Special Risks Holdings Inc. v. The Queen, 88 DTC 6444, [1988] 2 CTC 244 (FCTD), aff'd 89 DTC 5039 (FCA)

Teitelbaum, J:—The plaintiff, Special Risks Holdings Inc., filed with the Registry of the Federal Court of Canada, on March 4, 1988, a statement of claim wherein plaintiff requests the following:

(a) a declaration

(i) that subsection 184(3.1) of the I.T.A. had no operative effect in the aforesaid circumstances until the repayment of the dividend loan to the Plaintiff, which was subsequent to the final determination of the appeals from the Part III assessment,

(ii) that, on such repayment, subsection 184(3.1) became operative as a statutory declaration that, for the purposes of the LT.A., the portion of the aforesaid dividend that is deemed to be a loan is deemed not to be a dividend, which gives rise to the necessary implication that the Part III tax that has been found to have been payable in respect of the loan is deemed not to have been payable, and

(iii) that, as such statutory declaration became operative after the disposition of the final appeals from the Part III assessment, it is effective, notwithstanding subsection 152(8) of the I.T.A. to render null and void the Plaintiff's liability for Part III tax as determined by the aforesaid assessment,

(b) judgment for repayment of the sum of $2,980.97 with interest thereon;

(c) for such further and other relief as this Court deems just and equitable in the circumstances;

The defendant, Her Majesty the Queen, on April 19, 1988 filed with the Federal Court Registry a notice of motion requesting the following:

(a) granting the Defendant leave to file a conditional appearance for the purpose of objecting to the jurisdiction of the Court;

(b) striking out the Statement of Claim.

The grounds, given by the defendant, in her notice of motion, for the request are:

(1) the Court does not have the jurisdiction to entertain the Statement of Claim (Rule 401):

alternatively

(2) the Statement of Claim discloses no reasonable cause of action (Rule 419).

Background

After a corporate restructuring, plaintiff paid out certain dividends on March 31, 1978 and December 29, 1978. In March and December 1978, the plaintiff elected, pursuant to subsection 83(1) of the Income Tax Act (I.T.A.) to pay these dividends out of its tax paid undistributed surplus on hand account (T.P.U.S.) and its 1971 capital surplus on hand account (C.S.O.H.). Plaintiff paid a dividend of $185,000 on March 31, 1978, calculating that $181,604 of this was paid out of its T.P.U.S. account and $3,396 out of its 1971 C.S.O.H. account and another dividend on December 29,1978 of $1,346,231 out of its 1971 C.S.O.H. account.

As a result of the subsection 83(1) election, no Part III tax was paid on the dividends paid out.

On March 19, 1981, the Minister of National Revenue (M.N.R.) issued two notices of assessment whereby it was determined that the plaintiff made excessive elections and a Part III tax was levied. (Part III tax refers to sections 184 and 185 I.T.A. - Additional Tax on Excessive Elections)

With respect to the March 31, 1978 dividend (which is the subject of this motion and related statement of claim), the plaintiff was assessed under Part III "on excess of dividend paid over the portion deemed payable out of tax paid undistributed surplus or 1971 capital surplus" for $2,297 as tax, for $250 as penalty and for $493.97 as interest (Exhibit "C", Book of Procedures).

The March and December 1978 elections were disallowed on the basis that the plaintiff had disposed of shares of a corporation controlled by the plaintiff immediately before the disposition to a person with whom the plaintiff was not dealing at arms length immediately after the disposition and the plaintiff's 1971 C.S.O.H. account was deemed to be "nil", per subsection 89(5)(a)(ii) I.T.A.

On February 26, 1981, section 184 I.T.A. was amended by the addition of subsection 184(3.1) which allows a dividend to be treated as a loan, if certain specific requirements are met. Under subsection 184(3.1), a taxpayer is given a number of "operative dates" one of which is 90 days from the enactment of the provision.

Plaintiff filed notices of objection, dated May 26, 1981. On June 17, 1981, plaintiff and its shareholders filed an election pursuant to subsection 184(3.1) with respect to the dividends paid in March and December 1978 (Exhibits G, H, I and J Book of Procedures). The plaintiff maintains that this election was made on the understanding, which is shared by the M.N.R. that subsection 184(3.1) "would have no operative effect pending determination of the issue between the plaintiff and the M.N.R. as to the plaintiff and the M.N.R. as to the plaintiff's liability to pay the tax assessed" (Paragraph 11 of statement of claim). This allegation, of an understanding, alleged in the statement of claim was reiterated in argument before me by plaintiff's counsel. The statement was not denied by counsel for defendant.

