Owen Holdings Ltd. v. Minister of National Revenue, (1997) 216 N.R. 381 (FCA)

• Judge: Isaac, C.J., Marceau, J.A., and Heald, D.J.
• Court: Federal Court of Appeal (Canada)
• Case Date: July 17, 1997
• Jurisdiction: Canada (Federal)
• Citations: (1997), 216 N.R. 381 (FCA)

Owen Holdings Ltd. v. MNR (1997), 216 N.R. 381 (FCA)

MLB headnote and full text

Temp. Cite: [1997] N.R. TBEd. AU.005

Owen Holdings Ltd. (appellant/respondent by cross-appeal) v. Her Majesty the Queen (respondent/appellant by cross-appeal)

(A-542-96)

Indexed As: Owen Holdings Ltd. v. Minister of National Revenue

Federal Court of Appeal

Isaac, C.J., Marceau, J.A.,

and Heald, D.J.

July 17, 1997.

Summary:

The Minister disallowed a corporate tax­payer's claim under ss. 85(5.1) and 69(5)(d) of the Income Tax Act for a loss transferred from a related corporation. The claim was disallowed on the basis of s. 245 of the Act. The taxpayer appealed and requested the Crown to make discovery on a list of docu­ments, including: (1) all reports, memo­randa, notes, e-mails etc. (reports) leading to the drafting of s. 245; (2) all reports leading up to the drafting of ss. 85(5.1), 69(5)(d) and 88(1)(d); (3) all reports leading up to the drafting of certain documents; (4) all reports relating to testimony by various Finance officials before the Commons and Senate Committees relating to s. 245; and (5) any advance rulings or technical inter­pretations issued to any other taxpayer con­cerning the application of s. 245 in the con­text of a transfer of property with an inherent loss to a related party. The Crown did not include the requested documents in its proposed list of documents. The taxpayer brought a motion for production.

The Tax Court of Canada refused to order production of the documents in categories 1, 2, 3, and 4, but ordered production of the documents in category 5, i.e. the advance rulings and technical interpretations. The taxpayer appealed. The Minister cross-appealed.

The Federal Court of Appeal dismissed the appeal and allowed the cross-appeal in part, holding that the Tax Court should not have ordered production of the advance rulings. Isaac, C.J., dissenting in part, would have allowed the cross-appeal with respect to disclosure of both the advance rulings and the technical interpretations.

Income Tax - Topic 7958

Returns, assessments, payment and appeals - Appeals to Tax Court - Disclosure - The Minister disallowed a corporate tax­payer's claim under ss. 85(5.1) and 69(5)(d) of the Income Tax Act for a loss transferred from a related corporation - The claim was disallowed on the basis of s. 245 of the Act - The taxpayer appealed and requested the Crown to make dis­covery on a list of documents, including: (1) all reports leading to the drafting of s. 245; (2) all reports leading to the drafting of ss. 85(5.1), 69(5)(d) and 88(1)(d); (3) all reports leading to the drafting of cer­tain documents; and (4) all reports relating to testimony by various Finance officials before the Commons and Senate Com­mittees relating to s. 245 - The Tax Court refused to order production of the docu­ments - The Federal Court of Appeal considered the disclosure obligation imposed by rule 82(1) of the Tax Court of Canada Rules (General Procedure) and affirmed the decision - See paragraphs 5 and 6.

Income Tax - Topic 7958

Returns, assessments, payment and appeals - Appeals to Tax Court - Disclosure - The Minister disallowed a corporate tax­payer's claim under ss. 85(5.1) and 69(5)(d) of the Income Tax Act for a loss transferred from a related corporation - The claim was disallowed on the basis of s. 245 of the Act - The taxpayer appealed and requested the Crown to make dis­covery on a list of documents of, inter alia, any advance rulings or technical inter­pre­tations issued to any other taxpayer con­cerning the application of s. 245 in the context of a transfer of property with an inherent loss to a related party - The Tax Court of Canada ordered production of the advance rulings and technical interpreta­tions - The Federal Court of Appeal con­sidered the disclosure obligation imposed by rule 82(1) of the Tax Court of Canada Rules (General Procedure) and held that the Tax Court should not have ordered production of the advance rulings - See paragraphs 7 to 12.

Income Tax - Topic 7958

Returns, assessments, payment and appeals - Appeals to Tax Court - Disclosure - Rule 82(1) of the Tax Court of Canada Rules (General Procedure) provided that "[t]he parties may agree or, in the absence of agreement, either party may apply to the court for a judgment directing that each party shall file and serve on each other party a list of all the documents which are or have been in that party's possession, control or power relating to any matter in question between or among them in the appeal" - The Federal Court of Appeal considered the meaning of the words "relating to" in rule 82(1) - See paragraphs 5 to 6 and 15 to 21.

