COURT OF APPEAL FOR ONTARIO

CITATION: R. v. Vivares, 2016 ONCA 1

DATE: 20160105

DOCKET: C60254 and M44923

MacPherson, Tulloch and Pardu JJ.A.

BETWEEN

Her Majesty the Queen

Responding Party/Respondent

and

Malaquias Vivares

Moving Party/Appellant

Malaquias Vivares, acting in person

Rebecca Huang, appearing as
amicus curiae

Shain Widdifield, for the respondent

Heard: November 20, 2015

On appeal from the judgment of Justice John R. McIsaac of
    the Superior Court of Justice dated, November 24, 2014, affirming the order of
    Justice P. Wright of the Ontario Court of Justice, dated April 20, 2011.

MacPherson J.A.:

A.

Introduction

[1]

The appellant owns two handguns that were registered in the 1980s. After
    the
Firearms Act
, S.C. 1995, c. 39, established a new regulatory
    system, the appellant applied to re-register his handguns in 2007. In 2009, the
    Registrar of Firearms (Registrar) refused to issue registration certificates.
    This decision was upheld by Wright J. of the Ontario Court of Justice in 2011
    and McIsaac J. of the Superior Court of Justice in 2014. The appellant seeks
    leave to appeal from McIsaac J.s decision and, if leave is granted, an order
    directing the Registrar to issue registration certificates for his handguns.

B.

Facts

(1)

The parties and events

[2]

The appellant registered two semi-automatic Smith and Wesson handguns
    under the relevant provisions of the
Criminal Code
, R.S.C. 1985, c. C-46,
in 1980 and 1986.

[3]

In 1995, Parliament enacted the
Firearms Act
[1]
which made significant changes to the firearms regulation system. The new
Act
divided responsibility for the regulation of firearms between the federal and
    provincial governments. The federal Registrar is responsible for issuing
    registration certificates for firearms. The Chief Firearms Officer of a
    province is responsible for licensing individuals to possess firearms. As
    explained by MacDonnell J. in
R. v. Whitmore
, 2008 ONCJ 166, at para.
    3:

A central component of the new regime is the requirement that
    an individual must hold a license to possess the kind of firearm in question
    and a registration certificate for that firearm. Eligibility to hold a license
    and/or a registration certificate is determined by reference to the provisions
    of the
Firearms Act
. Pursuant to the
Act
, the Chief Firearms
    Officer is responsible for issuing licences and the Registrar of Firearms is
    responsible for issuing registration certificates.

[4]

Under the new
Firearms Act
, the appellants handguns were
    designated as what is known as s.12(6) handguns. Section 12(6) of the
Firearms
    Act
provides:

Grandfathered
    individuals  pre-December 1, 1998 handguns

12(6) A particular individual is eligible to hold a licence
    authorizing that particular individual to possess a handgun referred to in
    subsection (6.1) if

(a) on December 1, 1998 the particular individual

(i) held a registration certificate under the former
Act
for that kind of handgun,  and

(b) beginning on December 1, 1998 the particular individual was
    continuously the holder of a registration certificate for that kind of handgun.

[5]

The appellants 1980 and 1986 gun registrations were deemed to be
    registration certificates under s. 127 of the
Firearms Act
.

However,
    this grandfathered protection was not unlimited; s. 127(2) of the
Act
gave grandfathered registrants until December 31, 2002, a period of four
    years, to re-register their handguns. If s. 12(6) handguns were not
    re-registered, their registration certificates would expire and the registrant
    would no longer meet the continuous holder requirement in s. 12(6) of the
Act
.

[6]

The appellant did not re-register his handguns by this date. On January
    1, 2003, his handguns were no longer registered. He was in breach of the
Firearms
    Act
.

[7]

However, the appellant did apply for a firearms licence in Quebec. The
    Chief Firearms Officer of Quebec issued a licence with s. 12(6) privileges in
    November 2003, with an expiry date of January 25, 2009.

[8]

On June 19, 2007  four and a half years after his deemed registrations
    had expired  the appellant applied to the Registrar for registration
    certificates for his two handguns.

[9]

On November 19, 2008, the Chief Firearms Officer of Ontario issued a new
    firearms licence to the appellant. It did not include s. 12(6) privileges.

[10]

On
    January 25, 2009, the appellants Quebec licence, containing s. 12(6)
    privileges, expired.

[11]

On
    June 24, 2009, the Registrar issued a Notice of Refusal to Issue a Registration
    Certificate to the appellant. In the notice, the Registrar said:

The [Smith and Wesson] firearms are prohibited firearms for the
    purpose of the definition prohibited firearm in subsection 84(1) of the
Criminal Code
. Your present [possession
    and acquisition license] does not include the privilege referred to in s.
    12(6) of the
Firearms Act
to
    possess or acquire a prohibited firearm referred to in s. 12(6.1) of the same
Act
.

Pursuant to Section 13 of the
Firearms
    Act
, you are not eligible to hold a registration certificate for a
    firearm unless you hold a licence authorizing you to possess that kind of
    firearm.

[12]

Pursuant
    to s. 74 of the
Firearms Act
, the appellant sought a reference hearing
    before a judge of the Ontario Court of Justice challenging the Registrars
    decision.

(2)

The judicial decisions

(a)

Ontario Court of Justice

[13]

Although
    sympathetic to the appellants situation, the provincial court judge confirmed
    the Registrars decision to refuse to register the two s. 12(6) handguns. He
    stated that the standard of review at the reference hearing was an assessment
    of the reasonableness of the Registrars decision. After a comprehensive
    analysis, the provincial court judge summarized his reasoning and conclusion in
    this fashion:

In this particular case, Mr. Vivares was not continuously
    registered because all of the deemed certificates which related to the 12(6)
    handguns expired December the 31
st
, 2002. The applicant did not
    reapply until June the 19
th
, 2007. The fact that a [possession and
    acquisition] license was subsequently issued or that notice of refusal was not
    provided until June the 24
th
, 2009, does not make the Registrars
    decision in law unreasonable or wrong. I say in law given the eligibility
    requirements and the case law precedents. I cannot say, and I do not say, that
    the Registrar deliberately delayed responding.

The order, therefore, that will go as a result of this review,
    is to confirm the decision of the Registrar in refusing to register the two
    12(6) handguns.

[14]

The
    appellant appealed this decision to the Superior Court of Justice.

(b)

Superior Court of Justice

[15]

In
    brief reasons (two paragraphs), the appeal judge dismissed the appeal, saying
    that the appellant has failed to satisfy me that the decision by Wright,
    P.C.J.  was incorrect.

(c)

Court of Appeal for Ontario

[16]

The
    appellant applied for leave to appeal the appeal judges decision. On a motion
    for directions on February 25, 2015, Strathy C.J.O. ordered that the motion
    for leave to appeal will be heard at the same time as the appeal, if leave is
    granted.

[17]

At
    the hearing on November 20, 2015, the panel granted leave to appeal at the
    start of the hearing and heard the appeal on the merits.

C.

Issues

[18]

The
    appellant raises three issues:

(1)

Did the provincial court judge err in law in admitting Ms. Zhangs
    statements about Mr. Vivares licence and his eligibility for licence?

(2)

Did the provincial court judge err by applying the standard of
    reasonableness to the Registrars Notice of Refusal without testing the
    reasonableness of the Registrars decision with the facts as found by the
    court?

(3)

Did the superior court judge err in confirming the correctness of the
    provincial court judges decision when he erroneously applied the standard of
    reasonableness to the Registrars decision?

D.

Analysis

(1)

Ms. Zhangs statements

[19]

The
    appellant contends that the provincial court judge relied on inadmissible
    evidence from the Registrar. Grace Zhang was a senior analyst at the Canadian
    Firearms Program of the RCMP in Ottawa. Ms. Zhang was in charge of the records
    of the Canadian Firearms Registry. She was responsible for administering the
Firearms
    Act
and
Regulations
with respect to the registration of firearms.
    She had authority under the
Act
to issue, refuse and revoke
    registration certificates for firearms.

[20]

Ms.
    Zhang provided an affidavit that described the regulatory provisions and
    process for firearms registration. She also explained how the relevant
    provisions precluded the appellant from obtaining registration certificates
    after he applied in 2007.

[21]

In
    his reasons, the provincial court judge referred several times to paragraphs
    from Ms. Zhangs affidavit. The appellant contends that this was improper
    because Ms. Zhang was a fact witness and parts of her affidavit tread into
    impermissible legal opinion.

[22]

I
    do not accept this submission. I note that the appellant did not cross-examine
    Ms. Zhang on her affidavit or challenge its admissibility at the reference
    hearing. On a reference hearing, the provincial court judge is required to hear
    all relevant evidence presented by or on behalf of the Registrar:
Firearms
    Act
, s. 75(2).

[23]

Read
    in context, Ms. Zhangs statement is evidence supporting the Registrars
    position that because he could not hold a licence authorizing possession of s.
    12(6) handguns (as he did not continuously hold a registration certificate
    after December 31, 2002), he could no longer hold a registration certificate
    pursuant to s. 13 of the
Firearms Act
.  In my view, this was relevant
    and admissible evidence. In any event, I observe that the trial judge engaged
    in a comprehensive assessment of the relevant sections of the
Act
and
    clearly reached his own legal conclusions based on that assessment.

(2)

The provincial court judges decision

[24]

The
    starting point for the analysis on this issue is recognition that the Registrar
    has specialized expertise in administering a complex firearms registration
    regime. A Registrars decision is entitled to deference and is reviewed on a
    reasonableness standard: see
Henderson v. Canada (Attorney General)
,
    2011 ONCA 696, 108 O.R. (3d) 290, at paras. 37-38.

[25]

On
    review, the provincial court engages in its own fact finding, but under the
    umbrella of deference. As explained by Goudge J.A. in
Henderson
, at
    paras. 34 and 36:

The
Act
obliges
    the provincial court to hear all relevant evidence presented by both the
    applicant and the Registrar. It is clear that the provincial court is to engage
    in its own fact finding process. That is why it is described as a reference and
    not an appeal from the Registrars decision. Nor is it a hearing
de novo
,
    since the Registrar has not held a hearing. Clearly the legislative intent is
    that the provincial court is to find its own facts and need give no deference
    to any facts recited in the reasons of the Registrar.

Thus I think the language of s. 75(3) of the
Act
directs the provincial court to apply
    a deferential standard of review to the Registrars decision itself. The
    provincial court is to test that decision against the facts it has found. It is
    not to determine if it agrees with the decision, but whether it has been
    satisfied by the applicant that the decision is not reasonably defensible. This
    mandates deference.

[26]

The
    provincial court judge was faithful to the
Henderson
analytical
    framework. He reviewed the history of the appellants registrations and
    licences for the two handguns. He then applied the relevant provisions of the
Firearms
    Act
and upheld the Registrars decision, essentially for two reasons.

[27]

First,
    the provincial court judge held that the appellant could not obtain a firearms
    licence because he had not taken advantage of the grandfathering
    re-registration provisions of the
Firearms Act
:

The registration certificates for the two 12(6) handguns
    expired on the 31
st
of December, 2002 under s. 127(2) of the
Act
.
    Consequently, because the Applicant did not continuously hold registration
    certificates between December 31
st
, 2002, and June the 19
th
,
    2007, he was not eligible to hold a license under s. 12(6) and the Registrar
    was required to refuse the Applicants application for the issuance of a
    registration certificate.

[28]

In
    my view, this analysis is correct. The wording of ss. 12(6) and 127(2) of the
Act
,
    set out above, compels this conclusion which, on its own, is determinative of
    the appeal.

[29]

I
    make a final observation on this issue. Unlike the provincial court judge, I do
    not regard this interpretation of the grandfathering provisions of the
Act
as leading to a harsh or even undesirable result.

[30]

In
Manson v. Ontario (Chief Firearms Officer)
(2004), 183 C.C.C. (3d) 169
    (Ont. C.A.), at paras. 32 and 34, Laskin J.A. said:

The
Act
seeks
    principally to ensure public safety. See
Reference re: Firearms Act (Canada)
,
    [2000] 1 S.C.R. 783, 144 C.C.C. (3d) 385. Parliaments gun legislation has
    sought continuously to limit the number of people who can own firearms and to
    impose onerous restrictions on those who do own them.

The overall purpose of the governments gun legislation,
    reflected in the judgments of this court in
Barnes
and of the Supreme
    Court of Canada in
Hasselwander
,
strongly supports an
    interpretation of the grandfathering provisions of the
Act
that would restrict, not expand,
    access to these dangerous weapons.
[Emphasis added.]

[31]

The
    appellant had four years to re-register his handguns. He did not do so, and
    offered no reason for his choice.

[32]

Second,
    the Notice of Refusal issued to the appellant stated, correctly, that
    registration certificates could not be issued because his current Ontario
    firearms licence did not contain s. 12(6) privileges. Nevertheless, the
    provincial court judge acknowledged that, inexplicably, the Chief Firearms
    Officer of Quebec had issued a licence with s. 12(6) privileges to the
    appellant in 2003 (one year after his deemed registrations had expired). This
    Quebec licence was still in force in 2007 when the appellant finally made his
    re-registration applications, but it had lapsed by 2009 when the Registrar made
    the refusal decision.

[33]

The
    provincial court judge explored this puzzling situation (how had Quebec issued
    a licence a year after the deemed registrations expired?) and decided that the
    relevant date for assessing eligibility for registration was June 24, 2009, the
    date of the Registrars decision, not June 19, 2007, the date of the
    appellants application. Thus, the expired Quebec licence was irrelevant.

[34]

Again,
    in my view the provincial court judge was correct. Section 13 of the
Firearms
    Act
provides:

13. A person is not eligible to hold a registration certificate
    for a firearm unless the person
holds
a licence authorizing
    the person to possess that kind of firearm. [Emphasis added.]

[35]

Section
    13 is worded in the present tense. It creates, with s. 12(6), two concurrent
    obligations. First, in order to obtain a registration certificate, a person
    must have a licence for that kind of firearm. Second, to have a licence for a
    s. 12(6) handgun, a person must have continuously held a registration
    certificate from December 1, 1998. If either a registration certificate or a
    licence lapses, a person is no longer eligible to hold the other.

[36]

When
    the appellant made his application in 2007, he did hold a Quebec licence with
    s. 12(6) privileges. But he did not when the Registrar considered his
    application in 2009. Given that s. 13 creates a continuing obligation on the
    appellant to hold a licence with s. 12(6) privileges, he was no longer eligible
    to obtain registration certificates for those handguns.

[37]

Reading
    s. 13 in light of the purpose of the
Firearms
Act
and the
    intention of Parliament also supports the conclusion that the relevant time for
    review is when the Registrar makes a decision. As this court stated in
Manson
,
    Parliament has sought to limit the ability to own firearms through
    comprehensive regulation. The regulation requires both registration and
    licensing. When a person does not hold a registration certificate for a
    prohibited handgun, they cannot be licensed: s. 12(6). When a person is not
    licensed to possess a prohibited handgun, they cannot obtain a registration
    certificate: s. 13. This is how Parliament has chosen to regulate dangerous
    handguns. Parliaments choice must be applied.

[38]

Finally,
    I note that the provincial court judge specifically disclaimed the relevance of
    the two year delay between the appellants application and the Registrars
    decision:

Further, the process delay by the Registrar from June 2007 to
    June 2009 did not cause the continuous registration to lapse because there was
    no registration.

I cannot say, and I do not say, that the Registrar deliberately
    delayed responding.

[39]

Again,
    I agree with this reasoning. I also observe that it hardly lies in the
    appellants mouth to complain about the Registrars delay. The appellant did
    not apply for re-registration during the four year grandfathering period
    (1998-2002). And after his registration expired, he waited another four and a
    half years (2003-2007) before finally applying for a registration certificate.

(3)

The superior court judges decision

[40]

In
    light of my conclusion on the second issue, this issue does not arise. The
    appeal judge affirmed the correctness of the provincial court judges decision.
    So would I.

E.

Disposition

[41]

I
    would dismiss the appeal and confirm the decision of the Registrar refusing
    registration certificates for the appellants two s. 12(6) handguns.

Released: January 5, 2016 (J.M.)

J.C. MacPherson J.A.

I agree. M. Tulloch J.A.

I agree. G. Pardu J.A.

[1]
The bulk of the provisions of the
Act
came into force on December 1, 1998.


COURT OF APPEAL FOR ONTARIO

CITATION: R. v. Woodman, 2016 ONCA 63

DATE: 20160122

DOCKET: C60326

MacPherson, MacFarland, and Roberts JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

Jeffrey Woodman

Appellant

Jeffrey Woodman, in person

Michael Dineen, duty counsel

Robert Gattrell, for the respondent

Heard:  December 3, 2015

On appeal from the conviction entered on November 20,
    2014 and the sentence imposed on April 7, 2015 by Mr. Justice G. Taylor of the
    Superior Court of Justice, sitting with a jury.

ENDORSEMENT

Overview
:

[1]

The appellant, Jeffrey Woodman, appeals from his conviction and sentence
    for six offences, arising out of the high-speed car chase following the
    appellants shoplifting with a group of friends during the evening of September
    7, 2013.  When a police officer approached the car, it was driven directly at
    and struck him, causing him serious injuries. The main issue at trial was who
    was driving the car when it struck the officer.

[2]

The trial judge sentenced the appellant to four years and eight months
    in custody, after giving one year and four months credit for pre-trial
    custody.

Conviction appeal
:

[3]

The appellant submits that the trial judge erred in admitting for the
    truth of its contents the unsworn videotaped witness statement that Kevin
    Sinson gave to the police at 3:00 a.m. on September 8, 2013. At trial, Mr.
    Sinson claimed to have no recollection of the relevant events because he was under
    the influence of heroin. In his statement to police, Mr. Sinson identified the
    appellant as the driver of the vehicle that struck Sergeant Fenton.

[4]

The appellant admits that in the evening of September 7, 2013, he was
    shoplifting at Zehrs with others and that, as confirmed by videotape, he
    entered the drivers seat of a black Hyundai in which Mr. Sinson was a
    passenger. He also admits that when a police cruiser approached, he caused the
    car to speed off, reaching a speed of 100 kilometres per hour. The appellant
    argues, however, that he was not driving the car when it struck and injured
    Sergeant Fenton.

[5]

The appellant maintains that without Mr. Sinsons statement, there was
    insufficient evidence to prove that the appellant was the driver of the car
    when it struck Sergeant Fenton.

[6]

Mr. Sinson was one of three males, including the appellant, in the car
    that evening. No other witness, including Sergeant Fenton, could identify the
    driver of the car that struck him. The appellant argues that Mr. Sinsons
    statement was not reliable because of his admitted heroin abuse, his strong
    motive to lie and blame the appellant, and the futility of cross-examination
    because of his lack of recollection. The appellant submits that the prejudice
    to the appellant caused by the statements admission outweighed any probative
    value that it may have had.

[7]

We disagree. The trial judge properly exercised his role as gatekeeper
    in admitting Mr. Sinsons statement that met the twin threshold requirements of
    necessity and reliability:
R. v. Youvarajah
, 2013 SCC 41, at para. 21.

[8]

There is no question that Mr. Sinsons failure or refusal to recollect
    the events of September 7, 2013 and adopt his prior statement rendered necessary
    his statements admission for the truth of its contents.

[9]

Further, there is ample evidence to support the trial judges finding
    that Mr. Sinsons statement met the criterion of threshold reliability required
    to be admitted for the truth of its contents, including: Mr. Sinsons statement
    was given to police within hours of the relevant events and was videotaped; his
    demeanour and credibility at the time the statement was given could be assessed
    on the videotape, in particular, as the trial judge observed, that Mr. Sinson appeared
    to be coherent, responsive to questions, not under the influence of heroin or
    alcohol, and anxious to co-operate with the police; Mr. Sinson was available to
    be cross-examined on his statement and his failed memory at trial; and several
    aspects of Mr. Sinsons statement, including the sequence of events, the route
    taken by the car, and the interactions with Sergeant Fenton, were confirmed by
    the video recording and/or the testimony of Mr. Sinson and Sergeant Fenton.

[10]

The
    appellant relies on
R. v. Youvarajah
to argue that the
indicia
of reliability relied upon by the trial judge in this case, including Mr.
    Sinsons availability for cross-examination at trial and the solemnity of the
    circumstances in which he gave his statement to police, are not sufficient to
    meet the criterion of threshold reliability. Further, the appellant submits
    that the trial judge failed to address Mr. Sinsons powerful motive to lie in
    his statement. In
R. v. Youvarajah
, the trial judges refusal to admit
    at trial a recanting co-accused witness statement for the truth of its
    contents was upheld by the Supreme Court of Canada because it did not meet the
    criterion of threshold reliability notwithstanding that the co-accused was
    available for cross-examination and the statement was prepared by his lawyer
    and entered at his trial.

[11]

Notwithstanding
    Mr. Dineens very able submissions, in our view, the circumstances of
R. v.
    Youvarajah
are distinguishable from the case at bar. In
R. v.
    Youvarajah
, the Court noted the absence of the following
indicia
of reliability that are present in the case at bar: the statement in issue was
    an agreed statement of facts prepared by the co-accuseds lawyer rather than
    the witness own spontaneous words, for use at his own separate youth trial as
    part of a plea agreement; the co-accused testified that he did not understand
    everything that he read in the statement; the statement was not videotaped so
    that there was no opportunity to assess the co-accuseds demeanour or
    credibility; and the co-accused not only recanted his previous statement but
    admitted at the appellants trial the acts in which he had implicated the
    appellant in his previous statement.  Most important, cross-examination of the
    co-accused would be effectively precluded by his invocation of solicitor-client
    privilege. None of these factors features in the present case.

[12]

Mr.
    Sinsons statement was highly relevant. The trial judge determined only the issue
    of threshold reliability. The issue of the statements ultimate reliability and
    the weight, if any, to be given to the statement, was properly left to the jury;
    and the jury received proper instructions on how they were to evaluate Mr.
    Sinsons statement.  See:
R. v. Taylor
, 2015 ONCA 448, at para. 70.

[13]

Absent
    an error in principle, the trial judges determination of threshold reliability
    is entitled to deference:
R. v. Youvarajah
, at para. 31. We see no
    error and would not interfere.

Sentence
:

[14]

With
    respect to the appellants sentence appeal, neither counsel made submissions. In
    his notice of appeal, the appellant argues that his sentence was too high and
    out of the applicable sentencing range.

[15]

There
    is no basis to disturb the trial judges sentence that is entitled to deference
    in this court. The sentence was entirely fit and appropriate in the
    circumstances of this case.

[16]

While
    the appellant pleaded guilty to some of the offences, his lengthy and related
    criminal record, including 18 previous offences against the administration of
    justice, the fact that he committed these offences when there were outstanding warrants
    for his arrest on charges of dangerous driving and aggravated assault, as well
    as his deliberate attack against a vulnerable police officer who suffered
    serious injuries, required the sentencing judge to give predominant weight to
    the sentencing principles of denunciation and deterrence.

Disposition:

[17]

For
    these reasons, the appeal from conviction is dismissed. While leave to appeal
    the sentence is granted, the appeal from sentence is dismissed.

J.C. MacPherson J.A.

J.L. MacFarland J.A.

L.B. Roberts J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: ResQ Auto Glass Inc. v. Co-operators General
    Insurance Company, 2016 ONCA 30

DATE: 20160114

DOCKET:
    C60144

Simmons, LaForme and Huscroft JJ.A.

BETWEEN

ResQ Auto Glass Inc.

Plaintiff (Appellant)

and

Co-operators General Insurance Company

Defendant (Respondent)

H. Richard Bennett and Joseph Figliomeni, for the
    appellant

Derek V. Abreu, for the respondent

Heard: December 7, 2015

On appeal from the order of Justice W. Low of the Superior
    Court of Justice, dated February 11, 2015.

By the
    Court:

[1]

ResQ Auto Glass Inc. appeals from a summary judgment
    dismissing its action against Co-operators General Insurance Company for breach
    of contract and intentional interference with economic interests and
    contractual relations.

[2]

In its statement of claim, ResQ claimed
    $208,359.57 on account of windshield repairs effected between February 2012 and
    July 2014 to 1,844 automobiles insured by Co-operators.

[3]

ResQ asserted that it had obtained assignments
    from the automobile owners of their right to receive direct payments for the repairs
    from their insurer by means of an assignment clause, written in fine print,
    contained at the bottom of a repair estimate signed by each insured. Although
    the repair estimate and assignment indicated the insured would pay $0 for the repair,
    ResQ claimed that Co-operators had agreed in a letter dated January 23, 2012 to
    pay ResQ for windshield repairs at the windshield industry market repair rate.
    ResQ asserted that rate was $100 per repair and that Co-operators breached its
    contract with ResQ to pay the market rate by paying only $50 per repair.

[4]

In addition, ResQ claimed that Co-operators was
    liable for the tort of intentional interference with economic interests. ResQ
    also claimed punitive damages.

[5]

The motion judge dismissed ResQs motion for
    summary judgment and granted Co-operators motion for dismissal of ResQs
    action.

[6]

The motion judge found that the windshield
    repairs at issue were completed under individual contracts between Co-operators
    and ResQ and that in each case, prior to the repair being undertaken,
    Co-operators offered to pay for the repair by issuing a repair authorization
    for $50. Further, she held that ResQ accepted the offer by completing the
    repair. In response to an argument that each insured had assigned their insurance
    contract or their right to receive the insurance proceeds, the motion judge
    held that the insurance contracts were not assignable. She found that, in any
    event, the insureds had nothing to assign because Co-operators had exercised
    its right under the insurance contracts to effect the repairs.

[7]

Concerning the January 23, 2012 letter, the
    motion judge held that the statement in the letter that Co-operators would pay a
    $40 total for windshield repairs up to and including 3 chips was definitive as
    to the Insurer's intentions. She said the later description of the rate as the
    windshield repair industry rate did not derogate from the specificity of the
    stated amount or the terms of the subsequent authorizations. She added parenthetically
    that the appellant had not demonstrated that the market rate for windshield
    repairs was $100.

[8]

ResQ raises several issues on appeal.

[9]

First, ResQ argues that the motion judge erred
    in failing to construe the transaction between ResQ and the insured as a valid
    assignment at law. We reject this argument.

[10]

The motion judges reasons reflect the following
    key findings:

·

the windshield repairs at issue were initiated through
    independent contractors who found cars with windshield chips, identified their
    owners, ascertained the owners insurers and placed calls to the insurers to
    facilitate authorization by the insurers to ResQ to do the repair;

·

on being contacted by ResQ, a Co-operators representative would
    ask to speak to the car owner and would verify that the owner was one of its
    insureds for the period of time when the chip or chips are said to have occurred;

·

Co-operators then issued a document to ResQ authorizing it to
    effect the repair at a stipulated price;

·

the practice was that in each case, ResQ obtained the authorization
    from Co-operators and subsequently obtained the owners signature on a form
    generated by ResQ titled Work Order Estimate. The Work Order Estimate showed
    the total cost to the car owner as $0;

·

there was no evidence that ResQ disclosed to the car owner the
    amount that it would invoice Co-operators for the repair;

·

the Work Order Estimate contained a section at the bottom printed
    in very small print that included the assignment language on which ResQ relies.
    The print on the sample document was so small the motion judge found it to be
    illegible and had to have it reproduced;

·

the contract between the car owner and ResQ allowed ResQ to
    repair the car owners windshield and bill Co-operators;

·

there was a separate contract between ResQ and Co-operators for
    each automobile that was the subject of a windshield repair. Co-operators made
    an offer by issuing an authorization. ResQ accepted the offer by effecting the
    repair;

·

Co-operators obligation under its insurance policies was either to
    indemnify its insured for what the insured paid to repair the damage to the
    insureds automobile or to repair the automobile  provided the insured had
    purchased the coverage and provided that reimbursement was not precluded by the
    deductible amount. In this case, on being approached by an insured and ResQ, Co-operators
    contracted directly with ResQ to effect windshield repairs for $50 regardless
    of whether it had an obligation under the insurance policy to do so. Vis-à-vis
    the insured, the Insurer was waiving the deductible where there was one;

·

in each instance, the car owner was made whole, the windshield
    was repaired and the car owner expended nothing. Vis-à-vis the insured, there
    was no breach of the policy; and

·

the assignment at the bottom of the Work Order Estimate does not
    assist ResQ because the insured has no right to be indemnified. Co-operators
    caused the repair to be made  the insured paid nothing and undertook no
    contractual obligation to pay anything for the repair. The insured therefore
    has no cause of action against the Insurer.

[11]

At their core, the motion judges findings
    establish that there was a contract for repair at a specified price between
    Co-operators and ResQ. The purported assignment of the right to receive
    proceeds of insurance was ineffective because, in the context of these
    particular transactions, the car owners had paid nothing, had no claim against
    Co-operators and therefore had nothing to assign.

[12]

During oral argument, ResQ asserted that the Co-operators
    repair authorizations arrived after the windshield repairs were completed and
    therefore did not form part of any contract. Moreover, the motion judges focus
    on the $0 specified in the Work Order Estimates was an irrelevant
    consideration. The amount to be paid under the assignments would be determined
    through the customary proof of claim/investigation process.

[13]

We cannot accept these arguments. As illustrated
    above, the motion judge made specific findings that Co-operators made an offer
    to repair each automobile at a specified price by means of its written
    authorization and that ResQ accepted each offer by completing the repair. ResQ
    did not challenge these findings of fact on appeal. Moreover, based on our
    review, the findings are fully supported by the record.

[14]

Second, ResQ argues that the motion judge erred
    in failing to consider: Co-operators duty to assess the cost of damage in each
    particular case; Co-operators deemed admission that the cost of damage was
    $100; and the doctrines of estoppel by convention and representation. In this
    regard, ResQ relies in part on numerous transactions prior to the January 23,
    2012 letter indicating Co-operators paid $100 to ResQ for windshield repairs
    essentially identical to the later repairs for which it paid only $50.

[15]

We do not accept this submission. Co-operators
    gave clear notice of its intention not to continue to pay $100 for windshield
    repairs in the January 23, 2012 letter. ResQ chose to continue to provide
    repair services to Co-operators insureds after receiving the letter and
    continued to act on repair authorizations received from Co-operators specifying
    a price of $50. ResQ was not obliged to do so. Moreover, the motion judge held
    there was an individual contract for each windshield repair at a specified
    price. We see no basis on which ResQ can now assert that Co-operators was bound
    by the terms of prior dealings in relation to new contracts or that
    Co-operators had any additional duties to its insureds.

[16]

Third, ResQ argues that the motion judge erred
    in failing to find the January 23, 2012 letter was an enforceable promise to
    pay ResQ the market rate for windshield repairs and in failing to draw an
    adverse inference against Co-operators concerning what the market rate was
    because of Co-operators refusal to disclose relevant information.

[17]

We reject this submission. The motion judge
    construed the effect of the January 23, 2012 letter as being notice to ResQ
    that Co-operators would no longer pay the amount it had been paying for
    windshield repairs and that, in future, it would pay $40 (later increased to
    $50). The statement about paying market rate for windshield repairs did not
    derogate from the specificity of this notice confirming what Co-operators was
    prepared to pay. We see no basis on which to interfere with the motion judges
    interpretation of the effect of the letter.

[18]

Fourth, ResQ argues that the motion judge erred
    in failing to address its claim in tort and in failing to find that Co-operators
    engaged in unlawful acts with the intention of causing harm to ResQ and that it
    did in fact cause harm to ResQ.

[19]

We do not accept this submission. ResQ failed to
    demonstrate that Co-operators engaged in any unlawful conduct vis-à-vis its
    insureds. In relation to each automobile, Co-operators arranged to have the
    automobile repaired and to pay the cost of the repair directly to the repairer,
    ResQ. In these circumstances, Co-operators breached no duties to its insureds.
    In fact, as the motion judge held, Co-operators waived its rights under its
    contracts with its insureds in an effort to deal efficiently with what were small
    damage claims. In effect, Co-operators provided its insureds with an indulgence.
    We fail to see how this can form the basis for a finding of unlawful conduct
    vis-à-vis Co-operators insureds.

[20]

ResQ also argued that Co-operators conduct
    amounted to discrimination against ResQ because Co-operators failed to pay
    ResQ what it was paying other service providers for what was essentially the
    same work. Further, the January 23, 2012 letter was a ruse to disguise
    Co-operators discriminatory conduct. Leaving aside the question whether ResQ
    proved its allegations, they do not establish a cause of action in any event.
    On the motion judges findings, Co-operators entered into individual contracts
    with ResQ at a price Co-operators quoted in each case. ResQ was free to accept
    or reject the price that was offered. ResQ failed to establish any basis for
    asserting Co-operators conduct in this regard was unlawful.

[21]

Finally, in the light of our findings as set out
    above, we see no error in the motion judges decision not to address the
    appellants claim for punitive damages.

[22]

Based on the foregoing reasons, the appeal is
    dismissed. Costs of the appeal are to the respondent on a partial indemnity
    scale, fixed in the amount of $17,500, inclusive of disbursements and
    applicable taxes.

Released:

GH                                                  Janet
    Simmons J.A.

JAN 14 2016                                    H.S.
    LaForme J.A.

Grant Huscroft J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Royal Bank of Canada v. FTVRB2 Inc., 2016 ONCA 73

DATE:  20160126

DOCKET: C60565

Gillese, MacFarland and van Rensburg JJ.A.

BETWEEN

Royal Bank of Canada

Plaintiff (Respondent in Appeal)

and

FTVRB2
    Inc., FTVRTZ Inc., NMF-TV Inc.,
Janice Olivia Goldman

and
    Aaron Goldman

Defendants (Appellant)

AND BETWEEN:

Royal Bank of Canada

Plaintiff (Respondent in Appeal)

and

Janice Olivia Goldman

Defendant (Appellant)

Joseph Kary, for the appellant, Janice Oliver Goldman

Rachel Moses, for the respondent RBC

Heard:  January 18, 2016

On appeal from the order of Justice Barbara Conway of the
    Superior Court of Justice, dated May 1, 2015.

ENDORSEMENT

[1]

The appellant appeals the order from the summary judgment of the motion
    judge wherein she granted judgment in favour of the Bank on the basis of
    certain guarantees signed by the appellant.

[2]

There is no issue that the appellant signed the guarantees nor is there
    any question that the loans which are the subject of the guarantees are long in
    default.

[3]

The appellant argues that the motion judge erred both procedurally and
    substantively.

Alleged Procedural Error

[4]

First, Mr. Kary argues that the motion judge erred in proceeding with
    the Banks motion for summary judgment in the face of clear evidence of the
    appellants lack of capacity.

[5]

Issues about the appellants capacity or, more accurately, lack of
    capacity were first raised in November, 2013 before Mesbur J. on a receivership
    motion by the Bank in relation to the three companies, the debts of which underlie
    the guarantees that are the subject of this appeal.  In her reasons, Mesbur J.
    noted that the motion before her had been adjourned repeatedly since March 21,
    2013 and that As for Janice Goldman, her lawyer Mr. Tock raises for the very
    first time today a potential issue as to her capacity.  He has filed no
    material.

[6]

On the record before us the appellants lack of capacity was also raised
    in July, 2013 before McEwen J. where he noted:

Defendant Goldmans solicitor Mr. Tock advises that he has
    heard from the solicitor for Ms. Goldmans son that she may have developed
    psychological issues that affect her capacity.

This is not the first time that Ms. Goldman has
    alleged issues with capacity (see Mesbur J. endorsement of Nov. 29/13).  To
    date, however no steps have been taken by her in this regard to determine the
    issues.

[7]

He proceeded over the objection of Ms. Goldmans then lawyer to set a
    schedule for the delivery of materials and any cross-examinations and fixed the
    date for the hearing of the summary judgment motion for May 1, 2015. The
    appellant thereafter changed counsel and a motion was brought before Penny J.
    on November 13, 2014. The schedule was somewhat altered in relation to the
    exchange of materials and cross-examinations but the May 1, 2015 date for the
    return of the summary judgment motion was confirmed and marked peremptory to the
    respondent (Ms. Goldman, the appellant). There is nothing in that endorsement
    about any lack of capacity of the appellant.

[8]

On December 16, 2014, the parties were before Patillo J. who merely
    noted that no action was required and that the timetable had been complied
    with late!.

[9]

The next appearance was before Patillo J. again on April 10, 2015.  His
    endorsement reads:

Counsel for Ms. Goldman has raised capacity concerns with
    respect to his client.  The issue is not new.  It has been raised on more than one
    occasion in the past.  Yet no one on Ms. Goldmans side has taken any steps to
    deal with it, specifically in respect of this action.  Accordingly there is no
    basis to interfere with the May 1, 2015 motion date, which is peremptory to Ms.
    Goldman among others.

[10]

The
    motion came on before the motion judge on May 1, 2015 as scheduled and Mr. Kary
    again sought an adjournment on the basis that his client lacked capacity. He
    had recently filed, on behalf of his client, three affidavits.

[11]

The
    first   from his law partner Grace Kwan   has nothing to do with the
    appellants capacity.

[12]

Second,
    the affidavit of Aaron Goldman (the appellants son) offered hearsay evidence
    that his mother was advised by her doctors on January 9, 2015 that she had
    been diagnosed with dementia and early stage of Alzheimers. In addition, he
    provided details of his own observations of his mothers conduct and behaviour
    and attached certain records from a medical centre and a letter from a
    physician dated February 3, 2015.

[13]

The
    letter states: Mrs. Goldman has diagnosis of early stage Alzheimers
    disease.  He says nothing about any lack of capacity.

[14]

The
    records from the medical centre do not assist the appellant.  The January 7,
    2015 note of a neurologist notes that Mrs. Goldman may require assistance with
    sorting out her financial difficulties.  I have referred her to the social work
    services at the Memory Care Clinic.  Additionally, she should appoint a power
    of attorney.  There is no suggestion that the appellant lacks capacity
    indeed the only reasonable interpretation that can be put on this statement is
    that she has the capacity to make the appointment.

[15]

Similarly
    the note of January 9, 2015 recites that the appellant had newly diagnosed
    early stage Alzheimers disease but went on to recite the appellants
    agreement to start medication and willingness to participate in a research
    study if qualified.  There is no concern expressed in that note about any lack
    of capacity to consent to treatment.

[16]

Leaving
    aside the issue of whether these materials, filed as they were as part of an
    affidavit by the appellants son, were properly admissible  they do not
    provide any evidence that the appellant lacked capacity at the time of the
    summary judgment motion on May 1, 2015.

[17]

The
    third affidavit  from the appellants former co-worker  speaks  to her
    forgetfulness.   This is of no assistance  on the issue of capacity.   Ms.  Chazan
     is not qualified to make any diagnosis of lack of capacity and, in any event,
    memory issues do not equate with incapacity.

[18]

The
    law presumes capacity.  Anyone alleging lack of capacity has the onus to prove
    it.

[19]

As
    this court noted in
Barnes v. Kirk
, [1968] 2 O.R. 213 at para. 6:

The partys unsoundness of mind constitutes such a valid reason,
    but the onus of establishing that fact rests squarely on the party alleging it.
    The question essentially is one to be decided upon medical evidence; without
    direct cogent evidence from a person duly qualified to speak with authority
    upon the subject, it is difficult to perceive how the Court could pass upon the
    question judicially.

[20]

In
    our view, there was no evidence before the motion judge to support a finding
    that the appellant lacked capacity at that time.

[21]

There
    has been no motion before this court to receive fresh evidence in relation to
    the issue.

[22]

The
    motion judge made no error in proceeding with the motion as she did.  We do not
    accept this ground of appeal.

Substantive Issues

[23]

Next
    the appellant argues that because the corporation used the loan money advanced
    by the Bank for a purpose other than the purpose for which it was advanced this
    constitutes a material change to the loan arrangement that would, absent the
    appellants consent, release her from the guarantee.

[24]

We
    do not accept this submission. The undisputed evidence is that the Bank
    advanced the loan money as it was directed to do by Aaron Goldman, the
    appellants son and principal of the three companies.

[25]

This
    was a continuing all accounts guarantee, the precise form of guarantee
    considered by this court in
Royal Bank of Canada v. Samson
, 2013 ONCA
    313, where at para. 32 the court noted:

The purpose of a continuing all accounts guarantee is to allow
    the customer and the lender to alter their business arrangements without having
    to involve the guarantor.

[26]

The
    motion judge considered the defences of
non est factum
, the Banks
    failure to fully advance the loan amounts, the alleged lack of independent
    legal advice and alleged undue influence.  She rejected each and every one of
    them on the basis of the evidence before her.

[27]

On
non est factum
, she concluded that at the time the guarantees were
    executed the appellant was an intelligent woman, who had previously guaranteed
    her sons companies loan arrangements, knew that this was a guarantee,
    admitted that she was given an opportunity to get independent legal advice and
    knew what she was signing  and concluded there was nothing to it. We agree.

The defences of undue influence and the lack of
    independent legal advice were considered contextually and found to have no
    basis on the evidence. The appellant was a highly educated and intelligent
    woman when she signed the guarantees in 2010-2012.  She knew and understood
    exactly what it was she was signing. Other than the fact that Aaron Goldman is
    the appellants son and he is younger than his mother, there is no evidence to
    support this defence and the relationship alone without more is no defence.

[28]

As
    to the appellants argument that the Bank did not fully advance the loan monies
     again, this is met by the fact that it was an all accounts continuing
    guarantee.  By its terms, the guarantor was obligated to pay on demand all
    debts and liabilities to the Bank owing by the debtor. There was no requirement
    that the monies be fully advanced before she became obligated to the Bank.

[29]

We
    see no error in the motion judges findings and would not interfere.

[30]

The
    appeal is dismissed with costs to the respondent fixed in the sum of $13,000.00.

E.E. Gillese J.A.

J.
    MacFarland J.A.

K.
    van Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Sabet v. Elhalwagy, 2016 ONCA 84

DATE: 20160128

DOCKET: C60591

Simmons, Pepall and Pardu JJ.A.

BETWEEN

Ahmed Ken Sabet

Applicant/Appellant

and

Mohamed
    Elhalwagy, as Estate
    Trustee with a Will of the Estate of Mostafa
    H. Sabet

Respondent/Respondent in appeal

Ioulia Vinogradova, for the appellant

John OSullivan, for the respondent

Heard: In writing

On appeal from the order of Justice Barbara A. Conway of
    the Superior Court of Justice, dated May 19, 2015.

ENDORSEMENT

[1]

The respondent on the appeal claims substantial indemnity costs of a
    motion brought to dismiss the appeal for failure to pay costs ordered by
    LaForme J.A. when he dismissed the appellants motion to stay a decision
    pending appeal. The motion, brought before a single judge of the Court of
    Appeal, was adjourned to the panel hearing the appeal, but became moot when the
    appellant abandoned his appeal. The appellant submits that it should be awarded
    costs of the motion, as it was brought before a single judge rather than before
    a panel as required.

[2]

Given that the motion was not properly brought to a single judge, but
    that the appeal has been dismissed as abandoned, there will be no costs.

Janet
    Simmons J.A.

S.E.
    Pepall J.A.

G.
    Pardu J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Schnier v. Canada (Attorney General), 2016 ONCA 5

DATE: 20160106

DOCKET: C59790

Gillese, Blair and Brown JJ.A.

In the
    Matter of the Bankruptcy of Paul Lorne Schnier, of the City of Toronto, in the
    Province of Ontario

BETWEEN

Paul Lorne Schnier

Applicant (Respondent)

and

The Attorney General of Canada

Respondent (Appellant)

Kevin Dias and Maria Vujnovic, for the appellant

Fred Tayar, for the respondent

Heard: October 21, 2015

On appeal from the order of Justice Thomas J. McEwen of the
    Superior Court of Justice, dated December 8, 2014.

Brown J.A.:

I.

OVERVIEW

[1]

Special rules govern discharge hearings in
    income tax-driven personal bankruptcies. Section 172.1 of the
Bankruptcy
    and Insolvency Act
, R.S.C. 1985, c. B-3 (the
BIA
), provides
    that where the bankrupt has $200,000 or more of personal income tax debt and
    that personal income tax debt represents 75% or more of the bankrupts total
    unsecured proven claims, the timing of the discharge hearing, the discharge
    orders available to the court to make, and the factors the court must take into
    account in deciding the discharge application differ from those applied in a standard
    bankruptcy.

[2]

At the time of his discharge hearing, the
    respondent bankrupt, Paul Schnier, had unpaid income tax assessments totaling
    approximately $4.478 million. About $4.424 million of that amount was subject
    to outstanding appeals he had filed in the Tax Court of Canada. If the full
    assessed amount was considered part of his personal income tax debt, s. 172.1
    of the
BIA
would apply to his bankruptcy; if
    the appealed amounts were excluded, s. 172.1 would not apply.

[3]

The Registrar in Bankruptcy held that s. 172.1
    of the
BIA
did not apply to Mr. Schniers application for discharge.
    Her order of July 18, 2014 (the Discharge Order) discharged Mr. Schnier,
    subject to the condition that he remit to the trustee the remaining surplus
    income payable, up to a maximum of $10,000.

[4]

By order dated December 8, 2014 (the Appeal
    Order), the motion judge dismissed the Attorney Generals motion by way of
    appeal from the Discharge Order. The Attorney General now appeals to this court.

[5]

Although the Attorney General asks that the
    Appeal Order be set aside, if it is, the Attorney General does not seek to vary
    the conditions of the Discharge Order made by the Registrar. The relief sought
    by the Attorney General on this appeal is limited to a determination that s.
    172.1 of the
BIA
applied to Mr. Schniers discharge hearing.

[6]

The issue, then, on this appeal is a narrow one:
    In calculating Mr. Schniers personal income tax debt under
BIA
s.
    172.1(1), should the assessed amounts of personal income tax that were under
    appeal at the time of his discharge hearing be included?

[7]

For the reasons set out below, I conclude the
    answer is no, and I would dismiss the appeal. Both the motion judge and the
    Registrar correctly concluded that until the Tax Court of Canada had disposed
    of Mr. Schniers appeals of the Canada Revenue Agency (CRA) assessments, the
    portion of the CRAs claim for the assessed amounts under appeal was a
    contingent one that the trustee could refuse to admit as a proven claim.
    Accordingly, the motion judge and the Registrar correctly held that s. 172.1 of
    the
BIA
did not apply to Mr. Schniers discharge hearing.

II.

BACKGROUND

[8]

Mr. Schnier is a tax lawyer. His bankruptcy was
    driven by investments he made in two types of tax shelters. Between 1985 and
    1991, Mr. Schnier invested in two yacht tax shelters. In the 1990s and early
    2000s, he invested in four computer software tax shelters. Mr. Schnier claimed
    deductions from his income on those investments for either interest expenses or
    business losses. At the time Mr. Schnier made these investments, he believed
    that the tax shelters were permitted under the
Income Tax Act
(
ITA
)
; he had made the investments
    after receiving opinions from independent tax lawyers and accountants.

[9]

Beginning in 1989, Mr. Schnier received notices
    of reassessment in relation to the yacht tax shelters going back to the 1985
    taxation year. He immediately served on the Minister of National Revenue
    notices of objection to all of the CRA reassessments.

[10]

Section 165(3) of the
ITA
provides that
    upon receipt of a notice of objection, the Minister shall, with all due
    dispatch, reconsider the assessment and vacate, confirm or vary the assessment
    or reassess. That did not occur in this case. Inexplicably, the Minister
    allowed Mr. Schniers objections to languish for over two decades. During that
    time, Mr. Schnier repeatedly asked the CRA to deal with his file, to no avail. It
    was not until October 2011 that the Minister confirmed the reassessments for
    the yacht tax shelters. Mr. Schnier promptly filed notices of appeal to the Tax
    Court of Canada in November 2011.

[11]

The following month, Mr. Schnier made a proposal
    to his creditors under the
BIA
. At that time, he had been assessed
    $1,278,519.62 in income tax, plus penalties and interest, for a total of
    $4,478,703.19. Although Mr. Schnier increased the amount of his proposal to
    creditors over the course of the following creditors meetings, the CRA
    rejected the proposal, resulting in his deemed assignment into bankruptcy on
    January 19, 2012.

[12]

On February 1, 2012, the CRA filed a proof of
    claim in the bankruptcy in the amount of $4,478,703.19 (the Claim). The CRA
    disclosed that of the amount claimed, $4,424,558.19 was under appeal.

[13]

In January 2013, the Minister confirmed the
    assessments for the computer software tax shelters. Mr. Schnier filed appeals
    from those assessments in April 2013.

[14]

In its February 4, 2014 Report on the Bankrupts
    Application for Discharge, the trustee noted that the Tax Court had not yet
    determined Mr. Schniers appeals of the CRA assessments. As a result, the
    trustee reported that it was unable to value the claim and has not admitted
    CRAs claim for the assessed amounts under appeal as it is contingent.  Consequently,
    the trustees July 9, 2014 Claims Register admitted only $71,170.40 of the
    Claim, and recorded the remaining $4.424 million of the Claim as a contingent
    claim which was not admitted by the trustee.

[15]

The CRA opposed Mr. Schniers application to be
    discharged from bankruptcy.

