Federal Court of Appeal hears income, sales, input tax cases this week

Federal Court tackles suits raising issues of accelerated parole, copyright infringement

Federal Court of Appeal hears income, sales, input tax cases this week

This week, the Federal Court of Appeal heard appeals challenging decisions of the Minister of National Revenue, Health Canada, and the Canadian Transportation Agency. The Federal Court dealt with lawsuits alleging violations of Charter rights and of the Copyright Act.

Federal Court of Appeal

Last Thursday, the appellate court heard Le-Vel Brands, LLC v. Attorney General of Canada, A-92-22. The appeal focused on the Thrive DFT patch, a product which Le-Vel Brands, LLC marketed and sold in Canada and which aimed to improve the appearance of the wearer’s skin.

Health Canada ordered Le-Vel to stop selling and importing the patch in Canada. The patch was not a cosmetic under the Food and Drugs Act, 1985 and was instead as a natural health product (NHP) under the Natural Health Products Regulations, SOR/2003-196 because Le-Vel represented it as having therapeutic and systemic uses, the department said.

The Federal Court upheld Health Canada’s interpretation of the relevant definition for an NHP and its decision to classify the patch as an NHP. On appeal, Le-Vel argued that Health Canada’s decision was unreasonable and that the Federal Court should have limited the department’s jurisdiction to the issue of Le-Vel’s representations.

Also on Thursday, the appellate court heard Ontario Addiction Treatment Centres v. Attorney General of Canada, A-88-22. The appellant questioned the national revenue minister’s decision to deny its request for remission of sales tax allegedly paid in error on the purchase of cartridge-based reagents used for testing drug abuse and addiction patients under s. 23(2) of the Financial Administration Act, 1985.

This Monday, the appellate court heard Iris Technologies Inc v. His Majesty the King, A-77-22. The appellant was an independent provider of telecommunications services to residential, commercial, and wholesale customers. It asked for a reassessment for the national revenue minister to allow input tax credits and to vacate gross negligence penalties assessed for certain periods.

The Tax Court of Canada denied the appellant’s request. The appellant argued that the Tax Court should not have allowed the minister to issue assessments without identifying the factual foundation for them and should not have limited the scope and effect of r. 170.1 of the Tax Court of Canada Rules (General Procedure), SOR/90-688a.

On Tuesday, the appellate court heard the cases of Frank Smith v. Attorney General of Canada, A-34-22 and Frank C. Smith Medicine Professional Corporation v. Attorney General of Canada, A-35-22. These appeals challenged the national revenue minister’s issuance to the appellant of an audit expansion and request letter under s. 231.1 of the Income Tax Act, 1985.

The applicants alleged that the minister’s decision to expand the audit period from 2010–2016 to 2003–2018 was unreasonable and that the letter was invalid because it did not clearly state whom the minister was auditing and what response was required.

On Wednesday, the appellate court heard Regional Municipality of Halton et al v. Canadian Transportation Agency et al, A-95-22. The appellants challenged the Canadian Transportation Agency’s determination upon the Canadian National Railway Company’s application under s. 98(2) of the Canada Transportation Act, 1996, which was allegedly based on numerous legal errors.

Specifically, the appellants claimed that the agency misinterpreted and misapprehended the requirements of s. 98(2) and the scope of the interests of the localities that the proposed railway lines would affect. The agency wrongly concluded that mitigation measures could address the alleged significant adverse environmental effects on air quality and human health, the appellants added.

Federal Court

On Monday, the court continued hearing the proceedings in Kristen Marie Whaling (Formerly Christopher John Whaling) v. His Majesty the King, T-455-16 and in William Wei Lin Liang v. His Majesty the King, T-456-16. The plaintiffs, who were federal inmates, asked for damages for the infringement of their rights under s. 11(h) of the Canadian Charter of Rights and Freedoms.

These cases revolved around a proposed class action brought on behalf of prisoners who were serving federal penitentiary sentences as first-time, nonviolent offenders and who met the criteria for accelerated parole review status. The Abolition of Early Parole Act, which came into force on Mar. 28, 2011, retroactively took away this status, the action alleged.

On Wednesday, the court heard 1395804 Ontario Ltd. v. Attorney General of Canada, T-1862-15. The plaintiff, operating as Blacklock’s Reporter, was an online news agency that offered subscription-based news services. Parks Canada and other federal government departments and agencies copied, distributed, and accessed its articles in violation of the Copyright Act, 1985, Blacklock claimed.

In 1395804 Ontario Ltd. (Blacklock’s Reporter) v. Canada (Attorney General), 2021 FC 872, Blacklock challenged the case management judge’s order that dispensed with the requirement for the defendant, the federal attorney general, to obtain leave to file a counterclaim. The Federal Court disagreed with Blacklock. It found no reviewable error and no basis to intervene, given that the order was an exercise of the judge’s discretion under r. 385 of the Federal Courts Rules, SOR/98-106.

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