Ludco Enterprises Ltd. et al. v. Ministre du Revenu national, (1993) 72 F.T.R. 175 (TD)

• Judge: Dubé, J.
• Court: Federal Court (Canada)
• Case Date: October 26, 1993
• Jurisdiction: Canada (Federal)
• Citations: (1993), 72 F.T.R. 175 (TD)

Ludco Ent. Ltd. v. MNR (1993), 72 F.T.R. 175 (TD)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

....................

Les Entreprises Ludco Ltée/Ludco Enterprises Ltd., Brian Ludmer, David Ludmer, Cindy Ludmer (demandeurs-intimés) v. Sa Majesté la Reine (défenderesse-requérante)

(T-742-93; T-743-93; T-744-93; T-745-93)

Indexed As: Ludco Enterprises Ltd. et al. v. Ministre du Revenu national

Federal Court of Canada

Trial Division

Dubé, J.

December 3, 1993.

Summary:

By reassessment for the taxation years 1981 to 1985, Revenue Canada disallowed the taxpayers' deduction of interest on money borrowed to purchase shares. The taxpayers appealed the reassessments. The tax court affirmed the reassessments. The taxpayers appealed. Revenue Canada applied to strike out the portions of the statement of claim that alleged the reassessments were arbitrary and that sought a declaration that the reassessment were void.

The Federal Court of Canada, Trial Division, allowed Revenue Canada's application.

Income Tax - Topic 7851

Returns, assessments, payment and appeals - Assessments and reassessments - Reassessments - The taxpayers appealed reassessments, claiming that they were arbitrary and seeking a declaration that the reassessments were void - The Federal Court of Canada, Trial Division, struck out the allegations of arbitrariness and the claim for declaratory relief - The court stated that "the Minister is not bound by his earlier assessments, or by his earlier policies, or by his representations ... The Minister's duty is to apply the Act as it stands. The Act authorizes the Minister to amend his assessments ... Moreover, in an appeal from an assessment, the court is limited to the remedies provided by the Act and cannot give a declaratory judgment".

Cases Noticed:

Operation Dismantle Inc. et al. v. Canada et al., [1985] 1 S.C.R. 441; 59 N.R. 1; 13 C.R.R. 287; 18 D.L.R.(4th) 481; 12 Admin. L.R. 16, refd to. [para. 5].

Bronfman (Phyllis Barbara) Trust v. Minister of National Revenue, [1987] 1 S.C.R. 32; 71 N.R. 134; 87 D.T.C. 5059, refd to. [para. 7].

Minister of National Revenue v. Minden (1962), 62 D.T.C. 1044 (Ex. Ct.), refd to. [para. 8].

Minister of National Revenue v. Riendeau (1991), 132 N.R. 157; 91 D.T.C. 5416 (F.C.A.), refd to. [para. 8].

Russell v. Minister of National Revenue (1977), 77 D.T.C. 334 (Tax. Rev. Bd.), refd to. [para. 10].

Neeb v. Minister of National Revenue, [1991] 1 C.T.C. 41; 38 F.T.R. 73 (T.D.), refd to. [para. 10].

First Torland Investments Ltd. v. Minister of National Revenue (1969), 69 D.T.C. 5109 (Ex. Ct.), refd to. [para. 10].

Carter v. Minister of National Revenue (1980), 80 D.T.C. 1537 (Tax. Rev. Bd.), refd to. [para. 10].

New St. James Ltd. v. Minister of National Revenue (1966), 66 D.T.C. 5241 (Ex. Ct.), refd to. [para. 10].

Sogemines Development Co. v. Minister of National Revenue (1972), 72 D.T.C. 6254 (F.C.T.D.), affd. (1973), 73 D.T.C. 5304 (F.C.A.), refd to. [para. 10].

Minister of National Revenue v. Inland Industries Ltée, [1974] S.C.R. 514, refd to. [para. 11].

Hutterian Brethren Church of Wilson v. Minister of National Revenue, [1979] C.T.C. 1 (F.C.T.D.), affd. [1980] C.T.C. 1; 31 N.R. 426 (F.C.A.), refd to. [para. 12].

Hokhold v. Minister of National Revenue (1993), 65 F.T.R. 148; 93 D.T.C. 3305 (T.D.), refd to. [para. 13].

R. v. McKinlay Transport Ltd., [1990] 1 S.C.R. 627; 106 N.R. 385; 39 O.A.C. 385, refd to. [para. 14].

Minister of National Revenue v. Stickel (1972), 72 D.T.C. 6178 (F.C.T.D.), refd to. [para. 15].

No. 358 v. Minister of National Revenue (1956), 56 D.T.C. 466 (Appeal Bd.), refd to. [para. 15].

Fleming Estate et al. v. Minister of National Revenue, [1984] 2 F.C. 331; 61 N.R. 113; 84 D.T.C. 6345 (F.C.A.), refd to. [para. 17].

Minister of National Revenue v. Parsons - see Fleming Estate et al. v. Minister of National Revenue.

Optical Recording Labatories Co. v. Minister of National Revenue, [1991] 1 F.C. 309; 116 N.R. 200; 90 D.T.C. 6647 (F.C.A.), refd to. [para. 17].

Hunt v. T & N plc et al., [1990] 2 S.C.R. 959; 117 N.R. 321; 4 C.C.L.T.(2d) 1; 43 C.P.C.(2d) 105; 49 B.C.L.R.(2d) 273; 74 D.L.R.(4th) 321, refd to. [para. 18].

