Citation: 2015 FCA 40
HER MAJESTY THE QUEEN
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REASONS FOR JUDGMENT
 This is an appeal from a decision (neutral citation 2013 TCC 383) rendered by Associate Chief Justice Rossiter (as he then was) of the Tax Court of Canada (the Tax Court judge) wherein he dismissed the motion brought by David Gramiak (the appellant) to strike portions of the Reply to the Notice of Appeal filed by Her Majesty the Queen (the respondent) and granted the respondent leave to amend her Reply.
 At issue is whether the Tax Court judge committed various legal and factual errors in dismissing the appellant’s Motion to Strike and allowing the respondent’s Motion to Amend. For the reasons which follow, I have come to the view that no such errors were committed and that the appeal should accordingly be dismissed.
 The provisions of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (the Act) and the Tax Court of Canada Rules (General Procedure), SOR/90-688a (the Rules) which are relevant to the analysis are reproduced in the Annex to these reasons.
 The reassessments which form the subject matter of the underlying proceedings were issued with respect to the appellant’s 2002 and 2003 taxation years. At issue throughout the audit which led to their issuance was whether debentures issued by PI Ventures Inc. (the debentures) were qualified investments for purposes of the appellant’s self-directed registered retirement savings plan (RRSP) and whether they were acquired for an amount in excess of their fair market value.
 During the course of the audit, by letter dated January 12, 2006, waivers were sought by the Canada Revenue Agency (CRA). The text as proposed by the CRA waived the normal reassessment period with respect to (Appeal Book, Vol. I at pp. 130 and 132):
Income inclusion relating to the acquisition of non-qualified investment for a registered plan and/or income inclusion relating to the acquisition of investment for a registered plan for an amount in excess of fair market value with respect to PI Ventures Inc. in the amount of $130,500 [amount for 2002 taxation year, for 2003, the amount was $8,500] plus related penalties.
 The authorized representative of the appellant asked and obtained that the waivers be modified so as to read (ibidem):
Income inclusion of $130,500 [for the 2002 taxation year, $8,500 for the 2003 taxation year] relating to the acquisition of non-qualified investments (PI Ventures Corporation convertible debentures) for a RRSP subject to s. 146(9) and/or s. 146(10).
Waivers bearing this language were signed by the appellant on or about March 14, 2006.
 The waivers were subsequently revoked by the appellant on October 4, 2006, with effect six months thereafter thereby provoking the issuance of reassessments.
 These were issued on January 4, 2007. The effect of the reassessments was to add the above amounts to the appellant’s income for the 2002 and 2003 taxation years pursuant to subsections 146(9), 146(10) and paragraph 56(1)(h) of the Act on the basis that the debentures were non-qualified investments (subsection 146(10)) and were acquired by the appellant’s self-directed RRSP for an amount in excess of their value (subsection 146(9)). Penalties were levied pursuant to subsection 163(2) on the amounts assessed on the basis that the appellant had knowingly made a false statement in filing his tax returns for those years.
 The normal reassessment period (3 years from the date of the initial assessment) ended on June 5, 2006 with respect to the appellant’s 2002 taxation year and May 13, 2007 with respect to his 2003 taxation year so that the latter was reassessed within this period and the former was not.
 Up to January 12, 2012, when he filed his Notice of Appeal, the appellant maintained that the debentures had been acquired by his RRSP (Appeal Book, Vol. 1 at pp. 140, 141 and 200). In his Notice of Appeal, the appellant took the position, for the first time, that the debentures were not acquired and that as a result no amount could be included in his income pursuant to subsections 146(9) and 146(10) of the Act.
 In her initial Reply to the Notice of Appeal filed on March 6, 2012, the respondent raised the alternative argument that if the debentures were not acquired by the appellant, he nevertheless was in constructive receipt of a taxable benefit in the same amounts as those reassessed, pursuant to subsection 146(8).
 On February 28, 2013, the appellant brought a motion to strike the paragraphs setting out this alternative argument and related additions.
 Before the motion could be heard, the respondent brought a motion of her own seeking to amend her Reply so as to add the following two paragraphs:
19A. During the years 2004 to 2007, the Appellant received the following funds from foreign source as shown on the statements issued by Syndicated Gold Depository and provided by the Appellant to the CRA:
2004: US$ 5,950.00
2005: US$ 32,351.86
2006: US$ 40,000.00
2007: US$ 40,000.00
TOTAL: US$ 118,301.86 (CND$135,297.60)
19B. These amounts represent a return of capital from the Appellant’s RRSP investment in PI ventures Inc. as stated by the Appellant in a declaration dated June 20, 2008.
