Citation: 2008 TCC 448
Date: 20080903
Dockets: 2004-1147(IT)G
2004-1153(IT)G
BETWEEN:
CHRISTIAN LAROUCHE,
2753-1359 QUÉBEC INC.,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Angers J.
[1]
These two appeals were
heard on common evidence. The Appellants have appealed from the assessments
made regarding them under section 160 of the Income Tax Act ("the
Act"). It is admitted by the Appellants that at all relevant times they
were persons related to 9039-0618 Québec Inc. ("9039") within the
meaning of the Act.
[2]
The Appellant Christian
Larouche received dividends from 9039 totalling $141,250 during the years
1993 to 1996, and the Appellant 2753-1359 Québec Inc. received a dividend of
$41,980 from 9039 in 1996. At the time the dividends were paid, 9039 owed the
Minister of National Revenue ("the Minister") for unpaid income tax,
interest and penalties. On the date on which the Appellants were assessed,
May 23, 2003, 9039's tax debt was as follows:
|
Year
|
Taxes
|
Penalty
|
Interest
|
Total
|
|
1993
1994
1995
Total
|
$13,180.22
$22,972.39
$27,584.59
$63,737.20
|
$2,758.45
$2,758.45
|
$17,485.32
$28,575.12
$33,247.60
$79,308.04
|
$ 30,665.54
$ 51,547.51
$ 63,590.64
$145,803.69
|
[3]
The issue is whether
the dividends paid to the Appellants constitute a transfer for which no
consideration was given under section 160 of the Act. The amounts for which the
Appellants were assessed correspond to the amount of the dividends paid to them
by 9039. Section 160 of the Act reads as follows:
Tax liability re property transferred not
at arm’s length
(1) Where
a person has, on or after May 1, 1951, transferred property, either directly or
indirectly, by means of a trust or by any other means whatever, to
(a) the
person’s spouse or common-law partner or a person who has since become the
person’s spouse or common- law partner,
(b) a
person who was under 18 years of age, or
(c) a
person with whom the person was not dealing at arm’s length,
the following rules apply:
(d) the transferee
and transferor are jointly and severally liable to pay a part of the
transferor’s tax under this Part for each taxation year equal to the amount by
which the tax for the year is greater than it would have been if it were not
for the operation of sections 74.1 to 75.1 of this Act and section 74 of the Income
Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, in respect of
any income from, or gain from the disposition of, the property so transferred
or property substituted therefor, and
(e) the transferee
and transferor are jointly and severally liable to pay under this Act an amount
equal to the lesser of
(i) the amount, if
any, by which the fair market value of the property at the time it was
transferred exceeds the fair market value at that time of the consideration
given for the property, and
(ii) the total of all
amounts each of which is an amount that the transferor is liable to pay under
this Act in or in respect of the taxation year in which the property was
transferred or any preceding taxation year,
but nothing in this subsection shall be deemed to limit the
liability of the transferor under any other provision of this Act.
[4]
In order for
section 160 to apply, there must therefore have been a transfer of
property between two persons not dealing with each other at arm's length, a
transfer of property for which no consideration was given or where the
consideration was less than the fair market value, at a time when the
transferor had a debt to the Minister in the year when the property was
transferred or for any preceding year. It is understood that the transferee
will not owe more than the value of the benefit received.
[5]
In this case, and as
the issue is framed supra, the question is whether there was a transfer
of property, and if so, whether valuable consideration was given, within the
meaning of section 160 of the Act, when a dividend was paid.
[6]
This issue has been
considered in several decisions of this Court, the Federal Court of Appeal and
the Supreme Court of Canada. In Algoa Trust v. The Queen, [1993] 1 C.T.C.
2294, Rip J. of this Court held that section 160 of the Act applied to a
dividend such that payment of the dividend constituted a transfer of property
within the meaning of section 160. He made the following remarks:
The payment of a dividend in money or other property is a transfer
of property within the meaning of subsection 160(1) of the Act. The corporation
is impoverished and its shareholders are enriched. I fail to see the reason why
a dividend is not a transfer of property. I do realize an unknowing shareholder
not dealing at arm's length with the corporation may become jointly and
severally liable under the Act for the liability of the corporation as a result
of my interpretation of subsection 160(1). If this is an unintended effect of
that provision - and I am not sure it is - Parliament surely will consider
remedying the problem.
[7]
That conclusion by
Rip J. was affirmed by the Federal Court of Appeal on February 4, 1998,
and followed by Sharlow J.A. of the Federal Court of Appeal in 2006 in Addison
& Leyen Ltd. v. Canada, [2006] F.C.J. No. 489. At paragraphs 57
and 60 of her decision, Sharlow J.A. explained that section 160 could apply
to dividends:
[57] . . . It is possible to imagine a
corporation, especially a closely held one, using the payment of a dividend to
divest itself of assets in order to avoid paying a tax liability, but in most
cases the payment of a dividend is an ordinary commercial transaction. A
dividend is also taxable income to the recipient (except for certain corporate
recipients). . . .
[60] . . . Thus, the 1993 decision of the
Tax Court in Algoa Trust is the leading authority for the proposition
that section 160 may apply to a dividend.
[8]
That decision by
Sharlow J.A. was affirmed by the Supreme Court of Canada on other grounds.
[9]
In The Queen v.
Gilbert, 2007 FCA 136, Nadon J.A. reviewed the law and held that a
dividend paid to shareholders constituted a transfer for which no consideration
was given within the meaning of section 160 of the Act. The relevant remarks
read as follows:
[11] With regard to the first issue,
Lamarre Proulx J. determined that the dividends paid to the
respondents amounted to a transfer without consideration within the meaning of
paragraph 160(1)(a) of the Act. At paragraphs 30 to 32 of her
reasons, she stated the following:
From my understanding of corporate law, it is when a corporation is
wound up that the shareholders share the remaining property of the corporation.
The issuing of a dividend is different in nature. I cannot accept the argument
that receipt of a dividend causes the correlative impoverishment of the
shareholder transferee. I do not believe that is the case in corporate law and
it is decidedly not the case in tax law. In tax law, a person who receives a
dividend must include it in computing his income because it is an increase in
his income. For the corporation that issues it, it constitutes a reduction of
its retained earnings and a reduction of its assets.
There is therefore impoverishment of the issuing corporation and
enrichment of the transferee, as is the case in any transfer of property
subject to section 160 of the Act.
As to the possibility of consideration to be given for the issuing
of a dividend, I believe that the Supreme Court of Canada clearly stated in Neuman
(supra) there was no such possibility. . . .
[12] In my opinion, Lamarre-Proulx J. did not err in dismissing
the respondents’ argument to the effect that a dividend was paid to them as
shareholders of the corporation for consideration, since she was simply
following the precedents of our Court and the Supreme Court.
[13] Specifically, Lamarre Proulx J. referred to Newman v.
M.N.R., [1998] 1 S.C.R. 770, at page 791, where the
Supreme Court of Canada, referring with approval to the dissenting reasons of
LaForest J. in McClurg v. Canada, (1990) 3 S.C.R. 1020), clearly
confirmed that no consideration can be given for the payment of a dividend:
. . . a dividend is received by virtue of ownership of the capital
stock of a corporation. It is a fundamental principle of corporate law that a
dividend is a return on capital which attaches to a share, and is in no way
dependent on the conduct of a particular shareholder.
[14] This finding ratified the determination
of Rip J. of the Tax Court of Canada in Algoa Trust v. Canada, [1993] 1
C.T.C. 2294, page 2303, a decision which our Court dismissed on appeal, on
February 4, 1998 (Court docket A-201-93) :
When a person subscribes for shares of a corporation he or she is
paying theoretically for the acquisition of a share of the ownership of the
corporation and receives shares of a class in the capital stock of the
corporation. The shareholder gives consideration for the shares and not for
what the shares may bring. Ownership of shares gives the shareholder certain
rights: right to vote as a shareholder, right to a distribution of capital on
the winding-up of the corporation, right to receive dividends. (This list is
not meant to be exhaustive.) When the shareholder receives a dividend it is not
as a result of any consideration he or she gave the corporation and which the
corporation is obliged to pay for investing. When a shareholder purchases
shares he is not purchasing an income right. A shareholder receives a dividend
solely because the right to a dividend is an attribute of owning shares.
[10]
Leave to appeal was
denied by the Supreme Court of Canada on September 20, 2007.
[11]
The Respondent thus stands
by the current law in support of her assessments, that is, that
section 160 applies to the dividends paid in this case.