[16]

The Registrar was required to consider whether
    the rules governing tax-driven personal bankruptcies set out in
BIA
s.
    172.1 applied to Mr. Schniers bankruptcy. The reason is that important
    differences exist in the discharge procedures for individual bankrupts who fall
    within s. 172.1 and those who do not:

(i)

in a standard personal bankruptcy, the passage
    of time may result in the automatic discharge of a bankrupt; under s. 172.1, an
    application to the court for a discharge hearing must be made;

(ii)

in a standard personal bankruptcy, the court may
    grant an absolute order of discharge; such an order is not available if s.
    172.1 applies;

(iii)

if a court suspends the discharge in a s. 172.1
    bankruptcy, the court must require the bankrupt to file income and expense
    statements with the trustee each month and to file all returns of income
    required by law to be filed; and

(iv)

a court must take into account the following
    factors in considering a s. 172.1 discharge application:
the
    circumstances of the bankrupt at the time the personal income tax debt was
    incurred; the efforts, if any, made by the bankrupt to pay the personal income
    tax debt; whether the bankrupt made payments in respect of other debts while
    failing to make reasonable efforts to pay the personal income tax debt; and the
    bankrupts financial prospects.

[17]

In her July 18, 2014 reasons, the Registrar considered
    that the CRA was a proven creditor to the extent of the claims admitted by the
    trustee  about $71,170.  The balance of the CRAs claim consisted of assessed
    amounts of tax that were subject to appeals pending in the Tax Court of Canada
    and constituted a contingent claim.  The Registrar concluded that at present,
    the CRA has a contingent liability that cannot support the applicability of s.
    172.1 of the
BIA
. On appeal, the motion judge agreed with the
    Registrar.

III.

ISSUE ON THE APPEAL

[18]

At issue on this appeal is whether s. 172.1(1)
    of the
BIA
applied to Mr. Schniers discharge hearing.  The
    section
provides that the special income tax-driven bankruptcy
    discharge rules apply [i]n
the case of a bankrupt who has
    $200,000 or more of personal income tax debt and whose personal income tax debt
    represents 75% or more of the bankrupts total unsecured proven claims.

[19]

The parties offer competing interpretations of
    what constitutes personal income tax debt for purposes of s. 172.1. The
    Attorney General argues that personal income tax debt includes unpaid
    assessed tax, notwithstanding any right the taxpayer has to file an objection
    or appeal. The Attorney General submits that in this case, all of the $4.4
    million CRA claimed in its proof of claim were amounts payable as of the dates
    of assessment, and remained payable under the
ITA
notwithstanding Mr. Schniers subsequent appeals.

[20]

The Attorney General submits that its
    interpretation is consistent with the express language of the
ITA
, which I discuss in detail below. It acknowledges a pair of cases
    that take the contrary view:
Re Port Chevrolet Oldsmobile Ltd.
, 2002 BCSC 1874, 49 C.B.R. (4th) 127, affd 2004 BCCA 37, and
Re
    2713250 Canada Inc.
, 2011 QCCS 6119. The Attorney General
    submits that those cases were wrongly decided and should not be followed by
    this court.

[21]

For his part, Mr. Schnier argues
that on a proper interpretation of the
ITA
, his unpaid
    assessed amounts of tax that were subject to appeal were contingent claims
    which the trustee in bankruptcy did not accept as proven claims and, therefore,
    did not constitute personal income tax debt for the purposes of
BIA
s.
    172.1(1). Mr. Schnier submits that
Re
Port
    Chevrolet
and
Re 2713250 Canada Inc.
were correctly decided and should be followed by this court.

IV.

STANDARD OF REVIEW

[22]

The applicable standard of review was set out by
    this court in
Murphy v. Sally Creek Environs Corp. (Trustee of)
, 2010
    ONCA 312, 67 C.B.R. (5th) 161, at paras. 68, 70 and 72. On an appeal of a
    discharge order made by a registrar in bankruptcy, the reviewing motion judge
    may only set aside the order if the r
egistrar erred in principle or in
    law, failed to take into account a proper factor, took into account an improper
    factor that demonstrably led to a wrong conclusion, or made a palpable and
    overriding error in respect of a finding of fact. The same standard of review
    applies to a further appeal to this court, although the decision under appeal
    is that of the motion judge, not the registrar. A motion judge will commit an
    error of law if he or she does not adhere to the correct standard when
    reviewing the registrars decision
.

V.

ANALYSIS

[23]

Since the issue on this appeal concerns the
    interpretation of a statutory provision, I start by considering the legislative
    context in which s. 172.1 of the
BIA
is situated.
I then outline and analyze the Attorney Generals arguments regarding
    the proper interpretation of personal income tax debt that draw upon the language
    of the
ITA
. Next, I consider the Attorney Generals argument that this
    court should decline to follow
Re Port Chevrolet
and
Re 2713250 Canada Inc.
I then address the
    Attorney Generals concern that upholding the motion judges decision could
    invite abuse of the bankruptcy process. Finally, I consider the Attorney
    Generals argument that the trustee in this case failed to determine whether or
    not CRAs claim was provable
.

A.

The legislative context for the analysis

[24]

Applying the basic principle of statutory
    interpretation, the words personal income tax debt in
BIA
s.
    172.1(1) must be read in their entire context and in their grammatical and
    ordinary sense harmoniously with the scheme of the
BIA
, its object,
    and the intention of Parliament:
Re Rizzo & Rizzo Shoes Ltd.
,
    [1998] 1 S.C.R. 27, at
para. 21.

[25]

A bankruptcy under the
BIA
follows a
    single proceeding model. In general terms, the property of the bankrupt not
    subject to security interests is realized and collected by the trustee in
    bankruptcy and then distributed to creditors with proven claims in accordance
    with the priorities set out in the scheme of distribution found in
BIA
s. 136(1).

[26]

At the heart of this distribution scheme lies
    the concept of creditor claims provable in bankruptcy.  Section 121(1) of the
BIA
describes what claims are provable in a bankruptcy:

121.
(1) All
    debts and liabilities, present or future, to which the bankrupt is subject on
    the day on which the bankrupt becomes bankrupt or to which the bankrupt may
    become subject before the bankrupts discharge by reason of any obligation
    incurred before the day on which the bankrupt becomes bankrupt shall be deemed
    to be claims provable in proceedings under this Act.

[27]

Liquidated claims are not the only ones provable
    in a bankruptcy. Section 121(2) of the
BIA
specifically recognizes
    contingent claims as provable in a bankruptcy by providing that [t]he
determination whether a contingent or unliquidated claim is a provable
    claim and the valuation of such a claim shall be made in accordance with
    section 135.

[28]

In each bankruptcy, the trustee must examine and
    classify the claims filed by the bankrupts creditors:
BIA
, s. 135. As
    part of that process, the trustee must consider whether the characteristics of
    a debt claimed by a creditor are those of a liquidated claim, future claim, or
    contingent claim. If a trustee concludes that the debt claimed has the character
    of a contingent claim, the trustee must then determine whether the contingent
    claim is a provable claim. As
BIA
s. 135(1.1) states:

135. (1.1) The trustee shall
    determine whether any contingent claim or unliquidated claim is a provable
    claim, and, if a provable claim, the trustee shall value it, and the claim is
    thereafter, subject to this section, deemed a proved claim to the amount of its
    valuation.

[29]

As explained by the Supreme Court of Canada in

Newfoundland
    and Labrador v. AbitibiBowater,
2012 SCC 67, [2012]
    3 S.C.R. 443, at paras. 34 and 36, a claim may be asserted in insolvency
    proceedings even if it is contingent on an event that has not yet occurred,
    and [t]he criterion used by courts to determine whether a contingent claim
    will be included in the insolvency process is whether the event that has not
    yet occurred is too remote or speculative.

[30]

This general legislative scheme for the
    examination and determination of creditor claims in a bankruptcy provides the
    critical context in which to determine the narrow issue raised by this appeal
    i.e. whether the assessed amounts of income tax that were under appeal at the
    time of Mr. Schniers discharge hearing should be included when calculating his
    personal income tax debt under
BIA
s. 172.1(1). That is so because
    whether s. 172.1 applies to a bankruptcy turns on how the trustee classifies a
    claim by the CRA for the payment of assessed amounts of income tax which remain
    subject to an appeal by the bankrupt taxpayer at the time of his discharge
    hearing. The arguments advanced by the parties about the proper interpretation
    of personal income tax debt in s. 172.1(1) must be assessed within the larger
    context of this legislative scheme.

B.

Amounts payable within the meaning of
ITA
s. 223(1)

[31]

As noted, s. 172.1(1) of the
BIA
provides that the special discharge hearing rules apply [i]n the
    case of a bankrupt who has $200,000 or more of personal income tax debt and
    whose personal income tax debt represents 75% or more of the bankrupts total
    unsecured proven claims.

[32]

Section 172.1(8) of the
BIA
defines personal income tax debt to mean the amount payable,
    within the meaning of subsection 223(1) of the
Income Tax Act
by an individual.

[33]

Section 223(1) of the
ITA
defines an
    amount payable by a person as any or all of an amount payable under this Act
    by the person.

[34]

What are the fundamental characteristics of an
    amount payable under the
ITA
?  The Attorney
    General argues that there are two. First, s. 158 of the
ITA
provides:

158. Where the Minister mails a
    notice of assessment of any amount payable by a taxpayer, that part of the
    amount assessed then remaining unpaid is payable forthwith by the taxpayer to
    the Receiver General.

[35]

Second, s. 152(8) of the
ITA
deems an assessment to be valid and binding.  According to the
    Attorney General, when combined together these two characteristics of an unpaid
    assessed personal income tax debt are determinative of the analysis in this
    appeal. Even if a taxpayer appeals an assessment, the character of the tax debt
    remains one that is payable forthwith (s. 158) and valid and binding (s.
    152(8)): in effect, a liquidated claim. As a result, the Attorney General
    submits, personal income tax debt within the meaning of
BIA
s.
    172.1(1) includes unpaid assessed amounts of income tax that are under appeal.

[36]

I do not find that argument persuasive, for two
    reasons.

[37]

First, the roles played by ss. 152(8) and 158 of
    the
ITA
in the characterization of an assessed
    tax debt must take into account the right of a taxpayer to appeal a notice of
    assessment to the Tax Court of Canada under Part I, Division J of the
ITA.

[38]

Section 152(8) of the
ITA
expressly provides that the valid and binding effect of an
    assessment is made subject to a taxpayers right to appeal an assessment.  The
    section states:

152(8). An assessment shall,
subject to being varied or vacated on an objection or appeal
under
this Part and subject to a
    reassessment
, be deemed to be valid and binding
    notwithstanding any error, defect or omission in the assessment or in any
    proceeding under this Act relating thereto. [Emphasis added.]

