Duncan v. The Queen, 2005 TCC 458

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Motion heard by telephone conference call on July 19, 2005

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REASONS FOR ORDER AND ORDER

[1]      Upon reading the material filed in these matters, reviewing the files and hearing counsel:

[2]      These motions by the Respondent are requests for the Court to order James S. Duncan, upon examination for discoveries to answer questions "if a Section 754 election was made by Claridge & Associates?" or to provide counsel with that information. Appellants' counsel objected on the basis that it was a question of law.

[3]      In the course of the examination a "Grant Thornton letter" dated March 15, 1988, addressed to CMF Enterprises Ltd. in Toronto was reviewed. This was a letter from Dallas, Texas, accountant Grant Thornton advising respecting this United States Internal Revenue Code election and the consequent United States tax and value results respecting it.

[4]      CMF Enterprises Ltd. assigned the Appellants their interests in options to purchase interest in Claridge No. 1, apparently in 1987. Whether Claridge No. 1 was a partnership and the value and consideration for those purchases are parts of the subject in dispute.

[5]      James S. Duncan was the general partner in Claridge Holdings No. 1, a partnership involved in the purchase and valuation for Canadian tax purposes of a condominium in Dallas, Texas, which values are the subject of these appeals.

[6]      The questions are of factual matters, not law. In essence each set of questions is of the following:

James S. Duncan -

386:    Was a Section 754 election made by Claridge & Associates?

387:    Provide that information.

388:    Was any debt forgiveness income attributable to Claridge Holdings No. 1?

389:    Provide that information.

390:    Were you willing to be subject to U.S. federal income tax on the Claridge transaction?

The questions of Mr. Duncan were identical in his examination for J. Duncan Holdings Ltd.

[7]      Because Mr. Duncan was the general partner described, all of the questions were respecting matters within his power and ability to answer. They were factual and did not raise matters of legal knowledge. Each subject may be relevant to the value issues in dispute.

[8]      James S. Duncan is ordered to answer the questions and to provide the information as asked.

[9]      Costs and disbursements respecting each motion are fixed at $700 apiece and are to be paid to the Respondent by each Appellant forthwith.

[10]     The examinations for discovery are ordered to be resumed at the expense of the Appellants.

       Signed at Saskatoon, Saskatchewan, this 22^nd day of July 2005.

Beaubier, J.

CITATION:                                        2005TCC458

COURT FILE NOS.:                          97-986(IT)G and 97-988(IT)G

STYLE OF CAUSE:                           James S. Duncan, etal. v. The Queen

PLACE OF HEARING:                      Ottawa, Canada

DATE OF HEARING:                        July 19, 2005

ORDER AND REASONS FOR

ORDER BY:                                       The Honourable Justice D.W. Beaubier

DATE OF ORDER AND

REASONS FOR ORDER:                  July 22, 2005

APPEARANCES:

COUNSEL OF RECORD:

       For the Appellant:

                   Name:                              George Cadman, Q.C.

                   Firm:                                Boughton Peterson Yang Anderson Law

                                                          Corporation

       For the Respondent:                     John H. Sims, Q.C.

                                                          Deputy Attorney General of Canada

                                                          Ottawa, Ontario