[12]
Counsel for the
Appellants argued that contrary to the current trend in the case law, payment
of dividends by a corporation to its shareholders should not be regarded as a
transfer within the meaning of section 160 of the Act. In support of his
position, counsel for the Appellants submitted that there are two steps that
must be followed in order to pay a dividend, and cited a remark from Rondeau
v. Poirier, [1980] C.A. 35, a decision of the Quebec Court of Appeal,
in which Lamer J.A., as he then was, concluded that there are two steps
involved in paying dividends: (1) the declaration of the dividend, and (2) the
payment of the dividend. The relevant passages of the decision are as follows:
[TRANSLATION]
With respect, it is my opinion that the respondents' reasoning is
based on an erroneous premise: that declaration of a dividend merely makes a
dividend payable when it already existed because of the existence of the share.
I believe it is useful here to recall certain principles governing the rights
and obligations of the shareholders and directors of a corporation and of the
corporation itself. First, it must be noted that the directors alone decide
whether a dividend should be declared; they may do that only for the purposes
of distributing profits and, with certain very specific exceptions, they may
not encroach on capital. However, the fact that the corporation has made
profits imposes no obligation on them to declare any dividend, or to decide the
amount they intend to distribute if they find it advisable to declare a
dividend. This is important, because it leads to the solution to the very
problem before this Court. A shareholder in a corporation is not, properly
speaking, a creditor of that corporation, as long as the directors have not
declared a dividend; the shareholder is entitled not to the profits, because
the directors are not obliged to distribute them, but to a proportional share
of the profits, in accordance with certain terms for distribution, if and when
the directors decide to distribute them, that is, to declare a dividend. That
right to a distribution formula exists under a suspensive condition, the
condition being not that there are profits, but that the directors wish to
declare a dividend and are entitled to do that, that is, that there are profits
to be distributed.
The existence of profits creates rights not in the shareholder, but
in the directors: the right to declare the dividend in order to distribute all
or part of the profits. If the directors choose to distribute profits by
declaring a dividend, another right is added to the shareholder's patrimony:
ownership of the profits on the terms set out in his or her shares in relation
to the portion of the profits that the directors have decided to distribute and
the payment terms they may have established, if any. The shareholder then
becomes a creditor of the corporation. When the provisions of article 1085
C.C. are applied retroactively effect, as of the date on which the obligation
was contracted, we must be very careful not to confuse the obligation
contracted regarding the terms of distribution, if profits are to be
distributed, with the obligation to distribute, which, in my opinion, is
contracted only at the point when the dividend is declared (whether or not
there are terms of payment or other conditions attached).
[13]
In the submission of
counsel for the Appellants, the consequences of this two‑stage payment
process for both the corporation and the shareholder arise only at the
declaration stage; a debt arises in the corporation's liabilities and the
shareholder becomes a creditor of the corporation. At the dividend payment
stage, the undistributed profits are reduced by the amount of the dividend and
the debt disappears. As far as the shareholder is concerned, the debt is paid
and the right to payment of the dividend is extinguished.
[14]
The consequence of all
this, counsel for the Appellants submits, is that there can be no transfer
given that there is no enrichment. He cites Hamel v. Minister of National
Revenue, [1996] 2 C.T.C. 2046; in that case, Lamarre Proulx J. explained
that a transfer occurs when the person who makes the transfer is impoverished
and the person who receives the property is correspondingly enriched.
Did the payment by the corporation of the sum of $350,000 to Mr.
Allard in satisfaction of the amounts for which the Superior Court had given
him judgment against the appellant constitute a transfer of property to the
appellant? We have seen that the transfer does not have to be made directly to
the transferee. There is a transfer if there is impoverishment of the
transferor, whether the transfer is made directly or indirectly, and
corresponding enrichment of the transferee. It is my view that this is what
occurred in the instant case.
[15]
Counsel for the
Appellants also submits that not only have the Appellants not been enriched in
this case, but the corporation has also not been impoverished. For the corporation,
the debt disappears and the undistributed profits are reduced. For the
shareholders, their liquidity is increased, and their claim is accordingly
extinguished. The consequence means that there is no transfer in this case, as
held in Hamel.
