Placer Dome Can. v. Ont., (2004) 190 O.A.C. 157 (CA)

• Judge: Gillese, Armstrong and Blair, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: August 31, 2004
• Jurisdiction: Ontario
• Citations: (2004), 190 O.A.C. 157 (CA)

Placer Dome Can. v. Ont. (2004), 190 O.A.C. 157 (CA)

MLB headnote and full text

Temp. Cite: [2004] O.A.C. TBEd. SE.002

Placer Dome Canada Limited (appellant) v. Ontario (Minister of Finance) (respondent)

(C39007)

Indexed As: Placer Dome Canada Ltd. v. Ontario (Minister of Finance)

Ontario Court of Appeal

Gillese, Armstrong and Blair, JJ.A.

August 31, 2004.

Summary:

A parent company entered into financial transactions on behalf of its subsidiary as part of a "hedging program" to effectively offset a price or exchange risk inherent in another transaction or arrangement. For 1995 and 1996, the net gains of $6,423,000 and $11,440,000 were realized. The Minister of Finance confirmed reassessments taxing the subsidiary on the net gains under the Mining Tax Act. The subsidiary appealed.

The Ontario Superior Court, in a judgment reported [2002] O.T.C. 706, dismissed the appeal. The subsidiary appealed. The issue was whether the transactions constituted "hedging" under the Act and whether the net gains were taxable.

The Ontario Court of Appeal, Gillese, J., dissenting, allowed the appeal and remitted the matter to the Minister for reconsideration and reassessment on the basis that the net gains were not subject to tax.

Mines and Minerals - Topic 9625

Taxation - Income - Profit - Calculation of - Placer Dome entered into financial transactions on behalf of its subsidiary as part of a "hedging program" to effectively offset a price or exchange risk inherent in another transaction or arrangement - Net gains were realized - At issue was whether the gains were taxable "profits" under the Mining Tax Act, particularly whether the transactions constituted "hedging" under the Act - Hedging was defined as "the fixing of a price for output of a mine before delivery by means of a forward sale or a futures contract on a recognized commodity exchange" - The Ontario Court of Appeal held that, based on the plain meaning of the unambiguous definition of "hedging", the transactions could not constitute "hedging" where no part of the mine production (gold) was the subject matter of a forward sale or a futures contract - The net gains were not taxable - "Forward sales" did not include options - Alternatively, if the definition of "hedging" was ambiguous, ambiguity in a taxing statute was to be interpreted in a taxpayer's favour - The Act could not tax gains from purely financial hedging transactions having no direct relationship to the output of the mine.

Statutes - Topic 522

Interpretation - Taxing statutes - The Ontario Court of Appeal stated that where the language of a statute was clear and unambiguous, the statute must simply be applied - The court noted that "it is well established ... that a searching inquiry for either the 'economic realities' of a particular transaction or the general object and spirit of the provisions at issue can never supplant a court's duty to apply an unambiguous provision of the Act to a taxpayer's transaction" - If the court had a reasonable doubt as to the proper interpretation of a provision in a taxing statute, there was a residual presumption in favour of the taxpayer - See paragraphs 14 to 17.

Statutes - Topic 1414

Interpretation - Construction where meaning is not plain - Ambiguity - General - [See Mines and Minerals - Topic 9625 ].

Cases Noticed:

Ludco Enterprises Ltd. et al. v. Minister of National Revenue, [2001] 2 S.C.R. 1082; 275 N.R. 90, refd to. [paras. 14, 123].

Minister of National Revenue v. Shell Canada Ltd., [1999] 3 S.C.R. 622; 247 N.R. 19, refd to. [para. 15].

Québec (Communauté urbaine) et autres v. Corporation Notre-Dame de Bon-Secours, [1994] 3 S.C.R. 3; 171 N.R. 161; 63 Q.A.C. 161, refd to. [para. 17].

Echo Bay Mines Ltd. v. Minister of National Revenue (1992), 56 F.T.R. 114; 92 D.T.C. 6437 (T.D.), refd to. [paras. 22, 112].

R. v. Kelly, [1992] 2 S.C.R. 170; 137 N.R. 161; 9 B.C.A.C. 161; 19 W.A.C. 161, refd to. [para. 34].

65302 British Columbia Ltd. v. Minister of National Revenue, [1999] 3 S.C.R. 804; 248 N.R. 216, refd to. [para. 35].

Will-Kare Paving & Contracting Ltd. v. Minister of National Revenue, [2000] 1 S.C.R. 915; 255 N.R. 208, refd to. [paras. 49, 103].

Harel v. Quebec (Deputy Minister of Revenue), [1978] 1 S.C.R. 851; 18 N.R. 91, refd to. [para. 51].

Silicon Graphics Ltd. v. Minister of National Revenue, [2003] 1 F.C. 447; 291 N.R. 201 (F.C.A.), refd to. [para. 52].

Antosko v. Minister of National Revenue, [1994] 2 S.C.R. 312; 168 N.R. 16, refd to. [para. 85].

Friesen v. Minister of National Revenue, [1995] 3 S.C.R. 103; 186 N.R. 243, refd to. [para. 86].

Roth (W.E.) Construction Ltd. v. Ontario (Minister of Finance) (2001), 141 O.A.C. 366 (C.A.), refd to. [para. 87].

R. v. Barnier, [1980] 1 S.C.R. 1124; 31 N.R. 273, refd to. [para. 97].

Inco Ltd. v. Ontario (Minister of Finance), [2002] O.T.C. 585 (Sup. Ct.), refd to. [para. 106].

Sheridan Geophysics Ltd. v. Ontario (Minister of Mines and Northern Affairs), [1972] 2 O.R. 355 (C.A.), refd to. [para. 108].

McIntyre Porcupine Mines Ltd. v. Morgan (1921), 49 O.L.R. 214 (C.A.), refd to. [para. 108].

Nickel Rim Mines Ltd. v. Ontario (Attorney General), [1966] 1 O.R. 345 (H.C.), revd. [1966] 1 O.R. 358 (C.A.), refd to. [para. 108].

Ottawa Salus Corp. v. Municipal Property Assessment Corp. et al. (2004), 182 O.A.C. 172 (C.A.), refd to. [para. 111].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1, refd to. [para. 132].

Statutes Noticed:

Mining Tax Act, R.S.O. 1990, c. M-15, sect. 1(1) [paras. 10, 11, 12]; sect. 3(1) [para. 81]; sect. 3(5) [para. 82].

Authors and Works Noticed:

Driedger, Elmer A., Construction of Statutes (2nd Ed. 1983), p. 87 [para. 14].

Fridman, Gerald Henry Louis, The Law of Contract in Canada (4th Ed. 1999), p. 91 [para. 33].

Hogg, Peter W., and Magee, Joanne E., Principles of Canadian Income Tax Law (1995), pp. 453, 454 [para. 86].

Sullivan, Ruth, Sullivan and Driedger on the Construction of Statutes (4th Ed. 2002), pp. 162, 163 [para. 98].

Counsel:

Al Meghji and Mahmud Jamal, for the appellant;

Anita C. Veiga-Minhinnett, for the respondent.

This appeal was heard on March 1, 2004, before Gillese, Armstrong and Blair, JJ.A., of the Ontario Court of Appeal.

On August 31, 2004, the judgment of the Court of Appeal was released and the following opinions were filed:

Armstrong, J.A. (Blair, J.A., concurring) - see paragraphs 1 to 56;

Gillese, J.A., dissenting - see paragraphs 57 to 134.