Marina Homes Ltd. v. Canada, docket T-3237-90

    

Date: 20001215

Docket: T-3237-90

T-3238-90

BETWEEN:

     T-3237-90

MARINA HOMES LTD.,

Plaintiff

- and -

HER MAJESTY THE QUEEN,

Defendant

AND BETWEEN:

T-3238-90

DENVER HOMES LTD.,

Plaintiff,

- and -

HER MAJESTY THE QUEEN,

Defendant.

REASONS FOR JUDGMENTS

MacKAY, J.:

[1]      These are two actions heard together on common evidence, at Edmonton, Alberta. In each action an Alberta corporation, incorporated under the laws of the province and at all material times carrying on business in Alberta, appeals from a Notice of Assessment by the Minister of National Revenue dated 16 February 1990, pursuant to subsection 242(1) of the Income Tax Act, R.S.C. 1985, chapter 1 (5^th Supp.), as amended (the Act).

[2]      The plaintiffs' appeals were initiated by Statements of Claim file on 7 December 1990. Little was done to advance the actions for trial until 1998, following status review of the actions under the Federal Court Rules, 1998.

[3]      For the purposes of these actions, the parties admit facts set out in an agreed statement, to be taken as if these facts are formally proved. The statement is as follows:

Marina Homes Ltd.

1.      Marina Homes Ltd. ("Marina") is a corporation incorporated under the laws of the Province of Alberta.

2.      Marina was incorporated as 117987 Homes Ltd., and subsequently changed its name to Grandview Homes Ltd. and then to Marina Developments Ltd. and then to Marina Homes Ltd.

3.      At all materials times Vincent Montemurro owned 30 Class "A" common voting shares of Marina, and Brenda Montemurro owned 30 Class "B" common non-voting shares, being all of the issued shares of Marina.

4.      At all material times, Vincent Montemurro was president of Marina.

5.      The Directors of Marina in 1983 were Vincent Montemurro and Brenda Montemurro.

6.      The fiscal year end of Marina is January 31.

         Denver Homes Ltd.

7.      Denver Homes Ltd. ("Denver") is a corporation incorporated under the laws of the Province of Alberta.

8.      At all material times, Denver was owned 52% by Gino Antonello, 24% by Silvana Antonello and 24% by Terry Antonello.

9.      At all material times, Gino Antonello was President of Denver.

10.      The Directors of Denver in 1983 and 1989 were Gino Antonello, Silvana Antonello and Terrance Antonello.

11.      The fiscal year end of Denver is January 31.

Bronson Homes Ltd.

12.      Bronson Homes Ltd. ("Bronson") is a corporation incorporated under the laws of the Province of Alberta.

13.      At all material times Bronson was owned 50% by Gino Antonello and 50% by Vincent Montemurro.

14.      At all material times Gino Antonello and Vincent Montemurro were directors of Bronson.

15.      The fiscal year end of Bronson is December 31.

Loan

16.      On or about December 31, 1978, Bronson agreed to loan and thereafter did loan money to Marina and Denver in equal amounts which each of Marina and Denver agreed to borrow and repay. And attached as Exhibits 1-7 are copies of cheques from Bronson to Marina and Denver by which Bronson made the said loans (the "Loans").

17.      One of the terms and conditions of the Loans was that there would be no interest payable.

18.      By Resolution dated March 24, 1983, signed by the directors of Bronson, it was recorded that:

1.      Bronson Homes Ltd. indicate to each of Denver Homes Ltd. and Marina Developments Ltd. that notwithstanding the aforementioned loans are repayable on demand and until the written consent of each of Gino Antonello, Vince Montemurro, Denver Homes Ltd. and Marina Developments ltd. have been obtained, Bronson Homes Ltd. will not, shall not and shall not be entitled to demand repayment of the said loans.

    

And attached as Exhibit 8 is a copy of the said Resolution.

19.      As at May 30, 1989, the Loans were outstanding to Bronson in the following amounts:

Marina - $311,533.26

Denver - $314,370.93

Assessment

20.      By way of Notices of Reassessment dated February 13, 1984, the Minister of National Revenue ("Minister") reassessed Bronson's returns of income for the 1980 and 1981 taxation years. Bronson, as a result, was liable for certain taxes.

21.      On May 30, 1989, the Minister delivered a Requirement to Pay to each of Marina and Denver directing that each pay an amount in respect of the income tax liability of Bronson to the maximum of $479,648.48, but not to the exceed the Loans outstanding to Bronson by each of the Plaintiffs, as referred to in paragraph 19 herein.

22.      Neither Marina nor Denver remitted any money to the Minister pursuant to the Requirement to Pay.

23.      On February 16, 1990, the Minister delivered Notices of Assessment to each of Marina and Denver, alleging that each had failed to comply with the Requirements to Pay. More particularly, the Minister issued Assessment number 3284 to Marina for the amount of $311,533.26; and, Assessment number 3285 to Denver for the amount of $314,370.94.

24.      By Notice of Objection dated March 12, 1990, Marina served on the Minister an objection to Assessment number 3284.

25.      By Notice of Objection dated May 7, 1990, Denver served on the Minister an objection to Assessment number 3285.

26.      On September 12, 1990, the Minister notified each of Marina and Denver that Assessment number 3284 and Assessment number 3285 were confirmed, respectively.

[4]      In addition to those facts set out in the agreed statement, at trial it was established that loans advanced from Bronson to each of Denver Homes and Marina Homes (or their predecessor corporations) were made in the following amounts in the years: 1978, $10,000.00; 1979, $215,000.00; and 1980, $140,000.00.

[5]      The principals of each of the plaintiff companies, Mr. Vincent Montemurro for Marina and Mr. Gino Antonello for Denver, testified at trial. Their testimony confirms that they held equal shares, and were the sole directors of, Bronson. With respect to its operations they understood and their practice was that they relied on trust and long-standing friendship, and they produced little in the way of paper records. The company acted upon their mutual agreement. That was the basis for the agreement in 1972, when Bronson's predecessor was formed, which provided for the equal division between the two principals of shares in the company, and for equal participation of the two shareholders in voting at company meetings and in the operations of the company. It provided also for the acquisition of the shares of one of them upon his leaving the company, or his death or incapacity, by the continuing shareholder at a price per share to be determined in a manner prescribed. Their equal participation in Bronson Homes was the basis on which loans were made to Denver and to Marina in equal amounts at the same times. With the one exception, concerning the first loan of $10,000.00 made to each company in 1978, each affirmed that it was his understanding, when each of the loans was made in 1979 and 1980, as was later reflected in the Resolution of March 24, 1983, that the loan was made without interest and the loan was not payable and could not be called unless both shareholders in Bronson, and each of them for his own company, agreed to a repayment.

[6]      Both testified that the 1983 Resolution, prepared at their instructions by a lawyer, was made and signed by them. While this was done after Revenue Canada had initiated an audit of Bronson, both denied it changed any of the arrangements about the loans which had been orally agreed upon earlier. The Resolution was intended simply to have a written record of the loan arrangement, not to change its terms or to defeat claims of any creditor of Bronson. For Mr.Antonello the resolution was adopted simply to have a record of the arrangement, in times when the construction industry was in difficulty, and from the viewpoint of Mr. Montemurro, it was done to ensure that if anything happened to him, his wife, as a shareholder in Marina Homes, would have a measure of protection against claims by Bronson for repayment.

[7]      Both Mr. Montemurro and Mr. Antonello had some minimal public education in Italy before coming as young men to Canada. They were tradesmen with experience in constructing housing and in modest land development projects. There was nothing sophisticated about their business operations. They operated with few proper records, except records for arrangements with other persons, and no financial records of significance were adduced in these actions. Both impressed me as persons who were truthful in their evidence.

[8]      On the basis of their evidence I find that the 1983 Resolution, by its paragraph 1, set out the basics of the loan arrangements made by Bronson Homes. The loans to each of Denver and marina were not simply repayable on demand by Bronson; rather they were not repayable "until the written consent of each of Gino Antonello, Vince Montemurro, Denver Homes Ltd. and Marina Developments Ltd. have been obtained." Until then Bronson "will not, shall not and shall not be entitled to demand repayment of the loans."

[9]      At no time did any of Mr. Antonello, Mr. Montemurro, Denver Homes or Marina Homes consent to Bronson Homes to demand repayment of the loans made to Denver and Marina.

[10]      In the Amended Defence filed on 28 April 1992, it is set out that in the assessment by the Minister, he relied upon the following assumptions of fact:

a) and b) facts admitted and stated in the Defence [in this case those facts are set out in the Agreed Statement of Facts];

c)      the loans to the plaintiffs from Bronson were repayable on demand;

d)      as at May 30, 1989, the plaintiffs owed Bronson $314,370.94 (in the case of Denver) and $311,533.26 (in the case of Marina), respectively;

e)      as at May 30, 1989, Bronson owed amounts to the Receiver General for Canada pursuant to the Income Tax Act in an amount larger than the amount owed to Bronson by either Denver or Marina as set out in paragraph (d).

[11]      I find, on the evidence presented at trial on behalf of the plaintiffs, that a key assumption of the Minister was in error. On the plaintiffs' evidence I find the loans to the plaintiffs were not repayable to Bronson on demand. There was no written consent by Mr. Antonello, Mr. Montemurro, Denver or Marina to repayment at any time, as was required by the loan agreements, and thus, at May 30, 1989, or thereafter, the plaintiff companies did not have an obligation to repay the amounts each had borrowed from Bronson, at least in the sense that the loans were not, at that time, due and payable, or thereafter within 90 days.

SUBMISSIONS OF THE PARTIES

[12]      When the case was heard the plaintiffs argued that since no consent was given to repayment of the loans to Bronson, by Messrs. Antonello and Montumurro or by their respective companies, Bronson Homes could not demand payment on May 30, 1989, or thereafter. For the Crown it was argued that the March 1983 Resolution did not reflect the true nature of the loan transactions, rather those loans had been advanced, repayable on demand, an arrangement which the 1983 Resolution sought to change. I have already concluded otherwise, that from the beginning the loans were made on the basis confirmed later by the resolution in 1983, and by its terms consent was required by the shareholders of Bronson and by the plaintiff corporations before a demand for repayment could be effective.

[13]      The defendant urged that the loans were truly demand loans, that the 1983 Resolution was made after the audit of Bronson Homes by National Revenue was initiated, and that it introduced, as a change in the loans' terms, the requirement for consent by Messrs. Antonello and Montemurro, and by their respective companies, the plaintiffs, before Bronson could demand payment of the loans. I have not been persuaded that was the purpose or the effect of the 1983 Resolution. The only evidence before the Court on the matter is the testimony of Messrs. Antonello and Montemurro, which I accept as the truth; that the loan arrangements were understood to be on the basis that there would not be repayment unless and until they both agree to it.

[14]      The Crown advanced an alternative basis for assessing liability under the Act, pursuant to s. 160, on the basis that the loans were forgiven and thus not repayable, construing a transfer of assets between parties not at arm's length, and without consideration. In this case that alternative basis was alluded to originally in the plaintiffs' own Statements of Claim where, as an alternative ground of their appeals from assessment, the plaintiffs pleaded that if an amount of a loan was payable to Bronson, which was denied, the loan had been forgiven and was extinguished prior to May 30, 1989. That alternative ground was not argued by the plaintiffs at trial and in view of that the plaintiffs urged that the alternative ground argued by the defendant could not be considered for it introduced an entirely different basis for assessing tax liability than was originally advanced by the Minister in the assessments here appealed. In the plaintiffs' view the Court should allow the appeal and remit the matter to the Minister. If the latter then wished to introduce a new basis for assessing the plaintiffs, pursuant to s. 160 of the Act, as here urged by the defendant to be recognized, that would be a matter for consideration another day. Further, it is argued that s-s. 152(9) of the Act now precludes the Minister from raising an alternative basis of assessment in this case.

[15]      Counsel sought, and was granted, an opportunity to make written submissions on the question whether the Court should consider the defendant's submission of an alternative s. 160 ground for assessing liability of the plaintiffs. Those submissions were received in February 2000.

[16]      The plaintiffs urge that the original assessment under s-s. 224(4) and 227(10) was based on the plaintiffs' perceived liability to Her Majesty as a garnishee, that is as one owing a debt that was payable to the debtor-taxpayer, Bronson Homes. In the plaintiffs' view that assessment, though subject to objection or appeal as any other assessed liability under Part I, Division I of the Act, is not an assessment of tax liability. It is urged that the basis for the assessment under the Act cannot be changed at this stage, particularly since at the time of the original assessment in 1990 no consideration was given to a possible assessment under s. 160 of the Act, the alternative basis of the assessment now proposed by the defendant.

ANALYSIS

[17]      There is no doubt that the basis of an assessment under s. 224 and 227, an assessment by garnishment against one who is liable to make a payment to a tax debtor, is different from the assessment under s. 160 against the recipient of transferred property where the parties to the transfer are not dealing at arm's length.

[18]      Here the original claim arose by assessment pursuant to s-s. 224(1), 224(4) and 227(10) which provide:

224. (1) Where the Minister has knowledge or suspects that a person is or will be, within 90 days, liable to make a payment to another person who is liable to make a payment under the Act (in this subsection and subsections (1.1) and (3) referred to as the "tax debtor"), the Minister may, by registered letter or by a letter served personally, require that person to pay forthwith, where the moneys are immediately payable, and in any other case, as an when the moneys become payable, the moneys otherwise payable to the tax debtor in whole or in part to the Receiver General on account of the tax debtor's liability under this Act.      ...               (4) Every person who fails to comply with a requirement under subsection (1), (1.2) or (3) is liable to pay to Her Majesty an amount equal to the amount that he was required under subsection (1), (1.2) or (3), as the case may be, to pay to the Receiver General.      ...      227. (10) The Minister may assess          ( a) any person for any amount payable by that person under subsection (8), (8.1), (8.2), (8.3), (8.4) or 224(4) or (4.1) or section 227.1, and          ( b) any person resident in Canada for any amount payable by that person under Part XIII,      and, where he sends a notice of assessment to that person, Divisions I and J of Part I are applicable with such modification as the circumstances require.

224. (1) Dans le cas où le ministre sait ou soupçonne qu'une personne est ou sera, dans les 90 jours, tenue de faire un paiement à une autre personne qui, elle-même, est tenue de faire un paiement en vertu de las présente loi (apelée < < débiteur fiscal > > au présent paragraphe et aux paragraphes (1.1) et (3)), il peut, par lettre recommandée ou par lettre signifée à personne, exiger de cette personne que les deniers autrement payables au débiteur fiscal soient en totalité ou en partie versés, immédiatement si les deniers sont alors payables ou, dans les autres cas, au fur et à mesure qu'ils deviennent payables, au receveur général au titre de l'obligation du débiteur fiscal en vertu de la présente loi.      ...      (4) Toute personne qui de se conformer à une exigence du paragraphe (1), (1.2) ou (3) est tenue de payer à Sa Majesté un montant égal au montant qu'elle était tenue, en vertu du paragraphe (1), (1.2) ou (3), de payer au receveur général.      ...      227. (10) Le ministre peut cotiser          ( a) toute personne pour un montant payable par elle en vertu du paragraphe (8), (8.1), (8.2), (8.3) ou (8.4) ou 224(4) ou (4.1) ou de l'article 227.1;          ( b) toute personne qui réside au Canada pour un montant payable par elle en vertu de la partie VIII;      dans l'un et l'autre cas, s'il lui envoie un avis de cotisation, les sections I et J de la partie I s'appliquent, avec les adoptation nécessaires.

[19]      I agree with the plaintiffs that in the circumstances of this case the assessment by the Minister pursuant to ss. 224 and 227 was not valid. Neither at the time it was made, May 30, 1989, nor within 90 days of that date did the plaintiffs have any obligation to repay their outstanding loans to Bronson Homes. Thus, the Minister was in error in issuing to the plaintiffs requirements to pay. If the prerequisite for repayment liability to Bronson Homes did not exist, the plaintiffs were not liable to pay to the defendant the amounts required under s-s. 224(4) and the assessments under s-s. 227(10) were not valid [The Manufacturers Life Insurance Company v. M.N.R. (1991), 91 D.T.C. 1055 (T.C.C.); The Queen v. National Trust Co. (1988), 162 D.L.R. (4^th) 704 (F.C.A.)].

[20]      The alternative basis for the assessment first raised by the defendant by Defences filed in the Marina Homes action (T-3237-90) on 28 April 1992, and in the Denver Homes action (T-3238-90) on 4 February 1991, in both of which it was pleaded that if the Court should find that Bronson forgave the obligation to pay, then Bronson transferred property in the amounts of the loans outstanding to the plaintiffs, with which Bronson was not dealing at arm's length, and the plaintiffs, having given no consideration for the property transferred, were liable pursuant to s. 160 of the Act for the amounts of the respective outstanding loans.

