal risk assessment (PRRA) application in 2013, which was denied. L was to be removed in 2014. L filed applications to re-open appeal, for permanent resident status on humanitarian and compassionate (H&C) grounds and request to defer removal. L claimed that child would be removed from Aboriginal heritage if forced to live in Guyana with him. Deferral request was denied. L appealed from this decision. Appeal allowed. Short-term best interests of child did include consideration of Aboriginal heritage. Enforcement officer did not take into account short-term impact of L’s deportation on child. Child was vulnerable as child of Aboriginal heritage. Assumption that child would be able to return to Canada at some point was unreasonable. There was no one else available to take care of child on full-time basis in Canada. L was not willing to make child ward of state. There was no opportunity for child to maintain connection to heritage in Guyana. L’s deferral application was remitted to another enforcement officer for redetermination, in accordance with court’s reasons.
Lewis v. Canada (Public Safety and Emergency Preparedness) (2017), 2017 CarswellNat 2764, 2017 FCA 130, David Stratas J.A., Wyman W. Webb J.A., and Mary J.L. Gleason J.A. (F.C.A.); reversed (2015), 2015 CarswellNat 10508, 2015 CarswellNat 6206, 2015 FC 1309, 2015 CF 1309, Annis J. (F.C.).

Tax

Income tax

Employment income

Taxpayer required to report cost of securities using exchange rate on date options exercised

Taxpayer exercised stock options at profit and was deemed to have received employment benefit in taxation years in which they were exercised. Taxpayer exercised option via broker-assisted transaction with effect that shares were delivered to broker and immediately sold on taxpayer’s instructions. For 2010 and 2012 taxation years, taxpayer calculated cost base with reference to Canada/US exchange rate in effect on date options were granted and proceeds of sale on basis of exchange rate in effect on date of exercise. Minister of National Revenue reassessed taxpayer on basis that he was required to report cost of securities acquired and converted into Canadian dollars using exchange rate on date stock options were exercised. Tax Court judge dismissed taxpayer’s appeal and found that under s. 7(1) of Income Tax Act, employment benefits received by taxpayer in US dollars were to be calculated by converting Canadian dollar value of exercise price and fair market value of shares at time of exercise, using exchange rate in effect on date options were exercised. Taxpayer appealed. Appeal dismissed. Judge did not make error in law in upholding Minister’s reassessments and correctly applied relevant legal principles and case law. Tax implications for exercise of stock options, including conversion of foreign denominated amounts, were triggered on their exercise date. No taxable transaction occurred when stock options were granted to taxpayer since he did not acquire taxable benefit at that time. Taxable transactions occurred when taxpayer exercised his stock options in 2010 and 2012. Only when taxpayer exercised stock options was he required under s. 261(2)(b) of Act to calculate his reportable benefits by converting exercise price, along with fair market value of shares at time he exercised his options, using exchange rate applicable on date of exercise.
Ferlaino v. R. (2017), 2017 CarswellNat 2235, 2017 FCA 105, A.F. Scott J.A., Boivin J.A., and de Montogny J.A. (F.C.A.); affirmed (2016), 2016 CarswellNat 1389, 2016 CarswellNat 5249, 2016 TCC 105, 2016 CCI 105, Guy R. Smith J. (T.C.C. [Informal Procedure]).
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