The Queen v. Guaranty Properties Ltd., 90 DTC 6363, [1990] 2 CTC 94 (FCA)

The appellant attempted to rebut this Tax Appeal Board decision with the subse quent decision by assistant chairman Fordham in Palmer-McLellan (United) Ltd v. M.N.R. (1967), 67 D.T.C. 323 at 325, but to my mind the dicta in that case fall short of indicating an intention to reverse his interpretation of the previous year.

My analysis of the French version of the provision yields the same result.

The appellant relied on Palmer-McLellan (United) Ltd. v. M.N.R., [1969] 1 Ex.C.R. 107, at 114, a decision of Thurlow, J., as he then was. To the extent that this case is relevant it supports the appellant's case, but it is too indirectly relevant to be a great assistance.

The appellant also drew the Court's attention to paragraph 87(2)(w), which pro vides that "a restricted farm loss of a predecessor corporation for a taxation year is not deductible in computing the taxable income of the new corporation,” a provision she argued would not be necessary if the predecessor and successor corporations were different persons. The respondent made an opposite argument with respect to para graph 87(2)(ii), which provides that in relation to interest on certain obligations “the new corporation shall be deemed to be the same corporation as, and a continuation of, each predecessor corporation.” These contentions tend to cancel each other out.

The relevant language of subsection 197(4) is virtually identical to subsection 137(13) of the Canada Corporations Act interpreted by the Supreme Court in Black and Decker, viz. that upon the date of the amalgamation:

(a) the amalgamation becomes effective and the amalgamating corporations are amalgamated and continue as one corporation under the terms and conditions set out in the amalgamation agreement;

(b) the amalgamated corporation possesses all the property, rights, privileges and franchises and is subject to all liabilities, contracts, disabilities and debts of each of the amalgamating corporations . . .

[Emphasis added.]

In Black and Decker the statutory provisions read that "the amalgamating com panies are amalgamated and continued as one company” [emphasis added]. The Supreme Court highlighted the verb continue in paragraph (a) as the “controlling word in s. 137,” Spence, J. in Witco, supra, at 282 (D.L.R. 420), found that it was even clearer under the Ontario than under the federal statute that an amalgamation did not extinguish the corporate identity of the amalgamating corporations.