Cleary v. Canada, 2006 FCA 88

Date: 20060228

Dockets: A-680-04

A-681-04

Citation: 2006 FCA 88

CORAM :      DÉCARY J.A.

                        NOËL J.A.

                        PELLETIER J.A.

BETWEEN:

A-680-04

GILLES CLEARY

Appellant

and

HER MAJESTY THE QUEEN

Respondent

A-681-04

DANNY CLEARY

Appellant

and

HER MAJESTY THE QUEEN

Respondent

Hearing held at Montréal, Quebec, on February 28, 2006.

Judgment delivered from the bench at Montréal, Quebec, on February 28, 2006.

REASONS FOR JUDGMENT OF THE COURT BY:                                                      NOËL J.A.

Date: 20060228

Dockets: A-680-04

A-681-04

Citation: 2006 FCA 88

CORAM :      DÉCARY J.A.

                        NOËL J.A.

                        PELLETIER J.A.

BETWEEN:

A-680-04

GILLES CLEARY

Appellant

and

HER MAJESTY THE QUEEN

Respondent

A-681-04

DANNY CLEARY

Appellant

and

HER MAJESTY THE QUEEN

Respondent

REASONS FOR JUDGMENT OF THE COURT

(Delivered from the bench at Montréal, Quebec, on February 28, 2006.)

NOËL J.A.:

[1]   These are two appeals against decisions by the Honourable Mr. Justice Archambault of the Tax

Court of Canada refusing to grant the appellants a tax exemption under section 87 of the IndianAct with respect to business income on the ground that the entitlement to these earnings was not situated on a reserve.

[2]   The appellants do not take issue with the the trial judge as to the approach that the courts must follow to identify the situs of business income (see for example Southwind v. Canada, 98 DTC 6084; Bell v. Canada, [2000] F.C.J. No. 680 (QL).

[3]   The appellants do, however, take issue with him for applying the tests connected with this approach with a contradictory rigour. We do not share this view.

[4]   The trial judge was faced with an attempt by the appellants to graft an activity situated on a reserve in the Lac Saint Jean region onto their well-established and very profitable business in Longueuil. After carrying out a meticulous review of the evidence and in light of the applicable tests, he found that the $1.2 million in profits they wanted exempted from taxation essentially constituted “an artificial extraction of profit made by . . . [the business] in the Montréal region” (Reasons, paragraph 43).

[5]   This was a conclusion open to the Court, based on the evidence.

[6]   For these reasons, we are of the view that the appeal must be dismissed with a single set of costs.

                                                                                                                   “Marc Noël”

Certified true translation

Michael Palles

FEDERAL COURT OF APPEAL

SOLICITORS OF RECORD

DOCKET:                                                                              A-680-04 & A-681-04

NOTICE OF APPEAL OF A DECISION BY THE TAX COURT OF CANADA DATED NOVEMBER 2004, DOCKETS 2001-3163(IT)G AND 2001-3164(IT)G.

STYLE OF CAUSE:                                                               GILLES CLEARY v. HER MAJESTY THE QUEEN and DANNY CLEARY v. HER MAJESTY THE QUEEN

PLACE OF HEARING:                                                        Montréal, Quebec

DATE OF HEARING:                                                          February 28, 2006

REASONS FOR JUDGMENT BY:                                     Décary J.A.

                                                                                                Noël J.A.

                                                                                                Pelletier J.A.

DELIVERED FROM THE BENCH BY:                            Noël J.A.

APPEARANCES:

SOLICITORS OF RECORD: