Citation: 2010 TCC 10
Date: 20100107
Docket: 2006-3736(IT)G
BETWEEN:
GILDARD HACHÉ,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Lamarre J.
[1]
The Appellant is
appealing from an assessment made by the Minister of National Revenue ("the
Minister") under the Income Tax Act ("the ITA") for the
2001 taxation year. The Minister considered that the amount of $2,583,465
received by the Appellant from the federal Minister of Fisheries and Oceans (hereinafter
"Fisheries and Oceans Canada" or "DFO" or "D.F.O.",
depending on the various documents filed in evidence) constituted proceeds of the
disposition by the Appellant of two commercial fishing licences, for snow
crab and groundfish, that he allegedly held. The Minister therefore included
that amount in the Appellant's income, under sections 9 and 14 of the
ITA, as an eligible capital amount. At the hearing, the Respondent abandoned
that position and argued before this Court that the amount in question was
taxable as a capital gain under sections 38, 39 and 40 of the ITA. The
Appellant's position is simply that that amount is not taxable under the ITA since
fishing licences do not constitute property within the meaning of the ITA that
he could dispose of, and that the amount received thus cannot give rise to a
capital gain that must be included in his taxable income for the
2001 taxation year.
[2]
At the hearing, the
parties filed a document signed by them and entitled [translation] "Facts and Documents Acknowledged by the
Parties", of which I will reproduce only Part A concerning the facts,
as follows:
[translation]
a.
The Appellant, Gildard Haché, is a resident of
the town of Shippagan, Gloucester County, Province of New Brunswick; his full postal
address is Post Office Box 2085, Shippagan, NB E8S 3H3.
b.
The Appellant is appealing under the Income
Tax Act, R.S.C. 1985, c. 1 (5th Supplement) (hereinafter "the
ITA") the assessment for the 2001 taxation year issued on September 5,
2006.
c.
The Appellant was a commercial fisherman
registered under the Fisheries Act, R.S.C. 1985, c. F‑14,
and the Regulations thereunder (hereinafter "the Fisheries Act")
during the years 1996, 1997, 1998, 1999 and 2000.
d.
The Appellant was the holder of commercial
fishing licences for snow crab (licence No. 004385) and groundfish (licence
No. 004384) issued by the Minister of Fisheries and Oceans (hereinafter "Fisheries
and Oceans Canada" under the Fisheries Act (hereinafter "the
licences") during the years 1996, 1997, 1998, 1999 and 2000.
e.
The Appellant was the owner of a vessel named
the Sandra Caryne (hereinafter "the vessel") and snow crab and
groundfish fishing gear (hereinafter "the gear") during the years 1996,
1997, 1998, 1999 and 2000.
f.
On February 26, 2001, the Appellant signed
an agreement, No. NB‑70‑2001, with Her Majesty the Queen in
right of Canada represented by Fisheries
and Oceans Canada (hereinafter "the agreement").
g.
The agreement was entered into under the
Fisheries Access Program (hereinafter "the FAP").
h.
The purpose of Fisheries and Oceans Canada's FAP
was to allow Aboriginal First Nations groups to take part in the commercial
fishery as a shared resource, and to provide them with new vessels, gear and
equipment allowing them to take advantage of this access.
i.
Durant 2001, Fisheries and Oceans Canada paid the
Appellant the amount of $3,050,000 under the agreement; the heading "voluntary
payment" appears in the agreement.
j.
In his income tax return for 2001, the Appellant
reported the amount of $3,050,000.
k.
Following an audit concerning the Appellant’s
2000 and 2001 taxation years, on January 6, 2004, the Respondent
issued a notice of reassessment (hereinafter "the reassessment").
l.
In the reassessment, the Respondent changed the breakdown
of the amount of $3,050,000 that the Appellant had reported in his income
tax return for 2001 so that $466,535 was proceeds of the disposition of the
vessel and the gear and $2,583,465 was proceeds of the disposition of the licences.
m.