Hunt v. Carey Canada Inc. - see Hunt v. T & N plc et al.

Canada (Canadian Radio-Television and Telecommunications Commission) v. Teleprompter Cable Communications Corp., [1972] F.C. 1265 (F.C.A.), refd to. [para. 18].

Gund Inc. v. Ganz Brothers Toys Ltd. (1989), 23 C.P.R.(3d) 344 (F.C.T.D.), refd to. [para. 18].

Rothschild v. Canada (Custodian of Enemy Property), [1945] Ex. C.R. 44 (Ex. Ct.), refd to. [para. 18].

Rickards v. Attorney General (1843), 6 Beav. 444 (Ch.), refd to. [para. 18].

United States Natural Resources Inc. v. Moore Dry Kiln Co., [1973] F.C. 225 (F.C.A.), refd to. [para. 18].

Minister of National Revenue v. Canderel Ltd. (1993), 157 N.R. 380; 93 D.T.C. 5357 (F.C.A.), refd to. [para. 19].

Continental Bank of Canada v. Canada (1993), 93 D.T.C. 303 (T.C.C.), refd to. [para. 19].

Maracle v. Travellers Indemnity Co. of Canada, [1991] 2 S.C.R. 50; 125 N.R. 294; 47 O.A.C. 333, refd to. [para. 19].

Wilchar Construction Ltd. v. Minister of National Revenue, [1981] C.T.C. 415; 38 N.R. 578 (F.C.A.), refd to. [para. 19].

R. v. Langille, [1977] C.T.C. 144 (F.C.T.D.), refd to. [para. 19].

Robertson v. Minister of Pensions, [1949] 1 K.B. 227 (C.C.A.), refd to. [para. 19].

Vaillancourt v. Minister of National Revenue, [1991] 2 C.T.C. 42; 132 N.R. 133 (F.C.A.), refd to. [para. 20].

Harel v. Quebec, [1978] 1 S.C.R. 851; 18 N.R. 91, refd to. [para. 20].

Bryden v. Canada Employment and Immigration Commission, [1982] 1 S.C.R. 443; 41 N.R. 480, refd to. [para. 20].

Nowegijick v. Minister of National Revenue et al., [1983] 1 S.C.R. 29; 46 N.R. 41, refd to. [para. 20].

Sous-ministre du Revenu du Québec v. CIBA-Geigy Canada Ltd., [1981] R.D.F.Q. 156 (Que. C.A.), refd to. [para. 21].

Sous-ministre du Revenu du Québec v. Transport Lessard (1976) Ltée, [1985] R.D.J. 502 (Que. C.A.), refd to. [para. 21].

Granger v. Canada Employment and Immigration Commission, [1986] 3 F.C. 70; 69 N.R. 212 (F.C.A.), refd to. [para. 22].

Bendahmane v. Minister of Employment and Immigration, [1989] 3 F.C. 16; 95 N.R. 385; 26 F.T.R. 122 (F.C.A.), refd to. [para. 22].

Preston v. Inland Revenue Commission, [1985] A.C. 835 (H.L.), refd to. [para. 22].

Guérin v. Canada et al., [1984] 2 S.C.R. 335; 55 N.R. 161; [1985] 1 C.N.L.R. 120, refd to. [para. 22].

Pioneer Laundry & Dry Cleaners Ltd. v. Minister of National Revenue, [1939] S.C.R. 1, refd to. [para. 25].

Wrights' Canadian Ropes Ltd. v. Minister of National Revenue, [1947] C.T.C. 1 (P.C.), refd to. [para. 25].

Minister of National Revenue v. Devor (1993), 151 N.R. 188; 93 D.T.C. 5098 (F.C.A.), refd to. [para. 27].

Kourtessis v. Minister of National Revenue, [1993] 2 S.C.R. 53; 153 N.R. 1; 27 B.C.A.C. 81; 45 W.A.C. 81, refd to. [para. 27].

Special Risks Holdings Inc. v. Minister of National Revenue (1988), 23 F.T.R. 33; 88 D.T.C. 6444 (F.C.A.), refd to. [para. 27].

Kew Property Planning and Management Ltd. v. Burlington (Town), [1980] 2 S.C.R. 598; 31 N.R. 541, refd to. [para. 27].

Statutes Noticed:

Federal Court Act, R.S.C. 1985, c. F-7, sect. 18 [para. 17].

Federal Court Rules, rule 419(1)(a), rule 419(1)(b), rule 419(1)(d) [para. 1].

Income Tax Act, S.C. 1970-71-72, c. 63, sect. 18(1)(b) [para. 7]; sect. 20(1)(c)(i) [para. 2]; sect. 152(4) [para. 9]; sect. 175 [para. 26]; sect. 177 [para. 16].

Income Tax Act, Information Circulars, IC 75-7R3, sect. 3(c) [para. 24].

Information Circulars, Income Tax Act - see Income Tax Act, Information Circulars.

Counsel:

Guy DuPont, François Barette and Martine Vanasse, for the plaintiffs;

Pierre Cossette and Sophie-Lyne Lefebvre, for the defendants.

Solicitors of Record:

Philips & Vineberg, Montreal, Quebec, for the plaintiffs;

John C. Tait, Q.C., Deputy Attorney General of Canada, Ottawa, Ontario, for the defendant.

This application was heard on October 26, 1993, at Montreal, Quebec, before Dubé, J., of the Federal Court of Canada, Trial Division, who delivered the following judgment on December 3, 1993.