[16]
Counsel for the
Appellants pursued this argument and added a second perspective, based on the
principle that a debtor who pays their debt is entitled to an acquittance (article
1568 of the Civil Code of Québec) and that the right to an acquittance
is "property" as defined in the Act (property of any kind). If it is
property, is that not the consideration given, the fair market value of which
is equivalent to the amount of the dividend, so there was consequently
consideration given by the shareholders, that is, the acquittance? He
acknowledged that his argument lends itself well to a dividend paid in cash and
that it would be more difficult to apply it to a dividend paid in kind. On that
point, counsel for the Appellants pointed to the comments in Algoa Trust
that suppor his reasoning; for instance, Rip J. said there is no transfer
at the point when the dividend is declared. It must be noted that in Algoa
Trust the analysis related to dividends paid in shares, and not dividends
paid in cash as in the present case.
[17]
To summarize, the
Appellants' position is that a dividend was paid but that the payment was not a
transfer because there was no enrichment of the shareholders corresponding to
impoverishment of the corporation, and even if there was,
paragraph 160(1)(e) cannot apply because, by that accounting logic,
which follows the legal application of the principles stated, the shareholder
has received a dividend and the consideration is the loss of the shareholder's
right to bring action against the company for payment.
[18]
It is important to
note, first, what the nature of a dividend is and what payment of a dividend
means. In Neuman v. M.N.R., [1998] 1 S.C.R. 770, Iacobucci J.
rejected the argument that payment of a dividend is related to the amount of
effort deployed by the recipient on behalf of the corporation, which would
constitute valuable consideration. He quoted a remark of La Forest J.
in McClurg v. Canada, [1990] 3 S.C.R. 1020: "a dividend is received
by virtue of ownership of the capital stock of a corporation" and it is "a
fundamental principle of corporate law that a dividend is a return on capital
which attaches to a share, and is in no way dependent on the conduct of a
particular shareholder".
[19]
In Gosselin v.
Canada, [1996] T.C.J. No. 206, at paragraph 15, Dussault J. of
this Court said, regarding the nature of a dividend:
The declaration of a dividend is essentially the
allocation of a company's undistributed profits to its shareholders in
proportion to the shares held by them and in accordance with the rights attached
to those shares. Payment of the dividend is the act by which the dividends so
allocated by the directors in their discretion, and in compliance with the
principles of company law and the specific rules laid down in this regard,
distribute to the shareholders the dividend allocated to each class of shares.
In addition to the rules regarding solvency of the company there is the rule of
equality of shares in the same class in terms of the privileges and limitations
attached to shares in that class.
[20]
Second, the definition
of the word "transfer" has been considered in several cases, and in
my view the leading decision defining a transfer is Fasken Estate v. Canada,
[1948] Ex. C.R. 580, in which Thorson J. of the Exchequer Court defined it
as follows, at paragraph 34:
That the word "transfer" . . . is not a term of art and
has not a technical meaning. It is not necessary to a transfer of property from
a husband to his wife that it should be made in any particular form or that it
should be made directly. All that is required is that the husband should so
deal with the property as to divest himself of it and vest it in his wife, that
is to say, pass the property from himself to her. The means by which he
accomplishes this result, whether direct or circuitous, may properly be called
a transfer.
[21]
However, it is in Algoa
Trust that it was held that payment of a dividend is a transfer of
property, and not only a transfer per se but also a transfer of property
within the meaning of paragraph 160(1)(e); I quoted in
paragraph 6 herein above the comments of Rip J.
[22]
The fact that the
corporation cannot have been impoverished and the shareholders enriched does
not mean that there was no transfer of property when a dividend was paid.
Payment of a dividend to a shareholder is a transfer, and so the only remaining
question is whether payment of a dividend constitutes a transfer of property
for which no consideration is given by the shareholder, and it was held by
Rip J. in Algoa Trust, and also by Nadon J.A. of the Federal
Court of Appeal in Gilbert, who also quoted a comment of
Sharlow J.A. in Addison & Leyen Ltd. v. Canada that I
reproduced earlier, that it does.
[15] With regard to the issue of whether the
payment of a dividend is a transfer of property within the meaning of section
160 of the Act, Sharlow J.A. in Addison & Leyen Ltd. v. Canada [2006]
F.C.J. No. 489, at paragraphs 57 to 60, stated
that dividends could be subject to section 160:
. . . One of the questions raised but not answered by the 1981 amendment
to section 160 was whether the payment of a dividend could be a "transfer
of property" within the meaning of section 160. It is possible to imagine
a corporation, especially a closely held one, using the payment of a dividend
to divest itself of assets in order to avoid paying a tax liability, but in
most cases the payment of a dividend is an ordinary commercial transaction. A
dividend is also taxable income to the recipient (except for certain corporate
recipients) . . .