 On the same occasion, the respondent proposed to complement the contested plea as follows:
28. Alternatively, if this Court concludes that the Appellants’ RRSP did not acquire the debenture units and/or did not acquire any property during the 2002 and 2003 taxation years, the Respondent submits that by directing Olympia Trust to transfer funds from his RRSP account into Singh Walters Bindal Trust Account, the Appellant constructively received the total amount of the funds transferred.
29. As a consequence, the amounts of $130,500 and $8,500 received by the Appellant
as constituted a benefit out of or under a RRSP and as such this amount should be properly included in his income for the 2002 and 2003 taxation years pursuant to subsection 146(8) and paragraph 56(1)(h) of the Act.
 The Motion to Strike and the Motion to Amend were heard together. During the hearing, the appellant took the position that the Minister of National Revenue (the Minister) could not rely on subsection 152(9) to advance the alternative argument as it rests on a transaction that is different from the one on which the reassessments are premised. He further argued that insofar as the 2002 taxation year is concerned, the alternative argument falls outside the scope of the waiver and therefore outside of the exception to the normal reassessment period created by subparagraph 152(4.01)(a)(ii).
 By decision rendered on December 10, 2013, the Tax Court judge dismissed the appellant’s Motion to Strike and granted the respondent’s Motion to Amend her Reply. This is the decision now under appeal.
DECISION UNDER APPEAL
 The Tax Court judge first addressed the Motion to Strike. He referred to section 53 of the Rules and then enunciated the “plain and obvious” test for striking out pleadings (Operation Dismantle Inc. v. Canada,  1 S.C.R. 441 at p. 455; R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42). Although he stated that this test, by reason of its wording, must be ascertained without the need for lengthy deliberation – a proposition that has become a source of contention in the present appeal (appellant’s memorandum at paras. 34 and 35) – he went on to write more than thirty paragraphs before concluding at paragraph 38 that the appellant had failed to demonstrate that this test had been met.
 In the course of his analysis, the Tax Court judge considered two questions. First, do the impugned paragraphs of the Reply raise an argument that is permitted by subsection 152(9) of the Act? Second, does the allegation made in those paragraphs, more particularly the reference to subsection 146(8), reasonably relate to the matters specified in the waivers as contemplated by subparagraph 152(4.01)(a)(ii) of the Act?
 After considering the relevant case law, the Tax Court judge answered both of these questions in the affirmative. As to the first, the Tax Court judge found that the transactions underpinning the alternative argument were not substantially different from those underlying the reassessments at issue (reasons at paras. 43 to 47).
 He went on to find that although the text of the waiver was restrictive, this wording was not a bar to the alternative argument raised by the respondent (reasons at paras. 53 to 67). In the course of his reasons, he found that (reasons at para. 66):
… [i]t would be absurd to disallow the Respondent’s alternative argument when one considers that the Appellant drafted the waiver attempting to limit the scope of the reassessment, then advanced a new argument in the Notice of Appeal that contradicts the information provided to the CRA during the audit, and now claims the Respondent cannot respond to their new position since it is outside the scope of the carefully crafted waiver.
 Having refused to strike the impugned paragraphs, the Tax Court judge went on to allow the respondent’s proposed amendment to her Reply. The Tax Court judge noted that an amendment will be allowed if it assists in determining the real question in controversy between the parties (reasons at para. 75). The two paragraphs sought to be added achieve this result as they trace the funds which form the subject matter of the reassessments from the appellant’s self-directed RRSP back to him (reasons at para. 76).
 Moreover, the CRA was not made aware of these facts until 2008, well after the reassessments were issued (reasons at para. 78). Finally, no prejudice results as the appellant was aware from the beginning that the CRA was investigating what they believed was an RRSP stripping scheme (reasons at para. 77).
 The appellant first contends, citing Canadian Imperial Bank of Commerce v. The Queen, 2011 TCC 568 at paragraphs 7 to 81 [CIBC], that the Tax Court judge made an error in principle when he held that the “plain and obvious” test was to be ascertained quickly without deliberation. According to the appellant, “[t]he ‘plain and obvious’ test does not mean that a careful analysis of the issues is not required on a motion brought under section 53 of the Rules” (appellant’s memorandum at para. 35).
