Simon Fothergill

The Court considered whether farming losses were fully deductible where a taxpayer's law practice and horse-racing farming business together formed a chief source of income under s. 31(1) of the Income Tax Act.

It held that prior precedent had improperly narrowed the statutory combination test, overruled that aspect of Moldowan, and confirmed a contextual approach examining capital, income, time, and the taxpayer's mode of living.

Applying that approach, the Court found no basis to disturb the trial findings that the taxpayer significantly emphasized both activities, so the farm-loss limitation did not apply.

The Crown's appeal was dismissed with costs.

The Crown appealed a trial judgment finding it liable for breach of contract and awarding $2.52 million in compensatory damages plus $400,000 in punitive damages to a software developer.

The trial judge found that the government deliberately undermined the objectives of a portal development agreement by secretly encouraging a subcontractor to develop a competing product, breaching an implied duty of good faith.

The Court of Appeal upheld the findings on liability and compensatory damages, concluding the government's conduct undermined the contract's business efficacy and the parties' reasonable expectations.

However, the Court set aside the punitive damages award, finding it served no rational purpose since the breach of good faith already formed the basis of the compensatory damages.

The developer's cross-appeal for lost market value and lost opportunities was dismissed.

The appellant challenged federal jurisdiction over proposed natural gas gathering pipeline and processing plant expansions in British Columbia, arguing the facilities remained provincial works despite their connection to an interprovincial transmission pipeline.

The majority held that the facilities, together with the existing gathering, processing, and transmission system, formed a single federal transportation undertaking under s. 92(10)(a) of the Constitution Act, 1867 because they were functionally integrated and subject to common management, control and direction.

The Court further held that s. 92A did not derogate from Parliament’s pre-existing jurisdiction over interprovincial transportation undertakings.

It also concluded that the processing plants fell within the definition of “pipeline” in s. 2 of the National Energy Board Act.

The appeal was dismissed, with a dissent holding the facilities retained their distinct provincial character.