The M.N.R. confirmed the assessments, by notices of confirmation dated September 1, 1981 (Exhibit "K", Book of Procedures). The plaintiff appealed the assessments to the Federal Court-Trial Division. The appeal was dismissed on September 6, 1984 (Exhibit "M", Book of Procedures). Plaintiff then appealed this judgment to the Federal Court of Appeal which also dismissed plaintiff's appeal and upheld the assessment (January 8, 1986) (Exhibit "N", Book of Procedures).

On March 2, 1988, the plaintiff's shareholders repaid to the plaintiff the sum of $4,494, the amount which represents the portion of the dividend upon which the subsection 184(3.1) election was claimed (Paragraph 17, statement of claim). Plaintiff alleges that the M.N.R. has refused to recognize that the subsection 184(3.1) election has any effect and insisted upon payment of the Part III tax. The plaintiff has paid the tax (Paragraph 18, statement of claim).

As a result of the above, the plaintiff commenced an action, by way of statement of claim. It should be noted that the statement of claim filed on March 4, 1988, relates only to the dividend paid out in March 1978. Concurrently, on March 7, 1988, plaintiff filed a section 28 (Federal Court Act) application, to have reviewed and set aside, the decision of the M.N.R., whereby the election under subsection 184(3.1) I.T.A. was rejected in respect of the December 29, 1978 dividend in the amount of $1,346,231 paid out of plaintiff's 1971 C.S.O.H. account.

The plaintiff has, thus, commenced "two actions’. The present application relates to the statement of claim requesting declaratory relief and judgment in respect of the dividend paid out in March 1978. Although these are separate dividends (March and December 1978 dividends), the calculation of the December 1978 dividend seems to relate to the calculation of the March 1978 dividend. The $1,346,231 dividend (referred to above) represents the figure arrived at by taking the 1971 C.S.O.H. before the March 1978 election ($1,349,627) less the March election ($3,396).

Motion

After a brief discussion, the plaintiff consented to the filing of the conditional appearance and to proceed with the issue of jurisdiction.

Relevant Statutes

The relevant sections of the I.T.A. are subsections 83(1), 84(1) and (3) and 185. I do not believe it necessary to copy into this decision the wording of these subsections as they can be referred to in the Income Tax Act. I do believe it would be helpful to outline, in general terms, the various statutory provisions of the I.T.A., much of which I have taken from plaintiff’s Outline of Argument.

Subsection 83(1) of the Income Tax Act, S.C. 1970-71-72, c. 63 (herein "I.T.A.") authorized a Canadian corporation to elect, before paying a dividend, to have the full amount of the dividend deemed payable from amounts known as the corporation's tax paid undistributed surplus (herein "T.P.U.S.") and the corporation's 1971 capital surplus on hand (herein "C.S.O.H."); in which event, subsection 83(1) I.T.A. provided that no part of the dividend would be included in computing the income of a shareholder for Part I tax.

Subsection 184(1), which is in Part III I.T.A., imposed a tax on the corporation if the dividend (exempt in the hands of shareholders by subsection 83(1) I.T.A.) exceeded the T.P.U.S. plus the 1971 C.S.O.H. In the case of a dividend payable in 1978, that tax was one-half the "excess".

Section 185 I.T.A. required the Minister of National Revenue (herein the "Minister") to examine each subsection 83(1) I.T.A. election with all due dispatch and assess the Part III tax, if any, that was payable. The Part I provisions re: assessments, objections, appeals, etc. were made applicable mutatis mutandis (subsection 185(3) I.T.A).

Therefore, if the taxpayer who has made an election under subsection 83(1) and miscalculates, subsection 184(1) provides that he/she becomes liable to pay tax equal to 50 per cent of the excess.

It seems that many taxpayers (corporations) in an attempt to free pre-1972 surplus before the December 31, 1978 deadline made elections under subsection 83(1) which in fact were "excessive". To provide relief to these taxpayers, on February 26, 1981, a new subsection - (3.1) - was added to section 184 I.T.A. which applied, inter alia to any case where a subsection 83(1) I.T.A. election had been made in respect of a dividend payable after March 31,1977 and before 1979 where the corporation had made a reasonable attempt to correctly determine its T.P.U.S. and 1971 C.S.O.H. but where there was, nevertheless, an "excess" of the dividend over those two amounts. Subsection 184(3.1) I.T.A. provided that if the corporation so elects "the dividend . . . shall . . . be deemed not to be a dividend but to be a loan . . . if the full amount of such loan is repaid to the corporation . . . and the corporation satisfies such terms and conditions as are specified by the Minister".