[39]

As put by the Federal Court of Appeal in
Wesbrook
    Management Ltd. v. R.,

[1997] 1 C.T.C. 124, at p. 129
, when commenting on the effect of what is now s. 152(8): Once  an
    assessment can no longer be varied or vacated on objection or appeal  the last
    assessment is deemed valid and binding on both the taxpayer and the Minister.
[1]

[40]

Section 248(2) of the
ITA
is to the
    same effect. It states that
the tax payable by a taxpayer
    under any Part of this Act by or under which provision is made for the
    assessment of tax means the tax payable by the taxpayer as fixed by assessment
    or reassessment
subject to variation on objection
    or on appeal
, if any, in accordance with the provisions of
    that Part (emphasis added).

[41]

Both ss. 152(8) and 248(2) indicate that until
    the objection or appeal process is concluded, the amount of tax the Minister
    can compel a taxpayer to pay cannot be known. The assessed amount can change
    from time to time by virtue of judicial decisions or new assessments:
Terra
    Nova Properties Ltd. v. Minister of National Revenue
, [1967] 2 Ex. C.R. 46
    (Exch. Ct. Canada), at p. 51.

[42]

The stipulation in s. 158 of the
ITA

that any unpaid amount assessed is payable forthwith upon
    the mailing of a notice of assessment must be understood within the larger
    context of the taxpayers right under the
ITA

to
    object to an assessment and to appeal a Ministers confirmation of an
    assessment to the Tax Court of Canada.

[43]

Second, Part XV of the
ITA
places
    significant restrictions on the Ministers ability to collect assessed amounts
    that are payable forthwith where a taxpayer has objected to or appealed those
    amounts.

[44]

Usually, where an amount is payable under the
ITA
,
    s. 223(2) authorizes the Minister to certify an amount payable that has not
    been paid as an amount payable by the debtor. A certificate of an amount
    payable under
ITA
s. 223(2) can be registered in the Federal Court
    and, when registered, has the same effect as if the certificate were a judgment
    obtained in the Federal Court against the tax debtor. Sections 223 through 225
    then describe the different enforcement steps available to the Minister to
    collect the amount payable: commencing legal proceedings in court; certifying
    the amount due under s. 223; using statutory garnishment remedies; and seizing
    the tax debtors goods and chattels.

[45]

However, when a taxpayer files an objection to
    or appeals an assessment, s. 225.1 places limits on the Ministers ability to
    take steps to collect the assessed amounts. If a taxpayer has served a notice
    of objection to an assessment, the Minister cannot take any of the statutory
    enforcement steps until 90 days after the Minister has sent his notice of
    confirmation to the taxpayer (s. 225.1(2)). Similarly, if a taxpayer has
    appealed from an assessment to the Tax Court of Canada, the Minister cannot
    take any of those steps before the day of mailing of a copy of the decision of
    that court to the taxpayer (s. 225.1(3)).
[2]

[46]

The rationale behind the limits s. 225.1 places
    on the Ministers ability to collect is that it would be unfair to allow the
    Minister to collect an assessed amount of tax until there is a final determination
    of the ultimate amount the taxpayer must pay.
[3]

[47]

In my view, the Attorney General takes far too
    narrow an approach to what constitutes an amount payable under
ITA
s. 223(1), and therefore personal income tax debt in
BIA
s. 172.1.  The Attorney Generals submission focuses on only some
    of the characteristics of an assessed income tax debt  payable forthwith and
    valid and binding notwithstanding any error, defect, or omission. It ignores
    the critical effect of sections 152(8), 225.1 and 248(2) of the
ITA
that enable a taxpayer to appeal an assessment and limit the
    collectability of that tax debt by the Minister until the courts dispose of the
    appeal.

[48]

When the provisions of the
ITA
are considered as a whole, the meaning of amount payable as used
    in
ITA
s. 223(1) and
BIA
s. 172.1(8), must take into account
    that where a taxpayer has appealed an assessment to the Tax Court of Canada,
    the actual amount of tax that the Minister can compel the taxpayer to pay will
    not be known until the occurrence of a future event  i.e. the determination of
    the taxpayers appeal from the assessment. This is a hallmark of a contingent
    claim.

[49]

Further, a creditors inability to enforce a
    claim bears directly on the creditors ability to prove its claim under the
BIA.
In order to be a provable claim within the meaning of
BIA
s. 121, a
    claim must be one recoverable by legal process:
Re Central Capital Corp.
(1996), 27 O.R. (3d) 494 (C.A.), at pp. 532-533. The restraints placed by
ITA
s. 225.1 on the enforceability of an assessed amount of tax that is
    under appeal are strong indicators that a claim based on those amounts would
    not be provable in a bankruptcy.

[50]

Consequently, where amounts of income tax
    assessed against an individual bankrupt taxpayer remain under appeal at the
    time of his discharge hearing, the existence of the outstanding appeal entitles
    the trustee to classify the claim based on the unpaid assessed amounts as a contingent,
    unprovable one.

C.

The jurisprudence

[51]

Turning to the jurisprudence, the Attorney
    General advances two arguments: (i) support for its position can be found in
    the decision of this court in
Re Norris
(1989), 69 O.R. (2d) 285
    (C.A.); and (ii) the British Columbia and Quebec courts were wrong to conclude in
Re
Port Chevrolet
and
Re 2713250

Canada Inc.
, respectively,

that an unpaid assessed amount of tax under appeal is a contingent
    claim.

The decision in
Re Norris

[52]

The Attorney General submits that
Re Norris
stands for the principle that in carrying out its duties under the
BIA
,
    a trustee cannot ignore what Parliament has legislated with respect to tax
    debts. Applying that principle to the present case, the Attorney General argues
    that the trustee must give full recognition to assessed amounts under appeal
    because under the
ITA
a taxpayer becomes liable for an unpaid portion
    of an assessment when the notice of assessment is sent. That liability
    continues to exist until the assessment is varied or vacated on an objection or
    appeal.

[53]

In my view, the principle in
Re Norris
does not extend as far as the Attorney General submits. That case involved the
    bankruptcy of an individual against whom an assessment had been issued under
    the
ITA
. Critically, unlike in the present case, the bankrupt had not
    filed a notice of objection to the assessment. The Crown filed a proof of claim
    in the bankruptcy for the assessed amount and provided the trustee with the
    notice of assessment. The trustee disallowed the claim. This court held, at p.
    287, that the trustees request for evidence to support the proof of claim was
    fully answered by the notice of assessment, and if the trustee in bankruptcy
    wished to question the validity of an assessment against the bankrupt, it was
    required to seek its remedy within the
ITA
by filing a notice of
    objection.

[54]

In the present case, the trustee did not look
    behind the notice of assessment in order to ascertain the amount of Mr.
    Schniers personal income tax debt. Instead, the trustee gave effect to the
    appeal and enforcement provisions of the
ITA
. Whether the tax debt was
    liquidated or contingent for purposes of the
BIA
depended upon whether
    the taxpayer had exercised the appeal rights granted by the
ITA
and,
    if he had, whether s. 225.1 of the
ITA
restrained the Minister from
    taking steps to enforce and collect the assessed amount. The trustee took into
    account that no final determination of Mr. Schniers appeal had been made under
    the
ITA
, with the result that it was unable to value the CRAs claim.

The decisions in
Re Port Chevrolet
and
Re 2713250
    Canada Inc
.

[55]

More relevant to the facts of this case are two
    decisions dealing with the power of the chair of a meeting of creditors under
    s. 108 of the
BIA

to admit or reject a proof
    of claim for the purpose of voting:
Re
Port
    Chevrolet
and
Re 2713250 Canada Inc.

[56]

In the
Re
Port
    Chevrolet
case, the Canada Customs Revenue Agency
    (CCRA) had issued an assessment under the
Excise Tax Act
,
    R.S.C. 1985, c. E-15,
to Port Chevrolet for about $16.4
    million. The company filed a notice of intention to make a proposal under the
BIA
.
    The company also filed a notice of objection to the assessment. The CCRA filed
    a proof of claim in the amount of about $15.8 million the day before the
    meeting of creditors to vote on the companys proposal. The trustee disallowed
    CCRAs claim and valued it at nil, taking the view that it was unproven because
    it was based on an unresolved appeal and notice of objection. Relying on the
    trustees disallowance, the chair of the creditors meeting concluded that the
    CCRA claim was contingent and valued it at nil for voting purposes.

[57]

The CCRA appealed the trustees disallowance of
    its claim and the chairs decision that it had no right to vote at the meeting.
    The chambers judge dismissed the appeal on two grounds. First, the CCRA had
    failed to file a proof of claim in proper form: at para. 25. Second, the court
    rejected the CCRAs argument that provisions in the
Excise Tax Act
analogous to ss. 152(8) and 158 of the
ITA
created a valid and binding
    debt due from the moment of assessment regardless of the pending objection and
    appeal process: at paras. 35-36. The court stated, at para. 43:

[I]
f CCRA wishes to participate in
    concurrent proceedings under the
Bankruptcy and Insolvency Act
,
    then it is bound to comply with the
Bankruptcy and Insolvency Act
process
    with respect to proving its claim, and that compliance includes recognition of
    the trustee's powers to determine a claim is contingent and value it
    accordingly. I do not read
Re Norris
as precluding a trustee
    from exercising his discretion under
s. 135(1.1)
.

[58]

The British Columbia Court of Appeal affirmed
    the decision, but only in respect of the finding that the CCRA had failed to
    file a proof of claim in proper form. The BCCA specifically declined to
    consider the trustees disallowance of the CCRAs contingent claim.

[59]

A similar issue arose in a Quebec case involving
    a proposal made by 2713250 Canada Inc. under the
BIA
. The Agence du
    revenue du Québec (ARQ) had issued two notices of assessment to the debtor
    company for which the company had filed notices of objection. The ARQ filed
    proofs of claim in the proposal proceedings based upon the full amount of the
    assessments. At two meetings of creditors, the proposal trustee held that the
    ARQs claims were contingent and impossible to value because of the pending
    appeal of the notices of assessment. Therefore, the ARQ was ineligible to vote.
    The ARQ appealed the trustees decisions.