In a notice of objection dated April 5,
2004, the Appellant objected to the reassessment.
n.
On September 5, 2006, the Respondent issued
a second notice of reassessment (hereinafter "the second notice of
reassessment"), in which she adjusted amounts that are not relevant to the
present appeal and maintained the assessment of the amounts that are the
subject of the present appeal.
o.
The amount of $466,535 for which the Appellant
was assessed as proceeds of disposition with respect to the transfer of the
vessel and the gear is not in issue in this appeal.
p.
The Appellant is appealing the Respondent's
decision to tax him on the amount of $2,583,465 as proceeds of the disposition
of the licences.
[3]
The Appellant adduced
in evidence the last fishing licence for groundfish issued to him by Fisheries
and Oceans Canada, dated April 19, 2000 (Exhibit A‑1, Tab 3).
This licence authorizes the holder to engage in fishing and related activities
on Canada's Atlantic coast, subject to the provisions
of the [translation] "Fisheries
Act and Regulations". It also states the following:
[translation]
THIS LICENCE IS VALID FROM JANUARY 1, 2000, TO
MAY 14, 2001.
THIS LICENCE IS VALID ONLY WHEN THE CONDITIONS ARE ATTACHED THERETO.
THE CONDITIONS OF LICENCE ARE AVAILABLE FROM THE LICENCE ISSUING
OFFICE.
THE USE OF THIS LICENCE IS SUBJECT TO THE CONDITIONS SET BY D.F.O.
THE HOLDER OF THIS LICENCE MUST ENSURE THAT HE OR SHE HAS RECEIVED THE CONDITIONS
OF LICENCE, AND MUST NOT ENGAGE IN FISHING ACTIVITIES WITH THIS LICENCE BEFORE
RECEIVING THE VALID LICENCE CONDITIONS AND ATTACHING THEM TO THIS LICENCE.
[4]
In his testimony, the Appellant
explained that, despite the issuance of that licence, he had no longer been
able to fish for groundfish for approximately 10 years because the
government had closed that fishery. In fact, it appears that the Appellant never
received the conditions of that licence, which meant that he was not allowed to
fish for groundfish, and this deprived that licence of any validity. No document
indicating the contrary signed by the Appellant was adduced; nor did the Respondent
challenge the Appellant's credibility on this point.
[5]
The Appellant also filed
in evidence the last snow crab fishing licence issued to him by Fisheries and
Oceans Canada, dated December 16, 2000 (Exhibit A‑1, Tab 4).
That licence does not indicate any fishing period, but states that its use is
subject to the conditions set by Fisheries and Oceans Canada, which the fisher must
ensure that he or she has received before undertaking any fishing activity. In
his testimony, the Appellant explained that, when that licence was issued, fishing
had already ended for the year 2000. On April 13, 2000, a temporary
commercial fishing licence was issued to him for the period from April 15,
2000, to August 15, 2000, for which he paid a fee in the amount of $11,367
(Exhibit A‑1, Tab 13). That amount corresponds to the cost
related to the conditions governing the use of the snow crab fishing licence. Those
conditions are found in Exhibit A‑1, Tabs 11 and 12. They
have to do with the maximum quantity of fish that the fisher is authorized to
catch during the period, and with the areas in which the fishing can be done and
with the obligations that the fisher must fulfil in exercising his or her right
to fish. The two documents setting out those conditions for the period
from April 15, 2000, to August 15, 2000, were signed by the Appellant
on April 13, 2000 (Exhibit A‑1, Tab 11) and May 17,
2000 (Exhibit A‑1, Tab 12).
[6]
The Appellant noted
that he ceased all fishing activity in 2001. On February 5, 2001, he
completed a [translation] "2000/2001 Fisheries
Access Program Application", in which he indicated an [translation] "asking price for the
complete licence package" of $3,209,518.20 for the snow crab and groundfish
licences as well as his vessel and the gear (Exhibit I‑1, Tab 6).