. . . Thus, the 1993 decision of the Tax Court in Algoa Trust
is the leading authority for the proposition that section 160 may apply to a
dividend.
[23]
For the purposes of
this case, the issue is really whether payment of a dividend constitutes a
transfer for which no consideration was given. Rip J. was very clear on
that point at page 34 of his judgment in Algoa Trust, a comment that
Nadon J.A. quoted in Gilbert and that is found in paragraph 9
herein above.
[24]
The word "consideration"
has also been construed by this Court, by Bonner J. in Ruffolo v.
Canada, [1998] T.C.J. No. 714, a decision upheld by the Federal Court of
Appeal at [2000] T.C.J. No. 700. In that decision, Bonner J. set out the
classical definition of the word. At paragraphs 3 and 7 of his case, he
said:
The Appellants attack the assessments on two grounds. Firstly, they
assert that consideration was given for the dividends. This argument starts
with the well known principle that when a corporation declares a dividend to be
payable on a certain date to its shareholders, a debt becomes payable on that
date to each shareholder in the amount of the dividend. The Appellants' theory
is that the shareholder pays consideration for the dividend equal in value to
that dividend by giving up the right to receive which was vested in him as a
consequence of the declaration. Thus, so the Appellants assert, the
subparagraph 160(1)(e)(i) amount is nil.
…
It is clear that the first of the Appellants' arguments cannot
succeed. The word "consideration" in subparagraph 160(1)(e)(i)
is to be given its ordinary meaning, namely, something given in payment.
Nothing in the statutory context or in the purpose which underlies section 160
suggests otherwise. The right to payment of a debt which is satisfied and
therefore disappears when the debt is paid cannot be said to have been given up
by the creditor in payment for the payment. When a dividend is paid by a
corporation to a shareholder property flows in one direction only. The
right of a shareholder to receive payment of a dividend which has been declared
flows from his status as shareholder and not from any consideration given by
him. Nothing in the decision of the Supreme Court of Canada in Newman v. The
Queen supports the Appellants' position..
[Emphasis added].
[25]
Several years earlier,
in Logiudice v. Canada, [1997] T.C.J. No. 742, Bowie J. had
made the following remarks regarding the definition of the word "consideration"
in the context of section 160 of the Act:
16 The word consideration, as it is used in
the context of section 160 of the Act, in its ordinary sense refers to the
consideration given by one party to a contract to the other party, in return
for the property transferred. The obvious purpose of section 160 is to prevent
taxpayers from escaping their liability for tax, interest and penalties arising
under the provisions of the Act by placing their exigible assets in the hands
of relatives, or others with whom they are not at arms' length, and thus beyond
the immediate reach of the tax collector. The limiting provision in subparagraph
160(1)(e)(i) of the Act is to protect genuine business transactions from the
operation of the section, to the extent of the fair market value of the
consideration given for the property transferred. It is apparent, therefore,
that for a transferee to have the benefit of this saving provision she must be
able to prove that the transfer of property to her was made pursuant to the
terms of a genuine contractual arrangement.
[Emphasis added].
[26]
An argument very
similar to the argument made by counsel for the Appellants in this case was
considered by Lamarre Proulx J. in Gilbert, supra. She
said the following regarding the theory as to the consideration for payment of
a dividend:
32 As to the possibility of consideration to be given for the
issuing of a dividend, I believe that the Supreme Court of Canada clearly
stated in Neuman (supra) there was no such possibility. The right
to a dividend stems from ownership of the shares. The consideration given to
acquire the shares must not be confused with the consideration for dividends.
The consideration given to acquire shares is considered for the acquisition and
disposition of shares. It is not a consideration given for a dividend.
[27]
In Gosselin, supra,
Dussault J. clearly stated, at paragraph 16, that a corporation that
pays dividends receives no consideration from its shareholders.
