Brussels Steel Corp. v. Minister of National Revenue, (1986) 1 F.T.R. 35 (TD)

• Judge: Joyal, J.
• Court: Federal Court (Canada)
• Case Date: October 29, 1985
• Jurisdiction: Canada (Federal)
• Citations: (1986), 1 F.T.R. 35 (TD)

Brussels Steel Corp. v. MNR (1986), 1 F.T.R. 35 (TD)

MLB headnote and full text

Brussels Steel Corp. v. Her Majesty The Queen

(T-4977-81)

Indexed As: Brussels Steel Corp. v. Minister of National Revenue

Federal Court of Canada

Trial Division

Joyal, J.

January 16, 1986.

Summary:

Brussels Steel Corp., a trader in steel products, negotiated a settlement with Newfoundland Steel Corp. for damages for Newfoundland Steel's alleged breach of contract. Pursuant to the settlement Brussels received $428,772.91 from Newfoundland Steel. The Minister of National Revenue claimed that this settlement was income for Brussels, while Brussels maintained that the settlement was a capital asset. Brussels commenced an action to have the matter determined. The Federal Court of Canada, Trial Division, held that the settlement was income in the hands of Brussels in the year it was received.

Income Tax - Topic 10

Income - What constitutes - Litigation settlements - Brussels Steel Corp. commenced an action for damages against Newfoundland Steel for loss of profits for Newfoundland Steel's alleged breach of contract - A settlement was reached whereby Newfoundland Steel paid $428,772.91 to Brussels - The Minister of National Revenue claimed that the settlement was income for Brussels, but Brussels claimed it was a capital asset - The Federal Court, Trial Division, agreed with the Minister of National Revenue that the settlement was income for tax purposes in the year it was received, because it was received in respect of the cancellation of an ordinary and commercial contract made in the course of Brussel's ordinary business - See paragraphs 1 to 51.

Cases Noticed:

Short Bros., Ltd. v. Commissioners of Inland Revenue, 12 T.C. 955, folld. [para. 44].

Jesse Robinson & Sons v. Commissioners of Inland Revenue, 15 T.C. 1241, folld. [para. 45].

Raja's College v. Gian Singh & Co. Ltd. (P.C.), [1977] A.C. 312, folld. [para. 46].

Wiseburgh v. Domville, [1956] 1 All E.R. 754, folld. [para. 47].

Packer Floor Coverings Ltd. v. The Queen, 82 D.T.C. 6027, folld. [para. 50].

Counsel:

Appearances: Guy Dupont and Diane Tsonos, for the plaintiff;

Paul Plourde and Pierre Barsalou, for the defendant.

Solicitors of Record:

Verchere, Noel and Eddy, Montreal, Quebec, for the plaintiff;

Frank Iacobucci, Deputy Attorney General of Canada, for the defendant.

This case was heard at Montreal, Quebec, on October 29, 1985, before Joyal, J., of the Federal Court of Canada, Trial Division, who delivered the following decision on January 16, 1986: