Federal Court of Appeal tackles income tax and patent infringement suits
This week, the Supreme Court of Canada dealt with matters involving guarantee letters, compensation for constructive expropriation, and income replacement benefits for injured parties. On the other hand, the Federal Court of Appeal handled intellectual property and tax appeals.
Supreme Court of Canada
On Tuesday, the court heard Eurobank Ergasias S.A. v. Bombardier inc., et al, 40350. Bombardier inc. entered into a procurement contract with a Greek government branch and agreed to pay liquidated damages in case of non-fulfillment of an offsets contract, secured by a letter of guarantee with Eurobank Ergasias S.A. Bombardier arranged a letter of counter-guarantee issued by the National Bank of Canada in favour of Eurobank.
When a dispute arose under the offsets contract, Bombardier requested arbitration under the rules of the International Chamber of Commerce in Paris. The arbitral tribunal decided that the offsets contract, including its terms on liquidated damages and the guarantee letter, was null and void ab initio for breach of the European Union’s laws.
After the National Bank refused to pay under the counter-guarantee letter, Eurobank sought recovery through Quebec’s courts. The Quebec Superior Court confirmed its jurisdiction, rejected Eurobank’s demand for payment under the counter-guarantee letter based on the fraud exception, and found the counter-guarantee letter unenforceable. The Quebec Court of Appeal mostly agreed with this decision.
On Wednesday, the court heard Ummugulsum Yatar v. TD Insurance Meloche Monnex, et al, 40348. The appellant was injured in a motor vehicle accident. She applied for income replacement benefits and housekeeping and home maintenance benefits. The insurer initially paid these benefits then later denied the claim for housekeeping and home maintenance benefits.
The Licence Appeal Tribunal rejected the appellant’s challenge of the denial. The Ontario Divisional Court dismissed both her appeal and judicial review application. The Ontario Court of Appeal dismissed her appeal.
On Thursday, the court will hear City of St. John's v. Wallace Lynch, et al, 40302. The Newfoundland and Labrador Court of Appeal ruled that the city manager’s decision preventing the development of the respondents’ property in any manner amounted to constructive expropriation. The appellate court remitted the issue of compensation to the Board of Commissioners of Public Utilities.
The board referred a question – of whether compensation should be assessed based on the uses permitted by the existing zoning or whether the existing zoning should be ignored and the value determined as if residential development were permissible – to the N.L. Supreme Court under N.L.’s Expropriation Act, 1990.
The applications judge granted compensation for constructive expropriation based on existing watershed zoning. The N.L. Court of Appeal partly allowed the appeal and ordered that compensation be determined without reference to watershed zoning.
Federal Court of Appeal
On Wednesday, the court heard 3295940 Canada Inc. v. His Majesty The King, A-201-22. The appellant, questioning a Tax Court judgment, argued that it did not realize a capital gain of $31.5 million in its taxation year ending Mar. 31, 2005 as a consequence of the sale of its interest in a pharmaceutical business through selling its shares in 4244851 Canada Inc. to Novartis Pharmaceuticals Canada Inc.
The general anti-avoidance rule in s. 245 of the Income Tax Act, 1985 did not apply to deny recognition of the adjusted cost base of its shares in 4244851 Canada valued at $88.39 million, the appellant added.
On Thursday, the court will hear Steelhead LNG (ASLNG) Ltd. et al v. Arc Resources Ltd. et al, A-210-22. The appellants wanted to set aside the Federal Court’s judgment granting a summary trial motion and determining that the respondents did not infringe their patent.
The respondents infringed the appellants’ patent in the field of liquefied natural gas (LNG) when they used the appellants’ invention to launch their own multibillion-dollar LNG project, the appellants alleged.
Federal Court
On Tuesday, the court heard Pascal Dugas et al v. Attorney General of Canada, T-529-23. A proposed class proceeding alleged that Canada systematically breached the privacy rights of individual members of the Royal Canadian Mounted Police (RCMP).
On Oct. 5, in Dugas v. Canada (Attorney General), 2023 FC 1331, the Federal Court granted the defendant’s motion to extend the deadline to serve and to file the statement of defence until after final disposition of the motion for certification of the proposed class proceeding.
Also on Tuesday, the court heard Javeria Rehman v. Canada Revenue Agency, T-246-23. A judicial review application challenged the Canada Revenue Agency’s decision on the applicant’s eligibility for the Canada Recovery Sickness Benefit, Canada Recovery Caregiving Benefit, Canada Emergency Response Benefit, and Canada Recovery Benefit.
On Wednesday, the court heard The Louis Bull First Nation and Chief Jonathan Bull et al v. His Majesty the King, T-2439-97. The plaintiffs alleged that the surrender of a portion of their reserve went against their interests and had the sole purpose of accommodating white settlers.
Also on Wednesday, the court heard Yavar Hameed v. Prime Minister et al, T-1274-23. An application requested the writ of mandamus for the prime minister and federal justice minister to appoint judges to 79 vacancies in superior courts across Canada.
On Wednesday, the court heard Seismotech IP Holdings Inc. et al v. John Does, T-1147-23. The plaintiffs – who owned four patents relating to the management, monitoring, controlling, or billing of public utility usage – alleged that several brands and models of intelligent thermostats infringed their patents.
On Oct. 5, in Seismotech IP Holdings Inc. v. John Does, 2023 FC 1335, the Federal Court granted the motion of Ecobee Technologies ULC, a manufacturer of an allegedly infringing device, to be added as a party because the outcome would inevitably affect its legal interests.
On Wednesday, the court heard Maverick Oilfield Services Ltd et al v. Attorney General of Canada, T-1836-21. A judicial review application questioned the Canada Revenue Agency’s denial of the applicants’ request under the Income Tax Act to cancel assessed penalties and interest.
Also on Wednesday, the court heard Philip Davidson v. Attorney General of Canada, T-82-23. A judicial review application challenged the Social Security Tribunal’s rejection of the applicant’s request to appeal the decision of the Canada Employment Insurance Commission’s General Division to deny employment insurance benefits based on employee misconduct.
On Thursday, the court will hear Constable Ashley Goodyer v. The Attorney General of Canada, T-1186-22. A judicial review application questioned the RCMP commissioner’s determination relating to an appeal of an adjudication board decision under s. 45.11(1)(b) of the Royal Canadian Mounted Police Act, 1985.