[28]
All of that case law
derives, inter alia, from the following remarks of Iacobucci J. in Neuman,
supra. I will quote some remarks from that decision here, in support of
the argument that there is no consideration associated with payment of a
dividend:
57 Dickson C.J. seemed to be of the view
that the character of a shareholder's dividend income is to be determined by
that shareholder's level of contribution to the corporation. This
approach ignores the fundamental nature of dividends; a dividend is a payment
which is related by way of entitlement to one's capital or share interest in
the corporation and not to any other consideration. Thus, the
quantum of one's contribution to a company, and any dividends received from
that corporation, are mutually independent of one another. La Forest J.
made the same observation in his dissenting reasons in McClurg (at p.
1073):
With respect, this fact is irrelevant to the issue before us.
To relate dividend receipts to the amount of effort expended by the recipient
on behalf of the payor corporation is to misconstrue the nature of a dividend.
As discussed earlier, a dividend is received by virtue of ownership of the
capital stock of a corporation. It is a fundamental principle of
corporate law that a dividend is a return on capital which attaches to a share,
and is in no way dependent on the conduct of a particular shareholder.
…
60 In my view, it is wrong to suggest that
there may be an exception to the rule that s. 56(2) does not apply to dividend
income where the recipient of the dividend income in a non-arm's length
transaction has not made a "legitimate contribution" to the
corporation. In so stating, I assume, of course, that proper
consideration was given for the shares when issued. I am not aware of any
principle of corporate law that requires in addition that a so-called "legitimate
contribution" be made by a shareholder to entitle him or her to dividend
income and it is well accepted that tax law embraces corporate law principles
unless such principles are specifically set aside by the taxing statute.
…
64.
To summarize, it is inappropriate to consider
the contributions of a shareholder to a corporation when determining whether s.
56(2) applies. Dividends are paid to shareholders as a return on their
investment in the corporation.
[Emphasis added].
[29]
To come back to the
argument made by counsel for the Appellants, that the corporation is not
impoverished and the shareholder is not enriched, the remarks of
Lamarre Proulx J. in Gilbert, supra, on this point,
which were followed by Nadon J.A. of the Federal Court of Appeal, are
still cogent and relevant (see paragraph 9 of these Reasons), as are the
remarks of Dussault J. in Gosselin, supra, which are set out
in paragraph 19 hereinabove.
[30]
Lamarre Proulx J. held
as follows in Benoît Côté v. Canada, [2002] T.C.J. No. 76:
[24] There are different paths a taxpayer
may take in organizing his affairs, and each of those paths entails a specific
tax treatment. It is well-settled in tax matters that the Court must consider
what the taxpayer has done. Here the taxpayer chose not to pay himself a salary
but to take advances and to repay those advances by means of a dividend. The
tax treatment of a dividend is different from the treatment of salaries or
other payments for services rendered. Unfortunately, I can only conclude as
follows: the corporation's payment of a dividend to the appellant in 1992 was a
transfer of property within the meaning of section 160 of the Act, and
no consideration was given in respect of that property because, according to
corporate law and the provisions of the Act applicable in the instant
case, the dividend in question is a share of the corporation's profits
allocated to the appellant as a shareholder. It is not a salary or other
payment for services rendered.
[Emphasis added].
[31]
Thus the very nature of
a dividend means that no consideration can have been given by the shareholder
to the corporation in exchange for the right to the dividend. The right of the
shareholder referred to by counsel for the Appellants arises out of the
declaration of the dividend, and nothing more. The creditor-debtor relationship
is created once the dividend is declared, and it is on that relationship that
counsel bases his argument that the shareholder renounces their right to bring
action. However, that renunciation is not consideration for the declaration of
a dividend. I even doubt that, in itself, it is consideration given for payment
of a debt. The debtor is the one who is entitled to demand an acquittance.
[32]
When a corporation
declares a dividend, that can only impoverish the corporation even if payment
of the dividend constitutes payment of a debt. Payment of a dividend does not
arise from a debt incurred by the corporation because it has received something
in return, such as goods or services. The basis on which this distinction can
be made is still the nature of a dividend itself.
[33]
The same is true for
the shareholder. The dividend is a benefit generated by their investment. Thus
it can only enrich the shareholder, even if the value of the shares may have
declined. In accounting terms, the consequence is that the shareholder may not
have been enriched, except that, in order to reach that conclusion, we must
disregard the dividend, payment of which must be made to the owners of the
share capital available to a corporation.
[34]
For these reasons, the
appeals are dismissed with costs.
Signed at Ottawa, Canada, this 3rd day of September 2008.
"François Angers"
Translation
certified true
on this 15th day
of May 2009.
François Brunet,
Reviser
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