Specifically, the asking price for the snow crab and groundfish licences
totalled $2,109,518.20. That application was made under a Fisheries Access
Program established by Fisheries and Oceans Canada.
[7]
An agreement was reached
with the Appellant, which was signed by him on February 26, 2001, and
countersigned by Fisheries and Oceans Canada on March 9, 2001 (Exhibit A‑1,
Tab 5). That agreement is the basis for the payment that was received by
the Appellant and that is the subject of the present appeal. The agreement has
to do with the retirement and abandonment of the two fishing licences and
with the transfer of the vessel and the gear. The tax treatment of the amount
paid for the vessel and the gear is not disputed. Only the amount paid for the
two fishing licences is at issue here. The agreement reads as follows:
[translation]
FISHERIES ACCESS PROGRAM
AGREEMENT BETWEEN THE BENEFICIARY
AND
HER MAJESTY THE QUEEN IN RIGHT OF CANADA,
REPRESENTED BY THE MINISTER OF FISHERIES
AND OCEANS
AGREEMENT NB‑70‑2001
PART I: RETIREMENT AND ABANDONMENT OF LICENCES
1.
I, Gildard Haché, SIN: ____________ (hereinafter
"the beneficiary"), holder of a commercial fishing licence for snow
crab, being licence No. 4385, and a commercial fishing licence for groundfish,
being licence No. 4384, (hereinafter "the licences"), hereby abandon
all privileges and rights associated with the licences.
2.
In consideration of the voluntary payments provided
for in Part III, I hereby acknowledge, in my capacity as the
beneficiary:
(a) that this abandonment is irrevocable;
(b) that I understand the provisions set
out in Parts II and III of the present agreement;
(c) that Parts II
and III of the present document form part of the present agreement.
Signature of beneficiary: ___Gildard
Haché________
Date: ____February 26,
2001____
PART II: TRANSFER OF VESSEL AND GEAR
3.
The beneficiary acknowledges that he is the
owner of the vessel and the gear described in greater detail in the schedule to
the present agreement (hereinafter "the property").
4.
The beneficiary agrees and warrants that the
property is not subject to any lien or other financial obligation or encumbrance,
except those noted in the schedule to the present agreement.
5.
The beneficiary acknowledges that he has
agreed to transfer to an Aboriginal community (hereinafter "the Aboriginal organization"), at his expense, the
title to the property, being the fishing vessel and gear that is described in
the present agreement, free and clear of all privileges, financial obligations
and other encumbrances.
6.
The beneficiary agrees that DFO, the Aboriginal
organization and any person whom DFO or the Aboriginal organization designates from
time to time may examine the property at any reasonable time.
7.
The risks related to the property shall be the
responsibility of the beneficiary until title to the property is transferred to
the Aboriginal organization.
8.
The beneficiary agrees to maintain the property in
a state of seaworthiness and good repair until it is transferred to the
Aboriginal organization.
PART III: VOLUNTARY PAYMENT
9.
DFO agrees to make to the beneficiary a
voluntary payment in the amount of $3,050,000.00 (THREE MILLION AND
FIFTY THOUSAND DOLLARS) as soon as:
(a) the beneficiary has signed the
present agreement;
(b) the beneficiary has returned to DFO
all the documents and plates issued with regard to the licences;
(c) the beneficiary has transferred title
to the property to the Aboriginal organization;
(d) DFO is satisfied that the property is
free and clear of all privileges, financial obligations and other encumbrances.
10.
In either of the following cases:
(a) if the
beneficiary provides false or misleading information to DFO with regard to the
present agreement;
(b) if the beneficiary does not comply
with a provision of the present agreement,
DFO may:
(c) terminate
any obligation to make a payment to the beneficiary under the present agreement;
(d) require the beneficiary to pay back
to DFO any payment it has made under the present agreement;
(e) exercise any other remedy authorized
in law.
11.