 The appellant further argues that the language of the waiver as crafted by his authorized representative is air-tight and cannot be reasonably linked to the transaction underlying the alternative argument. In particular, the specificity of the words “PI Ventures Corporation Debentures” to describe the investment and the phrase “subject to subsection 146(9) and/or subsection 146(10)” are such that the waiver cannot be reasonably construed as extending to anything other than the imposition of tax under these two provisions as a result of the debenture transaction.
 The appellant adds that the impugned paragraphs are not saved by subsection 152(9) of the Act since the alternative argument rests on a legal and factual basis that is different from that which underlies the reassessments.
 Furthermore, it is well established that an alternative argument pursuant to this provision cannot be permitted if it allows the Minister to reassess outside the normal reassessment period. According to the appellant, this is the effect of the alternative argument which the respondent seeks to raise.
 Finally, the appellant submits that if the respondent’s alternative argument is struck, it would necessarily follow that paragraphs 19A and 19B cannot be added to the respondent’s Reply as the facts which they state would have no bearing on the outcome of the appeal.
ANALYSIS AND DECISION
Standard of Review
 The decision of a Tax Court judge disposing of a Motion to Strike or a Motion to Amend pleadings is discretionary in nature. This Court will therefore defer to such decision in the absence of an error of law, or a misapprehension of the facts (CIBC at para. 5).
 Whether the Tax Court judge properly directed himself in applying subsections 152(9) and 152(4.01) gives rise to a question of mixed fact and law to be reviewed for palpable and overriding error absent an extricable question of law (Housen v. Nikolaisen, 2002 SCC 33).
The test on a motion to strike
 The appellant first asserts that although the Tax Court judge cited the leading cases in setting out the test for striking pleadings, he erred in law in holding that the “plain and obvious” test is inconsistent with the need to conduct a careful analysis of the issues before a conclusion can be reached.
 As noted earlier, although paragraph 31 of the Tax Court judge’s reasons, if read in isolation, does suggest that he misunderstood the applicable test, the lengthy reasons that he gave demonstrate unequivocally that his conclusion is based on a full analysis of the issues. It is therefore apparent that although an error could be apprehended, none was in fact committed.
Is the alternative argument authorized by subsection 152(9)?
 At issue is whether assessing a tax on the amounts in issue as “benefits” pursuant to subsection 146(8) rather than by reason of acquiring a non-qualified investment and/or property below fair market value pursuant to subsection 146(9) and (10) amounts to an alternative argument that is prohibited by subsection 152(9). This provision allows the Minister to support an assessment on the basis of an alternative argument subject to certain terms and conditions aimed at ensuring that a taxpayer is not prejudiced by a late argument from an evidentiary viewpoint.
 A further restriction is that an alternative argument cannot be advanced when it would result in a reassessment being made outside the normal reassessment period set out in subsection 152(4) (Walsh v. Canada, 2007 FCA 222 at para. 18). This restriction which is central to the present appeal acknowledges the fact that allowing the Minister to raise an argument based on a legal and factual basis that is different from the one underlying the assessment after the normal reassessment period has expired would in effect do away with the limitation period.
 The appellant does not challenge the Tax Court judge’s understanding of the legal principles applicable in ascertaining the scope of subsection 152(9) (reasons at paras. 39 to 42). Rather, he takes issue with the application of those principles to the facts of this case. Specifically, the appellant maintains that the Tax Court judge drew an unreasonable conclusion or made a palpable and overriding error in holding that the alternative argument rests on transactions which formed the basis of the reassessments (appellant’s memorandum at paras. 50 to 62 relying on Pedwell v. Canada (C.A.),  4 F.C.R. 616 and St. Arnaud v. Canada, 2013 FCA 88).
 The question turns on whether the alternative argument is within or outside the legal and factual basis underlying the reassessments. As to the legal basis for the reassessments, the appellant insists on the fact that the Minister relied on subsections 146(9) and 146(10) which are limited to property transactions below fair market value and the acquisition of non-qualified investments (appellant’s memorandum at para. 39). However, this ignores the fact that paragraph 56(1)(h) was also invoked by the Minister in support of the reassessments (Reply to the Notice of Appeal, Appeal Book, Vol. 1, p. 56 at para. 21; Amended Reply to the Notice of Appeal, Appeal Book, Vol. 1, p. 36 at para. 21). Paragraph 56(1)(h) is a provision of general application which requires that all amounts which come within the ambit of section 146, without distinction, be included in income.
