The Tax Court of Canada has recognized in a recent case that “oversight expenses” – notably investment banking and other professional advisory fees for services rendered to boards of directors in their discharge of oversight responsibilities – should be fully deductible, even in the context of a planned M&A transaction. The Canada Revenue Agency has traditionally taken a hard line on expenses incurred by an acquirer or a target and has denied deductibility on the basis that these expenses are of a capital nature. Under CRA’s position, such expenses have had limited to no practical tax benefit. By rejecting CRA’s position, the Rio Tinto Alcan Inc. v The Queen (2016 TCC 172) decision has delivered a significant victory for companies, especially given the magnitude of fees associated with M&A transactions. Oversight expenses accepted as deductible by the Tax Court in Rio Tinto Alcan included investment banking fees for financial modelling and for financial and valuation opinions culminating in a fairness opinion. Moreover, given the broad rationale adopted by the Court, this case potentially establishes the basis for deductibility of oversight expenses in other capital transactions such as reorganizations and financings [at para 88]: (more…)
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In Environmental Interest Groups Challenge Registrations of Neonicotinoid Products in Federal Court, we discussed a recent judicial review initiated by the David Suzuki Foundation and others with respect to conditional registrations of neonicotinoid products. On May 17, 2016, the Federal Court released its decision in another judicial review brought by the David Suzuki Foundation, among others, in Équiterre and David Suzuki Foundation v Minister of Health (Canada). This case concerns whether section 17 of the Pest Control Products Act (PCPA) imposes a mandatory or discretionary duty upon the Minister of Health and the Pest Management Regulatory Agency (PMRA) to initiate special reviews of pest control products and active ingredients following the occurrence of certain prescribed events. (more…)
Operating agreements for oil and gas assets typically contemplate the immediate replacement of the operator by another working interest owner in the event of the operator’s insolvency. However, these provisions often become practically unenforceable because, once proceedings are commenced under either the Companies Creditors’ Arrangement Act, RSC 1970, c C-25 [CCAA] or the Bankruptcy and Insolvency Act, RSC 1985, c B-3 [BIA], stays are imposed that prevent creditors from exercising any remedies against the insolvent operator, including these “immediate replacement” provisions.
The recent decision in Bank of Montreal v Bumper Development Corporation Ltd, 2016 ABQB 363 [Bumper] indicates that immediate replacement clauses may be given effect in proceedings under the BIA, although, as discussed below, whether immediate replacement clauses will be given effect in CCAA proceedings remains uncertain. (more…)
Non-Canadian companies: welcome to the Canadian class action party. In recent years, Canadians have increasingly begun to recognize and actively manage the major business risk posed by class actions, as more and more businesses have found themselves facing class actions in Canadian jurisdictions. But that growing risk does not stop at the Canadian border. Companies that do business in Canada—or even that simply have a contract formed in Canada or some other Canadian connection—should know that they can now be dragged into a Canadian class action in circumstances that might surprise them. (more…)
In an important decision (Wilson v Atomic Energy of Canada Limited) for federally regulated employers, the Supreme Court of Canada held that the “unjust dismissal” provisions in the Canada Labour Code mean non-union employees cannot be terminated absent just cause and that adequate severance pay is not a sufficient substitute.
A couple of general principles of labour and employment law are that (1) unionized employees cannot be terminated absent just cause and (2) non-union employees may be terminated at any time without any right to reasons for termination so long the employer gives reasonable notice of termination or reasonable compensation in lieu of notice. Ultimately the court in Wilson found that the specific wording of the unjust dismissal provisions in the Code resulted in non-union employees have a just cause protection similar to unionized employees covered by a collective bargaining agreement. (more…)
The recent Master’s decision in Chandos Construction Ltd v Twin Peaks Construction Ltd, 2016 ABQB 296 determined an issue under the Builders’ Lien Act (Alberta) (BLA) which, surprisingly, had never been specifically addressed by an Alberta court. The issue was whether a lien claim for the value of work performed prior to the issuance of a certificate of substantial performance can attach to land after the owner has properly released the major lien fund. The Master determined that a lien does not attach in such circumstance. (more…)
It’s tough for any of us to think of a high profile criminal or regulatory case that could be described as “speedy”. The whole country followed the murder trial of Mark Smich and Delen Millard, who were recently convicted of the first degree murder of Tim Bosma—more than three years after they were charged in May 2013. The much talked about proceedings against SNC-Lavalin under the Corruption of Foreign Public Officials Act? With charges laid in February 2015, SNC-Lavalin and one former senior executive are scheduled for a preliminary hearing in September 2018. Despite these long delays, individuals or corporations charged with criminal or regulatory offences have always had a constitutional right to “tried within a reasonable time”—the right to a speedy trial. (more…)
Last week, Gretchen Carlson, the Fox News anchor, sued Fox News chairman Roger Ailes, accusing him of harassment and sexism. Though Ailes denies the allegations, the trial will be closely followed, both because of the personalities involved and the highly-charged allegations. Closer to home, Raj Shoan, the former Ontario commissioner for the Canadian Radio-Television and Telecommunications Commission, filed a lawsuit alleging racism and harassment at the CRTC.
How are harassment or discrimination allegations treated by Ontario courts? In two recent decisions, the Court of Appeal for Ontario sheds light on how employers and employees can expect harassment or discrimination allegations to pan out. (more…)
By Mark Powell
On July 7, 2016, the Canadian Securities Administrators Derivatives Committee (the “Committee”) published CSA Consultation Paper 95-401 entitled “Margin and Collateral Requirements for Non-Centrally Cleared Derivatives” (the “Consultation Paper”) with respect to minimum margin requirements for certain non-centrally cleared derivatives entered between counterparties that are both financial entities with an aggregate month-end average notional amount under all outstanding non-centrally cleared derivatives above $12 billion (excluding certain inter-affiliate trades). (more…)
On July 6, 2016, the David Suzuki Foundation, along with Friends of the Earth Canada, Ontario Nature, and Wilderness Committee, brought two judicial review applications against the Minister of Health and registrants of the active ingredients clothianidin and thiamethoxam and their end-use products, seeking a declaration that the registrations of both the active and end-use products are invalid (Court File Nos. T-1071-16 and T-1070-16). While the two applications seek slightly different forms of relief with respect to clothianidin and thiamethoxam, the overall goal is clear: to challenge the conditional registration regime for neonicotinoid products. Conditional registrations are granted on the condition that further information be provided by the registrant in respect of the products registered. (more…)