[21]      The basis for this alternative claim is s. 160, which provides in part:

160. (1) Where a person has, on or after the 1st day of May, 1951, transferred property, either directly or indirectly, by means of a trust or by any other means whatever, to      (a)      his spouse or a person who has since become his spouse,      (b)      a person who was under 18 years of age, or      (c)      a person with whom he was not dealing at arm's length,      the following rules apply:      ...      (e)      the transferee and transferor are jointly and severally liable to pay under this Act an amount equal to the lesser of          ...          (ii)      the aggregate 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.      (2) The Minister may at any time assess a transferee in respect of any amount payable by virtue of this section and the provisions of this Division are applicable mutatis mutandis in respect of an assessment made under this section as though it had been made under section 152.

160. (1) Lorsqu'une personne a, depuis le 1er mai 1951, transféré des biens, directement ou indirectement, au moyen d'une fiducie ou de toute autre façon,      a)      à son conjoint ou à une personne devenue depuis son conjoint,      b)      à une personne qui était âgée de moins de 18 ans, ou

c)      à une personne avec laquelle elle avait un lien de dépendance,      les règles suivantes s'appliquent:      ...      e)      le bénéficiaire et l'auteur du tranfert sont conjointement et solidairement responsables du paiement en vertu de la présente loi d'un montant égal au moins élevé des deux montants suivants:          ...          (ii)      le total des montants dont chacun représente un montant que l'auteur du transfert doit payer en vertu de la présente loi au cours de l'année d'imposition dans laquelle les biens ont été transférés ou d'une année d'imposition antérieure ou pour une de ces années,      mais aucune disposition du présent paragraphe n'est réputée limiter la responsabilité de l'auteur du transfert en vertu de toute autre disposition de la présente loi.      (2) Le Ministre peut, à une date quelconque, cotiser un bénéficiaire du transfert à l'égard de toute somme payable en vertu du présent article et les dispositions de la présente section s'appliquent mutatis mutandis à une cotisation faite en vertu du présent article comme si elle avait été faite en vertu de l'article 152.

[22]      The plaintiffs urge that the assessments against them as garnishees were not assessment of tax liability made under Part I of the Act and thus, the assessments under appeal cannot be upheld on an alternative basis under s. 160, which is an assessment of tax liability under Part I. The assumptions underlying an assessment under s. 160 are different from those supporting an assessment under s-s. 227(10) and, in the plaintiffs' view, they were not set out as assumptions supporting the assessments issued and they were not established by the defendant by evidence adduced at trial.

[23]      The defendant urges that the alternative basis now claimed supports an assessment of tax under s. 160, and since subsection (2) of that provision authorizes an assessment "at any time", the limitation periods set by s. 152 are thus not applicable to an assessment under s. 160. That interpretation is accepted by the plaintiffs in written submissions after trial, in the following terms, after urging that these action be allowed and

... any new, further or other assessment of tax liability against either plaintiff should be left to the Minister, exercising his powers and discretion under the Act to determine the amount, if any, of any new assessments which may be permitted under the Act. If the Minister feels that section 160 might apply on the facts then he may issue an assessment of tax liability; and, as such an assessment can under section 160(2) be issued "at any time", the Minister is not prejudiced by allowing these appeals. [Emphasis in original]

[24]      I note that even if there were time limits applicable to an assessment under s. 160 of the Act, pursuant to s. 152(4) or otherwise, s. 152(9), as enacted by amendment with effect for appeals disposed of after 17 June 1999, would permit a further assessment after the reassessment period in normal circumstances.

[25]      The defendant urges that the alternative ground of tax liability of the plaintiffs under s. 160 supports the assessments by the Minister. That assumes that an "assessment" means an amount of money determined by the Minister. That may be appropriate where the basis of the assessment, its rationale, is not in issue on an appeal. Yet where the basis of the assessment is questioned and found wanting, as it is here, an alternative basis to justify some tax liability is not a basis on which the Court should uphold an assessment as valid, in the absence of an assessment by the Minister made on that alternative basis.

[26]      In Gross v. The Minister of National Revenue (1989), 89 D.T.C. 660 at 662, Taylor T.C.J., commented:

The facts or assumptions underlying an assessment, at the time an assessment is made, are those vital to the process before the Court. To substitute for these some other facts or assumptions at a later point in time, simply because then new reasons appear to be more soundly based, is not a procedure which I find acceptable.

In Schultz v. The Queen (1995), 95 D.T.C. 5651 at 5662, Stone, J.A., writing for the Federal Court of Appeal, commented:

I do not understand the law as developed in these cases prevented the Minister from pleading the alternative defence before the Tax Court of Canada. It is true that in pleading he is subject to certain constraints. For example, hecannot plead an alternative assumption when to do so would fundamentally alter the basis on which his assessment was based as to render it an entirely new assessment. In my view, in the present cases the Minister has not so changed the basis of the assessments ...