When, under subclause 10(d) above,
DFO asks the beneficiary pay back a payment, the amount shall be a debt owed to
Her Majesty the Queen in right of Canada.
12.
On request, the beneficiary shall allow DFO, or
any person it designates from time to time, to audit the books and to examine
the records, vouchers, reports and other documents having to do with present
agreement, the licences or the property that DFO considers it appropriate to
examine, and to make copies and take extracts, and shall provide all the
necessary assistance for the purposes of these audits and examinations.
13.
The beneficiary shall retain the documents
referred to in clause 12 for a period of at least two years following
the date on which DFO pays to him the amount referred to in clause 9.
14.
No member of the House of Commons shall be a
party to, or derive benefit from, the present agreement.
15.
The beneficiary shall release Her Majesty the
Queen in right of Canada and her ministers, officials and employees from all
claims, proceedings, actions and claims related to the licences, and shall save
them harmless from all claims, damages and costs having to do with the licences
or the property.
16.
DFO may send any payments to the beneficiary at
the following address:
Gildard Haché
P. O. Box 2085
Shippagan, NB
E8S 3H3
17.
No payment shall be made under clause 9 of the
present agreement until the transfer to the Aboriginal organization of title to
a vessel forming part of the property has been registered.
18.
Any obligation that DFO may be under to make a
payment to the beneficiary under clause 9 of the present agreement shall
be terminated six months following the date on which the parties sign the
present agreement, unless the beneficiary has signed Part I of the present
agreement, returned to DFO all the documents and plates issued with regard to
the licences, transferred title to the property to the Aboriginal organization
and fulfilled all the conditions of the present agreement before the expiry of
that period.
19.
The beneficiary agrees and warrants that the
licences are not subject to any penalty, except those noted in the schedule to
the present agreement.
20.
Where DFO authorizes the retention of one or
more licences, the licences shall not be issued or transferred to another
fisher.
21.
As regards any time periods set out in the
present agreement, time is of the essence.
[8]
The Appellant also
adduced in evidence the Commercial Fisheries
Licensing Policy For Gulf Region issued by Fisheries and Oceans Canada (“the Policy”) (Exhibit A‑1,
Tab 10). This document tells us, among other things, that the Policy is an integral part of a number of federal
government initiatives to restructure the commercial fisheries and lay the
foundation for a fishery that is environmentally sustainable and economically
viable. Thus, it is stated, Fisheries and Oceans Canada favours limiting access to the
fishery as much as is necessary to provide for an orderly harvesting of the
fishery resource, to promote viable and profitable operations for the average
participant, and to adopt policies and integrated fisheries management plans
that are consistent
(paragraph 1). The objective is to provide a clear and consistent statement of Fisheries
and Oceans Canada's policy respecting, among other things, the issuance of
fishing licences in the Gulf Region (paragraph 2).
[9]
Paragraph 5 of the
Policy defines a licence as follows:
5. What is a
Licence?
(a) General
A licence grants permission to do something which, without such permission,
would be prohibited. As such, a licence confers no property or other rights
which can be legally sold, bartered or bequeathed. Essentially, it is a
privilege to do something, subject to the terms and conditions of the licence.
(b) Fishing
Licence
A fishing
licence is an instrument by which the Minister of Fisheries and Oceans Canada,
pursuant to his discretionary authority under the Fisheries Act, grants permission
to a person including an Aboriginal organization to harvest certain species of
fish or marine plants subject to the conditions attached to the licence. This
is in no sense a permanent permission; it terminates upon expiry of the
licence. The licensee is essentially given a limited fishing privilege rather
than any kind of absolute or permanent right or property.
(c) Future Commitment
As provided under the Fishery (General) Regulations, the issuance
of a document of any type to any person does not imply or confer any future
right or privilege for that person to be issued a document of the same type or
any other type upon expiry of the document.
[10]
Paragraph 12 of the
Policy sets out general policy guidelines, including the following:
12. General
Policy Guidelines
1. The
requirements to be licensed to fish for different species of fish are found in
the Fisheries Act and the regulations made under the Act.
2. Except where a fishery is
closed for conservation purposes, licence renewal and payment of fees is
mandatory on a yearly basis in order to retain the privilege to be issued the
licence.
. . .
[11]
Concerning licence holders,
paragraph 18 of the Policy provides as follows:
18. Change of
Licence Holder
1.
Current legislation provides that licences are not transferable. However, the
Minister in "his absolute discretion" may for administrative
efficiency prescribe in policy those conditions or requirements under which he
will issue a licence to a new licence holder as a "replacement" for
an existing licence being relinquished. These prescribed conditions or
requirements are specified in this document.
. . .
Analysis
[12]
The statutory
provisions referred to in the Policy are found in the Fisheries Act,
R.S.C. 1985, c. F‑14, and the Fishery (General) Regulations,
SOR/93‑53, the relevant sections of which are reproduced below:
Fisheries Act
Fishery
leases and licences
7. (1) Subject to subsection (2), the Minister may, in his absolute
discretion, wherever the exclusive right of fishing does not already exist by
law, issue or authorize to be issued leases and licences for fisheries or
fishing, wherever situated or carried on.
. . .
Minister
may cancel licence
9. The Minister may suspend or cancel any
lease or licence issued under the authority of this Act, if
(a)
the Minister has ascertained that the operations under the lease or licence
were not conducted in conformity with its provisions; and
(b) no proceedings
under this Act have been commenced with respect to the operations under the
lease or licence.
Fishery
(General) Regulations
Interpretation
2. In these Regulations,
. . .
"document" means
a licence, fisher's registration card or vessel registration card that grants a
legal privilege to engage in fishing or any other activity related to fishing and
fisheries;
. . .
Signing of Documents
9. Where it is indicated in a document that
it is not valid unless signed, the holder of the document shall, on receipt of
the document, immediately sign it in ink in the space provided.
Expiration of Documents
10. Unless otherwise specified in a document,
a document expires
(a)
where it is issued for a calendar year, on December 31 of the year for
which it is issued; or
(b) where it is issued
for a fiscal year, on March 31 of the year for which it is issued.
. . .
Transfer of Documents and Rights and Privileges
16. (1) A document is the property of the
Crown and is not transferable.
(2) The issuance of a
document of any type to any person does not imply or confer any future right or
privilege for that person to be issued a document of the same type or any other
type.
. . .
Conditions of Licences
22. (1) For the proper management and
control of fisheries and the conservation and protection of fish, the Minister
may specify in a licence any condition that is not inconsistent with these
Regulations or any of the Regulations listed in subsection 3(4) and in
particular, but not restricting the generality of the foregoing, may specify
conditions respecting any of the following matters:
. . .
[13]
The Respondent emphasized
that, to decide the issue of whether the amount of $2,583,465 received by the
Appellant constitutes a capital gain under the ITA, it must first be
established that there was a disposition of property in consideration of the
amount received. The Respondent relied on Winsor v. Canada, 2007 TCC 692
(Winsor) and Saulnier v. Royal Bank of Canada, 2008 SCC 58
(Saulnier), in arguing that the Appellant disposed of his fishing
licences, to which certain rights were attached, and that there was thus a disposition
of property.
[14]
In Winsor, the
taxpayer had made an offer to the federal government under the Atlantic
Groundfish Licence Retirement Program, a voluntary program introduced in 1998
in order to reduce the number of persons operating Atlantic groundfish fishing
businesses. The taxpayer had made an offer that was approved by the government and
the upshot of which was that the government agreed to pay the amount of $120,000;
half of that amount was allocated to the fishing licence, and the other half
was paid to the taxpayer for agreeing to cease commercial fishing definitively.
Only the amount of $60,000 allocated to the fishing licence was at issue.
Webb J. of this Court relied on the Nova Scotia Court of Appeal decision
in Royal Bank of Canada v. Saulnier, [2006] N.S.J. No. 307,
in finding that any person who holds a licence under the Fisheries Act
and the Fishery (General) Regulations has the right to apply for renewal
or reissue of the licence and to object to an arbitrary refusal, and that,
accordingly, this right constitutes property within the meaning of the ITA. The
term "property" is defined in subsection 248(1) of the ITA as
follows:
Definitions
248. (1) In this Act,
. . .
"property" means
property of any kind whatever whether real or personal or corporeal or
incorporeal and, without restricting the generality of the foregoing, includes
(a) a right of any
kind whatever, a share or a chose in action,
(b) unless a contrary
intention is evident, money,
(c) a timber resource
property, and
(d) the work in
progress of a business that is a profession.
[15]
The Supreme Court of Canada
heard the appeal in Saulnier after Webb J. rendered his
decision in Winsor. At issue in Saulnier was whether a commercial
fishing licence, which enables a fisher to engage in a regulated industry where participation
is otherwise prohibited, constituted "property" available to a
trustee, for example, under the Bankruptcy and Insolvency Act,
R.S.C. 1985, c. B‑3 ("the BIA").
[16]
The Supreme Court of
Canada did not share the opinion of the Nova Scotia Court of Appeal (on which Webb J.
had relied in Winsor) that a licence holder's ability to apply for its
renewal or to have it reissued to the person designated by the holder, and to
contest an arbitrary refusal by the Minister to do so, formed part of a "bundle
of rights" that collectively constituted a type of property capable of
providing security. Binnie J. wrote as follows at paragraphs 37, 38
and 39:
37 In my view, the debate
about the extent to which licences are "transitory and ephemeral" is of limited value. . . . Uncertainties of
renewal do not detract from the interest presently possessed by the holder, but
nor does an expectation of renewal based on a Minister's policy which could
change tomorrow, transform a licence into a property interest.
38
. . . In this respect, however, I do not believe the "judicial review" paradigm offered by the Nova Scotia
Court of Appeal in this case is helpful. The Regulations permit anyone
to apply for a fisheries licence and everyone is entitled to a
ministerial decision that complies with procedural fairness. I cannot agree
that these elements are capable, as such, of constituting a licence "property" in the hands of a holder.
39 In any event, I agree with the observation adopted by Major
J. in Comeau's Sea Foods that he could not find in the fisheries
legislation any legal underpinning for the "vesting" of an interest in a
licence "beyond the rights which it
gives for the year in which it was issued" (para. 33). See also Joliffe v. The Queen,
[1986] 1 F.C. 511 (T.D.), at p. 520 . . . Section 7(1)
of the Fisheries Act says that the Minister's discretion is “absolute”.
[17]
Thus the Supreme Court
of Canada accepted the holding in Joliffe, supra, that there is
no such thing as a vested right in a licence beyond those rights granted for
the period for which it is issued (see Comeau's Sea Foods Ltd. v. Canada
(Minister of Fisheries and Oceans), [1997] 1 S.C.R. 12, at paragraph 33).
[18]
Moreover, although the
Supreme Court of Canada held in Saulnier that the fishing licences held
by Mr. Saulnier when he made an assignment of his property did constitute
property within the meaning of the BIA, it clearly stated that, in general, a fishing
licence cannot be considered to be property at common law.
[19]
It is true that in that
same decision the Supreme Court also stated that a fishing licence bears some
analogy to a common law profit à prendre, which constitutes a property
right (Saulnier, paragraph 28). However, such a right exists only during
the validity of the licence. In fact, an individual's right to exploit a public
resource for commercial purposes for personal profit is a privilege restricted
to holders of commercial licences (see excerpt from the High Court of Australia
decision in Harper v. Minister for Sea Fisheries (1989), 168 C.L.R. 314,
quoted by Binnie J. in Saulnier, at paragraphs 31 and 32).
Thus Binnie J. emphasized at paragraph 34 that the subject matter of
the licence (that is, the right to participate in a fishery that is exclusive
to licence holders), coupled with a proprietary interest in the fish caught
pursuant to its terms, bears a reasonable analogy to rights traditionally
considered at common law to be proprietary in nature. He was therefore of the
opinion that this licence was reasonably within the contemplation of the
definition of "property" in the BIA, where reference is
made to a "profit, present or future . . . in, arising out of or incident to
property".
[20]
The situation in Saulnier
differs from that in the present case. First of all, the definition of the term
"property" in the BIA introduces the notion of "profit, present or
future . . . in . . . property", which is not found in
the definition of "property" in the ITA.
[21]
As well, in Saulnier,
Mr. Saulnier was the holder of his fishing licences when he made the
assignment of his property. Here, the Appellant no longer held any valid fishing
licences in 2001 when he made an application to the Fisheries Access
Program under which he received the amount at issue. With regard to the groundfish
licence, the Appellant never received the conditions attached to that licence, with
the result that his licence was not valid for the 2000-2001 period shown
on the very face of the licence filed in evidence (Exhibit A‑1, Tab 3).
With regard to the snow crab licence, that licence had expired at the end of 2000,
as can be seen from the period indicated on the temporary licence (Exhibit A‑1,
Tab 13) and according to paragraph 10(a) of the Fishery
(General) Regulations. In fact, therefore, the Appellant no longer possessed
a "bundle of rights" related to those licences that would have
conferred on him a proprietary right that could have constituted property (see Saulnier,
paragraph 43).
[22]
Lastly, in Saulnier,
Binnie J. wrote as follows at paragraph 50:
50 It may well be that in the
course of a bankruptcy the fishing licence will expire, or has already expired.
If so, the trustee will have the same right as the original holder of an
expired licence to go to the Minister to seek its replacement, and has the same
recourse (or the lack of it) if the request is rejected. The bankrupt can
transfer no greater rights than he possesses. The trustee simply steps into the
shoes of the Appellant Saulnier and takes the licence "warts and all".
[23]
In the case at bar, the
Appellant did not transfer his licence to anyone who could exercise his rights
in his stead. The Appellant simply renounced his right to apply for a fishing
licence.
[24]
Moreover, in Manrell
v. Canada, 2003 FCA 128, [2003] 3 F.C. 727,
the Federal Court of Appeal recognized that the meaning given to the term "property"
in the ITA must respect the legal traditions of the common law (paragraph 55).
In Saulnier, the Supreme Court of Canada did state that a fishing
licence does not constitute property at common law. Only a licence conferring a
proprietary interest in the fish caught in accordance with the conditions it
sets out can be analogous to a proprietary right at common law. In the
present case, the Appellant did not hold any such licences in 2001 when he
made an application under the Fisheries Access Program. As well, in Manrell
it was held that a payment received by a company shareholder under a
non-competition agreement in the context of a sale of shares did not constitute
proceeds of a disposition of property. In my opinion, giving up one's right to
operate a business, and thus a right to income, by agreeing to sign a non‑competition
agreement may be considered analogous to giving up the right to apply for a fishing
licence and thereby giving up any profit à prendre from that licence. As
in Manrell, I do not believe there has been a disposition of property within
the meaning of the ITA.
[25]
I am accordingly of the
opinion that the amount at issue of $2,583,465 does not constitute
proceeds of a disposition of property, and that receipt of this amount cannot
give rise to a taxable capital gain under the ITA.
[26]
For these reasons, the
appeal is allowed, with costs, and the assessment is referred back to the
Minister for reconsideration and reassessment on the basis that the amount
of $2,583,465 should not be included in the Appellant's income for the
2001 taxation year.
Signed at Montreal, Quebec, this 7th day of January 2010.
"Lucie Lamarre"
Lamarre J.
Translation certified true
on this 18th day of February 2010.
Erich Klein, Reviser
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