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That can happen in any circumstance. Most grown dogs will show dominance over a puppy, and at some point that may be challenged. Unless you prevent all interactions between the two one of them is going to be dominant.
Yes, it's important to differentiate between the dogs settling the pack order between them (acceptable behavior) and one dog taking your job right out of your hands (not acceptable). Since it may be hard to correct either dog when you're actually using the toilet, you might think about setting up a training situation where you sit on the toilet when you don't need to, then you can get up to correct the younger dog. Which means you'll be right on the spot to correct the older one if he steps in. Part of the younger dog's "thought" might be that he knows you never get up to discipline him...perhaps a bit of "naa, na, na, na, naaaaah, you can't get me!" in his mind. I'm betting it's a game to him.
another thing to try: when you go to the toilet (to really use it), call both dogs to come with you. At the doorway, put them on a down-stay. It's harder for a dog to bark in a down than in a sit, he's not in the habit of barking from a down positon, and it's a more submissive position. This way, both dogs are working, you are in charge, and hopefully it will create a different mind set than if they choose to follow you. Might be worth a try, anyway.
The younger dog is just at the age when his "puppy license" runs out and older dogs are less forgiving of bad behavior. Jax will probably start putting Kane in his place more firmly aroung now, and when it's just between the dogs, that's fine. But when you are giving a command, no other dog should step in and take over. That's blowing you off, and that is never acceptable.
Good luck!