[60]

Gascon J., as he then was, dismissed the appeal,
    applying the reasoning of the chambers judge in the
Re
Port Chevrolet
case. He held that in
    exercising the power conferred on it by
BIA
s. 108(1), the trustee
    could conclude that the ARQs claims were in fact contingent, unliquidated, and
    not provable claims, due to the impossibility of valuing them with any
    certainty: at para. 86. Gascon J. then considered, and rejected, the ARQs
    argument about the validity and binding nature of its notices of assessment, at
    paras. 88 through 94:

Contrary to what the ARQ argues, the Court
    believes that in exercising the power ascribed to it by section 108(1), the
    Trustee was not legally bound to consider as valid, regardless of the
    situation, the notices of assessment on which the disputed proofs of claims are
    based.

On the one hand, if the relevant tax laws
    establish a presumption of validity of those notices of assessment, that
    presumption is not irrebuttable. The objection process such tax laws authorize
    surely demonstrates this.

On the other hand, the presumptions of
    validity established by tax laws are not incompatible with the exercise of the
    jurisdiction which the
BIA
confers on the Trustee pursuant to sections
    108, 121 or 135 of the BIA.

As the Court of Appeal for British Columbia
    points out in its analysis of the problem in
Port Chevrolet
, there are
    two possible solutions under such circumstances.

The first is that in terms of a proof of claim
    filed under the
BIA
, one must give, without reservation, full faith
    and credit to any notice of assessment by the tax authorities, regardless
    whether it may eventually be set aside.

The second is that we can reconcile the
BIA
and tax laws by drawing a distinction between, on the one hand,
    business judgment and a trustees practice in exercising its powers under the
BIA
and, on the other hand, the rebuttable presumptions of validity of tax
    laws which subsist notwithstanding the prescribed objection and appeal processes.

For its part, the Court prefers the second
    solution, which is much more respectful of the objectives of the
BIA
. [Translation from French.]

[61]

Although the
Re
Port Chevrolet
and
Re
2713250 Canada

Inc
. cases both involved the exercise by trustees of their discretion
    in the context of admitting or rejecting proofs of claim for the purposes of
    voting under
BIA
s. 108(1), in my view the reasoning in
Re
Port Chevrolet
, as adopted by
Re
2713250 Canada Inc.
, applies
    equally to the exercise of the trustees general power to determine whether a
    contingent claim is a provable claim under ss. 121 and 135 of the
BIA
. Where a bankrupt taxpayer has appealed assessed amounts of income
    tax, it is open to a trustee to characterize a CRA proof of claim based on
    those assessments as a contingent claim. If the claim cannot be valued with any
    certainty prior to the disposition of the appeal, the trustee may treat the
    contingent claim as not provable in the bankruptcy.

[62]

Such a result gives full recognition to the provisions of the
ITA
discussed earlier dealing with the calculation and enforcement of
    assessed amounts of income tax, while treating a proof of claim based on an
    appealed assessment in a manner harmonious with the general scheme of the
BIA
concerning creditors proofs of claim.

[63]

Such an interpretation is also consistent with the language of s.
    172.1(1) of the
BIA
,
which provides that the
    special discharge rules for tax-driven personal bankruptcies apply in
the case of a bankrupt who has $200,000 or more of personal income tax
    debt and whose personal income tax debt
represents
75% or more of the bankrupts total unsecured proven claims (emphasis
    added). The use of the word represents signifies that in order for personal
    income tax debt to be capable of representing 75% of a bankrupts unsecured
    proven claims, the personal income tax debt must possess the
    characteristics of a provable claim in bankruptcy. Put another way, to qualify
    as personal income tax debt within the meaning of s. 172.1(1), the tax debt
    must be a proven claim.

[64]

To hold otherwise would give unfair,
    preferential treatment to CRA proofs of claim based on assessed income tax
    amounts that remain under appeal at the time of a discharge hearing. If the
    full amount of the assessed amount under appeal was recognized as a claim
    provable in the bankruptcy, and the taxpayers appeal of the assessment was
    later allowed and the assessed amount reduced or eliminated, the CRA would have
    obtained an unjustified advantage over other creditors in the bankruptcy
    proceeding.

D.

Potential abuse of the bankruptcy process

[65]

Against that conclusion, the Attorney General
    argues that to treat CRA claims for unpaid assessed income tax under appeal as
    contingent ones that may not be provable would render meaningless s. 172.1 of
    the
BIA
. A taxpayer who was subject to
    significant income tax assessments could abuse the bankruptcy process by
    appealing his assessment, then make an assignment in bankruptcy and fail to
    expedite the hearing of his tax appeal. That would allow a bankrupt to avoid
    the special discharge rules created by s. 172.1 for tax-driven bankruptcies.

[66]

In my view, the motion judge correctly addressed
    this argument when he held that an adjournment could have been sought before
    the [Registrar] so the appeal could be heard and no attempt was made in this
    case. Indeed, had the CRA sought a brief adjournment of Mr. Schniers
    discharge hearing, no dispute could have arisen about the applicability of s.
    172.1 to his bankruptcy, as the following chronology of events discloses.

[67]

Section 225.1(5) of the
ITA
states that
    where a taxpayer who has appealed to the Tax Court of Canada has agreed to
    delay his appeal until the court has decided related test cases, then the
    Minister may take actions to enforce the assessments against the taxpayer at
    any time after the Minister gives written notice to the taxpayer that the
    decision of the Tax Court of Canada in the test case has been mailed to the
    Minister.

[68]

In February 2012, Mr. Schnier had filed with the
    Tax Court of Canada his agreement to be bound in the lead test cases before
    that court concerning the deductibility of expenses relating to the yacht tax
    shelters. The Tax Court of Canada confirmed that it would hold his appeal in
    abeyance pending the resolution of the three lead test cases. The lead cases
    concerning the yacht tax shelters were dismissed on January 7, 2014 and an
    appeal from that dismissal to the Federal Court of Appeal was withdrawn on
    March 19, 2014. Both those events took place before Mr. Schniers bankruptcy
    hearing.

[69]

However, the Tax Court of Canada did not
    formally dismiss Mr. Schniers appeal from the yacht tax shelter assessments
    until August 18, 2014, slightly more than a month after his discharge hearing was
    held. The record does not explain when the Tax Court of Canada mailed the
    Minister the decision dismissing the lead test appeals concerning the yacht tax
    shelters or why the Minister did not send a written notice of the decision to
    Mr. Schnier prior to his discharge hearing. From the transcript of the
    discharge hearing, it is apparent that the parties were aware the test cases
    had been resolved in favour of the CRA: Appeal Book, p. 56. Why, given those
    circumstances, the CRA did not ask for a short adjournment of the discharge
    hearing pending formal notice to Mr. Schnier of the dismissal of the lead test
    appeals pursuant to
ITA
s. 225.1(5) was not
    explained in the record before us.

E.

Whether the trustee disallowed any part of the
    Claim

[70]

Finally, in her factum, the Attorney General
    argued that the trustee had failed to determine whether or not the CRAs Claim
    was provable. I disagree.

[71]

Although the appeal record did not contain a
    notice of disallowance issued by the trustee under
BIA
s. 135(3) in
    respect of the Claim, appellants counsel candidly conceded that there was no
    evidence before the court about what, if anything, the trustee did under s.
    135.

[72]

In any event, the evidence showed that the CRA
    was aware well before the discharge hearing that the trustee had disallowed
    that part of its Claim covering the assessed amounts under appeal. The
    trustees Report under s. 170(1) on the bankrupts application for discharge
    was dated February 4, 2014, some five months prior to the discharge hearing,
    and was signed by the inspectors, including one of the inspectors who was an
    employee of the CRA. The Report clearly stated that the trustee was unable to
    value most of the CRAs Claim and had not admitted the portion concerning the
    assessed amounts under appeal as it was contingent. The Trustees July 9, 2014
    Claims Register also recorded that $4.385 million of the CRA Claim had been
    classified as contingent and had not been admitted for dividend. Accordingly,
    the evidence before the Registrar at the time of the discharge hearing was that
    the trustee had determined that only $71,170 of the CRA Claim was provable in
    the bankruptcy.

F.

Conclusion

[73]

For the reasons set out above, I conclude that
    both the motion judge and the Registrar were correct in concluding that until
    the Tax Court of Canada disposed of Mr. Schniers appeals of the CRAs
    assessments, the CRAs claim in the bankruptcy for the assessed amount under
    appeal was a contingent one which the trustee could refuse to admit as a proven
    claim. Consequently, the motion judge and the Registrar correctly concluded
    that s. 172.1 of the
BIA
did not apply to Mr. Schniers discharge
    hearing.

VI.

DISPOSITION

[74]

I would dismiss the appeal. The parties agreed
    that the successful party would be entitled to costs of the appeal on a partial
    indemnity basis in the amount of $15,000. I would therefore order the Attorney
    General of Canada to pay Mr. Schnier costs of $15,000, inclusive of HST and
    disbursements.

Released: January 6, 2016 (EEG)

David
    Brown J.A.

I
    agree E.E. Gillese J.A.

I
    agree R.A. Blair J.A.

[1]

Moreover,
    the case law interpreting s. 152(8) treats the sections purpose as a modest
    one, operating as a curative provision ensuring the validity of an
    administratively-issued assessment despite any errors, defects or omissions:
Regina
    Shoppers Mall Ltd. v. Canada
, [1991] 1 C.T.C. 297 (F.C.A.), at p. 301;
Leung
    (J.) v. M.N.R.
, [1993] 2 C.T.C. 284 (F.C.T.D.), at p. 302.

[2]
Although
ITA
s. 225.1 provides for certain
    exceptions to these bars to collection, none apply to the facts of the present
    case.

[3]
If reasonable grounds exist to believe that the
    collection of an assessed amount would be jeopardized by a delay in collection,
ITA
s. 225.2 authorizes the Minister to apply
ex parte
to the
    court for an order allowing him to take enforcement steps.