Jurisdiction

The issue that first must be dealt with is that of jurisdiction. In order to better understand the position of plaintiff and defendant, I have tried to set out the relevant points of each party's argument.

Submission of Defendant (M.N.R.)

The defendant basically sees the plaintiff as requesting two things, a declaration regarding the interpretation of certain sections of the Income Tax Act, namely subsection 184(3.1) and a judgment for the repayment of $2,980.97, which represents the amount of tax assessed and paid in respect of a dividend paid in March 1978.

It is the defendant's position that the relief requested in the statement of claim is, in effect, an attempt to have the assessment, in the amount of $2,980.97, indirectly nullified by now asking the Federal Court for a judgment for repayment of this amount. Accordingly, defendant submits, the Federal Court does not have jurisdiction with respect to the repayment (be it to determine or order the repayment) as it has been determined that the tax is owed. The defendant submits that the plaintiff followed the appeal process as stipulated in the Income Tax Act and liability was established. The assessments, which included the assessment in the sum of $2,980.97, were appealed to the Federal Court-Trial Division and then to the Court of Appeal. Both Courts confirmed the assessments. Defendant now submits that to support plaintiff's action would amount to reverification of the assessments and the decisions of the Court of Appeal.

The defendant's position (that the Federal Court does not have jurisdiction to order the repayment) is based on the following supposition: that the assessment, $2,980.97, could not have been challenged by a direction action in the form of a request for declaratory relief under section 18 of the Federal Court Act. Thus, if this is correct, then the assessment cannot now be indirectly challenged by way of declaratory relief.

With respect to Part “A” of the prayer for relief found in the statement of claim, relating to declarations in respect to subsection 184(3.1), the defendant submits that this also deals with the tax liability that was decided by the Court of Appeal.

I'm also saying that, part A deals also with the tax liability that was decided by the Court of Appeal. I’m saying this, to the extent that the position that my friend is taking today, was not raised before either trial or the Court of Appeal, that's the end of the matter. But it’s all in the context of the liability for tax assessed by the assessment of March '81. So, in essence, the Statement of Claim is an indirect attack on that assessment.

(Pages 46 and 47, Transcript of Hearing before me)

With regard to the submission of the defendant as regards the assessment and that it cannot be challenged by direction action, the defendant refers to subsection 152(8) I.T.A. which deems an assessment to be valid and binding, subject to further reassessment or to being varied or vacated on objection or appeal. The appeal to the Federal Court is made pursuant to section 172(I.T.A.). The Trial Division has exclusive original jurisdiction with respect to declaratory relief, per section 18 of the Federal Court Act. However, section 29 of the Federal Court Act provides that if an Act of Parliament provides for an appeal with respect to decisions of a board, tribunal, etc., then there is no jurisdiction under section 18 or 28 of the Federal Court Act.

Section 29 — Where Decision Not to be Restrained

Notwithstanding sections 18 and 28, where provision is expressly made by an Act of the Parliament of Canada for an appeal as such to the Court, to the Supreme Court, to the Governor in Council or to the Treasury Board from a decision or order of a federal board, commission or other tribunal made by or in the course of proceedings before that board, commission or tribunal, that decision or order is not, to the extent that it may be so appealed, subject to review or to be restrained, prohibited, removed, set aside or otherwise dealt with, except to the extent and in the manner provided for in that Act.

This, therefore is the submission of the defendant, that is, if there is in an Act of Parliament an appeal procedure set out, then the Federal Court—Trial Division has no jurisdiction. The defendant cites two decisions in support of its position, namely Okanagan Helicopters Ltd. v. Canadian Transport Commission, [1975] F.C. 396 (C.A.) at 406 and West Coast Transmission Company Ltd. v. B.C. Hydro & Power Authority, [1981] 2 F.C. 636 at 684. Therefore, it follows, in so far as defendant is concerned, that the Federal Court-Trial Division could not have jurisdiction under section 18 (F.C.A.) to deal with an assessment because the Income Tax Act provides specifically for an appeal process from an assessment. In this regard, the defendant refers to the case of M.N.R. v. Parsons et al., [1984] C.T.C. 352; 84 D.T.C. 6345. This case generally stands for the proposition that if the I.T.A. expressly provides for an appeal from an assessment, that assessment cannot be reviewed, restrained or otherwise set aside by the Court in the exercise of its jurisdiction under sections 18 or 28 of the F.C.A. The Court also indicated that the right of appeal under the I.T.A. was not subject to a distinction between. the question of quantum and the question of the Minister’s legal authority to make an assessment.