In my opinion, in this case the alternative basis for an assessment under s. 160 does fundamentally alter the basis of the assessments for Marina and Denver, and such a change is a matter for the Minister to determine by formal action with proper notice, not a matter for this Court to institute.

[27]      I distinguish the facts in this case from those in McVey v. R., [1996] 2 C.T.C. 215 (T.C.C.), where Rip, J. dismissed an appeal from an assessment based on s. 160 where the taxpayer claimed that there was no transfer of property, but rather there was a loan. There it was held the liability for tax, created by the Act not by the Minister's assessment, meant that the taxpayer was liable to pay the amount claimed, which was the same whether it was assessed under s. 160 or under ss. 224(1) and (4) and s-s. 227(10). In that case, there was evidence the transferor treated the transaction as a loan but the transferee made representations to the Department that the transaction was a gift. Then when assessed on the basis of s. 160, the taxpayer claimed the transaction was a loan after all. Those circumstances were peculiar to that case and the decision is not helpful in this case.

[28]      In that case there was one transaction the amount of which was assessable in one taxation year, whether it was considered a transfer of property or a loan. In this case that is not the result. If these transactions were loans, the outstanding balance at May 30, 1989, was in excess of $300,000.00 in each case. While for the defendant it is urged that same amount is assessable under s. 160, the plaintiffs urge, and I am persuaded, that under subparagraph 160(1)(e)(ii) the amounts each of the plaintiffs was liable to pay is "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."

[29]      There is no evidence that Bronson Homes was a tax-debtor for any taxation year until 1980. Thus, the liability under s. 160 would appear to be related to the amounts transferred to the plaintiffs in 1980, i.e. $140,000.00. Ultimately any decision about that will be determined by the Minister in relation to amounts deemed to be transferred to the plaintiff companies, pursuant to s. 160. In connection with any such reassessment, I record that there was no issue raised concerning the lack of arm's length relationships between Bronson Homes and the plaintiff companies. Further, no argument was raised about the alternate perception or assumption on behalf of the defendant that the moneys in issue were ultimately transfers of property within the meaning of s. 160. While the matter was not directly dealt with,on the evidence of Messrs. Antonello and Montemurro, that no consent had been given to a demand for repayment by Bronson, and that they were not able, in view of economic conditions in the mid-1980's, to repay the moneys originally treated as loans, it may be inferred that by May 30, 1989, the moneys advanced by Bronson Homes to the plaintiff corporations were considered by the principals concerned to be transfers of property, for which there is no argument that any consideration was given.

CONCLUSIONS

[30]      In my opinion, on the evidence of the principal parties here involved, Mr. Antonello and Mr. Montemurro, the loans advanced by Bronson Homes were not repayable on demand until those principals and their respective separate companies agreed to repayment. On May 30, 1989, no agreement for repayment was made and there was not then or within 90 days thereafter an obligation of the plaintiff companies to repay the loans. Thus, the prerequisite to an assessment pursuant to s-ss. 224(1) and (4) and s-s. 227(10) was not met and the Minister's assessments thereunder must be set aside.

[31]      The alternative ground for an assessment pursuant to s. 160, is a matter to be pursued, if at all, by formal action by the Minister by means of a reassessment under the Act. It is not a matter for endorsement by the Court at this stage.

[32]      In the result, the actions of the plaintiffs are allowed and the assessments dated February 16, 1990 are vacated. The matter is remitted to the Minister with advice to that effect. If the Minister determines that the plaintiffs are to be reassessed pursuant to s. 160, that shall be related to transfers of property, as specified by subparagraph 160(1)(e)(ii) of the Act, made in a year in which Bronson Homes was determined to be a tax-debtor.

[33]      The plaintiffs shall have costs of these actions, as the parties may agree, or failing agreement they shall be assessed pursuant to Column III of Tariff B under the Federal Court Rules, 1998, on the understanding that the costs in relation to services of one counsel shall be assigned on the basis of 50% to each action since the same counsel represented the plaintiffs in both actions heard together.

[34]      Separate Orders go for each of files T-3237-90 and T-3238-90 with a copy of these Reasons filed on each of those files.

     (Signed) W. Andrew MacKay

___________________________________

JUDGE

OTTAWA, Ontario

December 15, 2000.