Turner v. Canada (Attorney General)

Turner v. Canada (Attorney General) Court (s) Database Federal Court of Appeal Decisions Date 2005-05-13 Neutral citation 2005 FCA 184 File numbers A-435-02, A-437-02 Decision Content Date: 20050513 Dockets: A-435-02 A-437-02 Citation: 2005 FCA 184 CORAM: NOËL J.A. NADON J.A. MALONE J.A. Docket: A-435-02 BETWEEN: JAMES P. TURNER Applicant and THE ATTORNEY GENERAL OF CANADA Respondent Docket: A-437-02 BETWEEN: JAGROOP S. GILL Applicant and THE ATTORNEY GENERAL OF CANADA Respondent Heard at Vancouver, British Columbia, on May 11, 2005. Judgment delivered at Vancouver, British Columbia, on May 13, 2005. REASONS FOR JUDGMENT BY: NOËL J.A. CONCURRED IN BY: NADON J.A. MALONE J.A. Date: 20050513 Dockets: A-435-02 A-437-02 Citation: 2005 FCA 184 CORAM: NOËL J.A. NADON J.A. MALONE J.A. Docket: A-435-02 BETWEEN: JAMES P. TURNER Applicant and THE ATTORNEY GENERAL OF CANADA Respondent Docket: A-437-02 BETWEEN: JAGROOP S. GILL Applicant and THE ATTORNEY GENERAL OF CANADA Respondent REASONS FOR JUDGMENT NOËL J.A. [1] These are applications for judicial review of two Judgments of the Tax Court of Canada dismissing the taxpayers' appeals with respect to the 1981 and 1982 taxation years in the case of Mr. Turner and the 1982 and 1983 taxation years in the case of Mr. Gill. The applications were consolidated and heard together by Order of this Court. [2] The two informal appeals before the Tax Court did not proceed on common evidence. Mr. Turner proceeded independently, while Mr. Gill had his appeal heard on common evidence with the appeal of Sarban Bawa, and agreed that he would be bound by the decision in that case. The Judgment in the Turner case was rendered on the basis of the reasons given in Sarban Bawa v. The Queen (94-2099-IT-I) so that both appeals before the Tax Court were disposed of on the basis of the same set of reasons. [3] The dispute centres on deduction of a business loss of $6,402.39 per unit in respect of units held in a partnership. The Minister reassessed the applicants and reduced their business loss to $262.10 per unit on the assumption that the loss was in respect of capital cost allowance claimed on property acquired by a partnership known as Inter-Teck Oil Limited Partnership (ITOLP). The applicants' main contention is that the property in question was not acquired by ITOLP. Rather, they maintain that it was acquired by Inter-Teck Oil Partnership, and that as general partners, they were entitled to the loss as claimed. [4] The discrepancy in the loss allowed arises from the Minister's assumption that the seller of the property, International Resource Recovery Inc. (IRRI), and the purchaser (ITOLP) were not dealing at arm's length when the property was acquired, and the further assumption that the sale price was excessive. [5] The applicants maintain that the transaction did not involve ITOLP as a purchaser and that, in any event, the sale price of $6,850,000 rather than the assessed amount of $422,000 reflects the fair market value of the property sold. [6] The Tax Court Judge did not accept the applicants' contention that the property in question was acquired by the Inter-Teck Oil Partnership. He further held that the fair market value figure determined by the Minister had not been shown to be wrong. This is the decision now subject to judicial review. Disposition [7] The issues in these applications were largely addressed in Chutka et al., 2001 D.T.C. 5093 (F.C.A.) (also indexed as Madsen v. Canada), and Deptuk v. Canada, 2003 D.T.C. 5272, 2003 FCA 177, appeals brought by different appellants but arising out of the same transactions. In Chutka et al., this Court dismissed the appeal and determined that the Minister properly deemed the purchase price to be the fair market value of the property by virtue of the parties being related persons. In Deptuk (supra), the same result was arrived at albeit on the basis of a slightly different reasoning. [8] Insofar as the first issue is concerned, the applicants' argument is not easy to follow. As far as I can ascertain, the applicants submit that each member of the Inter-Teck Oil Partnership agreed to be bound by the sales contract to be signed by ITOLP for the purchase of the property in their subscription agreement for units in the Inter-Teck Oil Partnership, units which were later exchanged for units in ITOLP. The argument is that this, in effect, provided for the purchase of the property by the Inter-Teck Oil Partnership. [9] Even if this was the effect of the subscription agreement, I fail to see how this results in the purchase of the property by the Inter-Teck Oil Partnership. The executed copy of the sales contract is between IRRI and ITOLP, and there is no other instrument under which title to the property can have passed to the applicants. The Tax Court Judge was correct in determining that the property was sold to ITOLP. [10] As the evidence indicates that both the vendor (IRRI) and the purchaser (ITOLP) were controlled by Mr. Gill, it follows based on the reasoning in Deptuk (supra), that paragraph 69(1)(a) was properly applied to reduce the cost of the property in the hands of ITOLP to its fair market value. [11] Finally, as no evidence was presented in these applications to question the fair market value ascribed by the Minister, the figure of $422,000 which was accepted by this Court in Chutka et al. (supra) must stand. [12] I would dismiss the applications and order that one set of costs be paid to the successful party. "Marc Noël" J.A. "I agree. M. Nadon, J.A." "I agree. B. Malone, J.A." FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKETS: A-435-02 A-437-02 (Appeal from a Judgment of the Tax Court of Canada dated June 17, 2002, Docket No. 94-2234(IT)I) (Appeal from a Judgment of the Tax Court of Canada dated June 17, 2002, Docket No. 94-2288(IT)I) STYLE OF CAUSE: James P. Turner v. The Attorney General of Canada Jagroop S. Gill v. The Attorney General of Canada PLACE OF HEARING: Vancouver, British Columbia DATE OF HEARING: May 11, 2005 REASONS FOR JUDGMENT BY: NOËL J.A. CONCURRED IN BY: NADON J.A. MALONEJ.A. DATED: May 13, 2005 APPEARANCES: Mr. James P. Turner Mr. Jagroop S. Gill THE APPLICANT on his own behalf THE APPLICANT on his own behalf Ms. Margaret E.T. Clare FOR THE RESPONDENT SOLICITORS OF RECORD: Mr. James P. Turner Vancouver, British Columbia Mr. Jagroop S. Gill Delta, British Columbia THE APPLICANT on his own behalf THE APPLICANT on his own behalf John H. Sims, Q.C. Deputy Attorney General of Canada Vancouver, British Columbia FOR THE RESPONDENT