Income Tax - Topic 7965

Returns, assessments, payment and appeals - Appeals to Tax Court - Notice of appeal - General - The Minister disal­lowed a corporate taxpayer's claim under ss. 85(5.1) and 69(5)(d) of the Income Tax Act on the basis of s. 245 of the Act - The taxpayer appealed - Upon a motion by the taxpayer, the Tax Court ordered production of advance rulings or technical interpretations issued to other taxpayers concerning the application of s. 245 - The Minister appealed that order - A sub­mission was made based on s. 241(6) of the Act that notice to the taxpayers to whom the advance rulings and technical interpretations were issued was a pre-condition to the validity of the appeal proceedings - The Federal Court of Appeal disagreed - The names and other personal details respecting taxpayers were removed from the documents to be dis­closed - Therefore the taxpayers could not be affected by the order or the appeal and all interested parties were before the court - See paragraph 8.

Words and Phrases

Relating to - The Federal Court of Appeal considered the meaning of the words "relating to" in rule 82(1) of the Tax Court of Canada Rules (General Pro­cedure) - See paragraphs 5 to 6 and 15 to 21.

Cases Noticed:

Canada (Attorney General) v. Bassermann (1994), 169 N.R. 109; 114 D.L.R.(4th) 104 (F.C.A.), refd to. [para. 6].

Ford Motor Co. of Canada v. Minister of National Revenue (1997), 212 N.R. 275 (F.C.A.), refd to. [para. 10].

Shell Canada Ltd. v. R., [1994] 1 C.T.C. 2208 (Tax C.C.), refd to. [para. 20].

Ikea Ltd. v. Idea Design Ltd. and Mortimore (No. 2), [1987] 3 F.C. 317; 13 F.T.R. 306; 16 C.P.R.(3d) 65 (T.D.), refd to. [para. 21].

Kay v. Posluns (1989), 71 O.R.(2d) 238 (H.C.), refd to. [para. 21].

Boxer v. Reesor (1983), 43 B.C.L.R. 352 (S.C.), refd to. [para. 21].

Invacare Corp. v. Everest & Jennings Canadian Ltd., [1984] 1 F.C. 856; 55 N.R. 73 (F.C.A.), refd to. [para. 21].

Compagnie Financière du Pacifique v. Peruvian Guano Co. (1882), 11 Q.B.D. 55 (C.A.), refd to. [para. 21].

Harel v. Quebec, [1978] 1 S.C.R. 851; 18 N.R. 91, refd to. [para. 24].

Fibreco Pulp Inc. et al. v. Minister of National Revenue (1995), 184 N.R. 359; 95 D.T.C. 5412 (F.C.A.), refd to. [para. 24].

Bryden v. Canada Employment and Immi­gration Commission, [1982] 1 S.C.R. 443; 41 N.R. 480, refd to. [para. 24].

Nowegijick v. Minister of National Reve­nue et al., [1983] 1 S.C.R. 29; 46 N.R. 41, refd to. [para. 24].

Mattabi Mines Ltd. v. Ontario (Minister of Revenue), [1988] 2 S.C.R. 175; 87 N.R. 300; 29 O.A.C. 268, refd to. [para. 24].

Ast Estate v. Minister of National Reve­nue (1997), 209 N.R. 324 (F.C.A.), refd to. [para. 24].

Maritime Telegraph and Telephone Co. v. Minister of National Revenue, [1992] 1 C.T.C. 264; 140 N.R. 284 (F.C.A.), refd to. [para. 24].

Glaxo Wellcome Inc. v. R., [1996] 1 C.T.C. 2904 (Tax C.C.), refd to. [para. 24].

Statutes Noticed:

Tax Court of Canada Act Regulations (Can.), Tax Court of Canada Rules (General Procedure), rule 82(1) [para. 5, footnote 1].

Tax Court of Canada Rules (General Pro­cedure) - see Tax Court of Canada Act Regulations (Can.).

Authors and Works Noticed:

Cass, Fred et al., Discovery Law, Practice and Procedure (1993), pp. 9, 11 [para. 19].

Holmested and Watson, Ontario Civil Procedure, generally [para. 20].

Counsel:

Joel Nitikman, for the appellant;

L.P. Chambers, for the respondent.

Solicitors of Record:

Fraser & Beatty, Vancouver, British Columbia, for the appellant;

George Thomson, Deputy Attorney Gen­eral of Canada, Ottawa, Ontario, for the respondent.

These appeals were heard on June 19, 1997, at Vancouver, British Columbia, by Isaac, C.J., Marceau, J.A., and Heald, D.J., of the Federal Court of Appeal.

The decision of the Court of Appeal was delivered on July 17, 1997, and the fol­lowing opinions were filed:

Marceau, J.A. (Heald, D.J., concurring) - see paragraphs 1 to 12;

Isaac, C.J., dissenting in part - see para­graphs 13 to 34.