The legal point, which I assume defendant is making, is that if plaintiff had filed a statement of claim at the time of the assessment, in March 1981, the Federal Court-Trial Division would not have had jurisdiction, accordingly, defendant submits this applies more so now because the plaintiff has gone though the appeal process provided by the statute, the Income Tax Act.

In the context of declaratory relief, the defendant quotes from the Supreme Court of Canada's decision of Solosky v. The Queen, [1980] 1 S.C.R. 821 at 832; 105 D.L.R. (3d) 745 at 754:

It is clear that a declaration will not normally be granted when the dispute is over and has become academic, or where the dispute has yet to arise and may not arise.

(Tab 3, Queen's Book of Authorities)

It is the defendant's contention that the dispute is over. Therefore there is no longer any issue with respect to tax liability for Part III tax.

The defendant also submits that assuming the election made under subsection 184(3.1) I.T.A. was a valid election by plaintiff, it would have affected the plaintiff's tax liability and should have been raised before the Federal Court, at trial or on appeal. In this way, it is submitted, it would have been part of the issues and the Court would have had before it had all the necessary facts to determine the plaintiff's liability. It is submitted, it is now too late to have the decision of the Court of Appeal overturned.

I cannot accept this submission. For the purposes of the application before me, I am satisifed the election under subsection 184(3.1) was made on the understanding, shared by the M.N.R., that subsection 184(3.1) would have no operative effect pending final determination of the issue between plaintiff and the M.N.R. as to plaintiff's tax liability. There is no reason for plaintiff to have raised this issue in the Courts as the tax assessment had not yet been confirmed. According to plaintiff, subsection 184(3.1) provides an optional statutory remedy to which it is entitled, once all of the conditions are satisfied and until it was determined by the Court that there was an excessive election.

Plaintiffs Submission

Plaintiff characterizes its action in the following manner:

This is a novel action in that it claims recovery of tax from Her Majesty the Queen, the amount of which has been determined by assessment confirmed by judicial decision.

It seems to me that plaintiff's submission is that its present action (the statement of claim) does not challenge the validity of the assessments, as that has been confirmed by the Federal Court, instead, the statement of claim is based on the view that, in the particular circumstance of this case, there is applicable a special statutory provision, subsection 184(3.1), that upon compliance with specified conditions (found in subsection 184(3.1)) confers on the taxpayer a right to be repaid by the defendant, tax that was payable in accordance with the relevant charging provisions and which tax was paid. Therefore, according to plaintiff, the statement of claim represents an action to enforce the rights granted to plaintiff pursuant to subsection 184(3.1).

After making a review of the relevant statutory provisions (subsections 83(1), 184(1), 184(3.1) and section 85, I.T.A.) the plaintiff submits that when subsection 184(3.1) is read against its statutory background, its clear intent is to provide optional relief, where the requirements of subsection 184(3.1) are satisfied, in respect of Part III tax imposed by subsection 184(1).

This Part III tax only becomes payable when a dividend exceeds the aggregate of the T.P.U.S. and the 1971 C.S.O.H. accounts. The intention of providing optional relief in respect of that tax can be arrived from the following wording of subsection 184(3.1).

(3.1) Where a corporation has elected in accordance with subsection 83(1) in respect of. . . any dividend . . . and all or any portion of the dividend.

(b) is an excess referred to in subsection (1),

if the corporation so elects under this subsection

. . . the following rules apply:

(e) . . . the dividend . . . shall, for the purposes of this Act, be deemed not to be a dividend but to be a loan . . . made by the corporation . . . if the full amount of such loan is repaid to the corporation before such date as is stipulated by the Minister. . .

According to plaintiff's submission, the above provision, deeming a dividend that had given rise to a Part III tax "not to be a dividend but to be a loan" if such “loan” is repaid, should be read as giving relief against the Part III tax. Plaintiff further alleges that its action is based on the view that subsection 184(3.1) confers on a taxpayer who falls within its time requirements and satisfies the other requirements contained therein a right to have the Part III tax imposed by virtue of a subsection 83(1) election remitted and that subsection 83(1) does not, retroactively change the basis on which the tax was imposed. The plaintiff further maintains, that as the Part III tax is imposed in respect of a dividend, it follows that a provision (subsection 184(1)) in the same section as the charging provision deeming a dividend "not to be a dividend" is designed to relieve the taxpayer of the burden of the tax.

Plaintiff further submits that subsection 184(3.1) came into force on February 27, 1981 and conferred upon a taxpayer 90 days from a variety of starting points to claim thereunder. According to plaintiff, this 90-day period applied to all prior excessive elections regardless of whether the assessments have become binding or whether the assessments have been confirmed by ministerial decision or judicial decision.

Plaintiff thus submits that subsection 184(3.1) confers a right (by way of a statutory scheme) for the remission of tax paid if one satisfies the requirements of the statute. Plaintiff argues that it has satisfied all of the requirements (for the purpose of this motion and on the face of the statement of claim) and therefore is entitled to the relief sought. Plaintiff also submits that the Federal Court is the only place for it to make its claim as subsection 184(3.1) does not provide any procedure for enforcing the plaintiff's right to relief. (Kew Property Planning and Management Limited v. Corporation of the Town of Burlington, [1980] 2 S.C.R. 598 at 603-604; 110 D.L.R. (3d) 263 at 267).

Furthermore plaintiff submits, and I agree with this submission, that the action is not an attack on the assessments, as the substantive issues are different. Plaintiff contends that the Court of Appeal's decision only dealt with the validity of the assessments. The Court of Appeal did not deal with the issue of the election under subsection 184(3.1) nor was the issue raised as there were, at that time, no grounds to raise the issue of the election.

Jurisdiction

In order to determine the Federal Court's jurisdiction in the present matter, one must determine whether what is requested in the statement of claim and what was confirmed by the Court of Appeal are in fact two different issues or, in reality, the same issue.

I am satisfied that the statement of claim is not a challenge to the assessment of March 1981 but is an action to enforce what the plaintiff perceives to be its rights under subsection 184(3.1) of the Income Tax Act. I am thus satisfied that the Federal Court has jurisdiction in this matter.

The jurisdiction would come within sections 17 and 18 of the Federal Court Act. As subsection 184(3.1) does not provide a procedure for enforcing rights thereunder, the Federal Court is the only Court where the plaintiff can claim relief. The issue of the action deals with money paid to and held by the Crown in a Federal Income Tax Matter.

I am satisfied that a review of the Trial Division judgment and the Court of Appeal's judgment indicate that the substantive issues raised in the present statement of claim are very different (see Exhibits M and N, Book of Procedures).

The Court of Appeal clearly stated that the only question raised before the Trial Division and on the appeal relates to the computation of the appellant’s 1971 C.S.O.H. account. Pratte, J. states at pages 1, 2 and 3 (Exhibit N):

In making the computation, the appellant included pursuant to s. 89(1)(1)(ii) a sum of $130,555. in respect of a disposition of certain shares . . . This the appellant was authorized to do, unless as was decided by the Trial Judge, the amount of $1,350,555. was deemed to be nil by s. 89(5)(a)(ii). The sole question, therefore is whether that subparagraph 89(5)(a)(ii) applied in the computation of the appellant's 1971 C.S.O.H. so as to reduce to nil the amount of $1,350,555.

The Court of Appeal examined the appellant's arguments regarding the application of subparagraph 89(5)(a)(ii) and agreed with the trial judge that they should be rejected. The Court of Appeal's decision also included a discussion of whether the conditions contained in subparagraph 89(5)(a)(ii) had been met. The headnote identifies the issues in the following manner:

Whether the taxpayer controlled company A immediately before the disposition as a result of its relationship with company C, which at the time directly controlled company A, and whether or not the taxpayer was dealing at arm's length with company A immediately after the disposition. (86 D.T.C. 6035)

The only mention of "Part III tax" in the Court of Appeal's decision, is an introductory remark, that this is an appeal from the judgment dismissing an appeal from income tax reassessments under Part III of the Income Tax Act.

Although it could be argued that the issues that were before the Federal Court, Trial and Appeal Divisions, are similar to the present issue, same taxpayer and payment of dividends, I am satisfied that the issues are different. I am also satisfied that plaintiff could not have raised the issue of the subsection 184(3.1) election until the issue of the excessive election was disposed of, as per the understanding with the M.N.R. “until the dispute relating to the dividends paid out was determined".

I am satisfied that the statement of claim does not challenge the assessments which have been declared valid. The statement of claim deals with a separate issue. One issue has been decided (assessment), now a second issue must be decided (subsection 184(3.1)), this second issue could not have been raised until the first was decided. I am of the opinion that the jurisdiction of the Federal Court to review under section 18 F.C.A. is not necessarily removed by section 29 F.C.A. where the issues raised are, as in this case, different from the matters that could be raised on an appeal (Optical Recording Corporation v. The Queen & M.N.R., [1987] 1 F.C. 339; [1986] 2 C.T.C. 325).

Motion to Strike (Rule 419(1) (a))

(1) The Court may at any stage of an action order any pleading or anything in any pleading to be struck out, with or without leave to amend, on the ground that

(a) it discloses no reasonable cause of action or defence, as the case may be

Defendant's Submission

The Crown submits that the statement of claim should be struck out essentially because what is asked of the Court goes contrary to the provisions of Income Tax Act. Basically, defendant contends, I am being asked in the present action to set aside an assessment which has been decided to be valid and binding. Furthermore, it is the defendant's contention that this Court cannot grant relief with respect to the reimbursement of taxes. According to the defendant, the only provision dealing with refunds of tax is found in section 164 I.T.A. This provision relates clearly to the question of liability of tax.

The Crown further contends that if the matter has to be redetermined it is out of time (statute-barred).

The defendant's submission is basically that although the plaintiff may have had a defence to the assessments under section 184 I.T.A., by not raising the election under subsection 184(3.1) the plaintiff has abandoned that defence, because what the plaintiff claims now could have been granted through the appeal process.

It appears that most of these comments relate to the merits of the subsection 184(3.1) interpretation argued by the plaintiff. It is not the role of the motions judge to either delve into the merits of a case or attempt to predict its outcome at the present stage of the proceedings. It is only for me to decide if the plaintiff has an arguable case.

Plaintiff's Position

The plaintiff maintains that the statement of claim does disclose a reasonable cause of action. On a motion, it is not necessary for the court to decide whether, assuming the facts alleged to be true, the plaintiff should succeed. The court should be satisfied that the plaintiff has a fairly arguable case, which the plaintiff submits it has. Basically, the plaintiff submits that it is fairly arguable that subsection 184(3.1) is a remedial section, that applies even to assessments which are final and binding and simply deals with a remission of tax under the conditions precedent, as outlined in subsection 184(3.1).

Conclusion

The decision to strike out pleadings as they disclose no reasonable cause of action is discretionary. The case law reveals a reluctance to strike out an action under rule 419(1)(a) unless the case is plain, obvious or beyond doubt that the plaintiff could not succeed at trial (Canada (A.G.) v. Inuit Tapirisat of Canada, [1980] 2 S.C.R. 735; 115 D.L.R. (3d) 1).

With respect to a motion under Rule 419(1)(a) the judge is to take everything stated in the allegations outlined in the statement of claim to be true and see if the conclusions flow and if the law allows what is requested. If so, then the motion to strike under 419(1)(a) should be dismissed.

Wilson, J. in the Operation Dismantle v. The Queen, [1985] 1 S.C.R. 441 at 477; 18 D.L.R. (4th) 481 at 508 makes the following comment:

It would seem that as a general principle the Courts will be hesitant to strike out a statement of claim as disclosing no reasonable cause of action. The fact that reaching a conclusion on this preliminary issue requires lengthy argument will not be determinative of the matter nor will the novelty of the cause of action militate against the plaintiffs.

From the submission made by the plaintiff, I am satisfied there is an arguable case that subsection 184(3.1) is remedial and that upon compliance with specified conditions confers on the taxpayer a right to have the Part III tax imposed under subsection 83(1) remitted. Further, subsection 184(3.1) has not, to my knowledge, been judicially considered. Therefore, if the plaintiff does have an arguable case, and as it appears that it does, the only Court which can make a determination on the interpretation to be given to subsection 184(3.1) is the Federal Court of Canada. Therefore, the plaintiff should be given the opportunity to proceed to present its case.

The application submitted by the defendant is dismissed with costs in favour of plaintiff.

Application dismissed.