 While counsel for the appellant questioned whether paragraphs 56(1)(h) can be used as a charging provision, he provided no authority for the proposition that it could not. At this stage, I am not convinced that reliance on paragraph 56(1)(h) as a legal basis for the alternative argument can be excluded.
 As to the factual basis, the Tax Court judge found that the facts underlying the reassessments were that funds used to purchase the debentures having nil or nominal value were diverted to a law firm’s trust account in the course of RRSP stripping transactions (reasons at para. 43). According to the Tax Court judge, whether the funds were diverted to the law firm’s trust account directly as the appellant now contends or by way of purchasing assets which had no value is not materially different (reasons at para. 44). The bottom line is that the appellant engaged in RRSP stripping transactions and that is the factual basis relied upon by the Minister in issuing the reassessments (reasons at para. 46).
 This admittedly broad view of the factual basis for the reassessments finds support in the language of the letter from the auditor addressed to the appellant outlining the proposed reassessments (reasons at para. 59) which amongst other things refers to RRSP value stripping as well as the notion of sham (Appeal Book, Vol. 1, at p. 82). I note that a sham allegation is particularly supportive of the broad view adopted by the Tax Court judge as it suggests that the true transaction is different from what the appellant made it appear to be.
 Counsel for the appellant pointed out during the hearing that the Notice of Confirmation subsequently issued indicates that the sham argument was not cited by the auditor in the audit report as an assessing position (Appeal Book, Vol. 1 at pp. 109 and 110). That is so. However, if anything this calls for further clarification. In my view, the determination of the factual basis for the reassessment is best left to be determined at trial based on the fullness of the evidence, including the testimony of the auditor.
 The issue insofar as the waiver is concerned is whether the alternative argument “can reasonably be regarded as relating to, … [the] matter specified in [the] waiver …” (subparagraph 152(4.01)(a)(ii)). The fact that the waiver only provides for income inclusions relating to debentures subject to subsections 146(9) and/or subsection 146(10) is on the face of it very restrictive. The Tax Court judge appeared to recognize so much but he nevertheless held that a “non-textual objective interpretation” of the waiver (reasons at para. 60) allowed for a broader application (reasons at paras. 53 to 67).
 I need not dwell on this issue because I agree with the Tax Court judge’s further opinion that allowing the appellant to escape taxation on the basis of a waiver, crafted so as to include the transaction which he maintained had taken place but exclude the transaction which he later revealed after the limitation period had expired, would give rise to an absurd result (reasons at para. 66).
 Counsel for the appellant contends that the absurdity identified by the Tax Court judge is based on an erroneous assessment of the circumstances (appellant’s memorandum at para. 92). Specifically, counsel asserts that the appellant made no representations whatsoever to the Minister prior to the drafting and filing of the waiver (ibidem).
 That is so. However, the record reveals that the CRA was induced to maintain its initial assessing position at a time when the Minister was still in a position to reassess, i.e. before the limitation period had expired.
 In the written representations dated May 14, 2006, submitted to the CRA by the appellant’s authorized representative, the following factual assertions are made (Appeal Book, Vol. 1 at pp. 139 and 141):
“… Our client exercised reasonable care with respect to the debentures investment”
“It is our contention that the RRSP investment in PI Ventures Corporation at the time our client purchased the debentures was a qualified investment …”
“…, the documentation at the time the debentures were purchased, indicate the investment was a qualified RRSP investment.”
 The appellant later asserted in the Notices of Objection that were filed on March 21, 2007, when the limitation period for the 2003 taxation year had yet to expire, that the “… debenture units …” were acquired and that “the acquisitions were conducted via a self-directed RRSP transfer …”. I note that a person who files an objection is required by subsection 165(1) to set out “all relevant facts”.
 Against this background, the appellant concedes that the avowed purpose of the modification brought to the wording of the waiver initially proposed by the CRA was to “consciously and deliberately … [restrict] … the Waiver to … reassessments … in reliance on subsections 146(9) and (10) of the Act and no other provisions …” (Notice of Motion to Strike, Appeal Book, Vol. 1 at p. 27).
 To the extent that the appellant actively induced the Minister to remain on the wrong path and waited until the reassessment period had passed to reveal the true transaction after having ensured that the waiver had been made air-tight, he may well be precluded from resiling from his initial position and/or relying on the waiver. In this respect, the appellant’s state of mind when these representations were made is obviously crucial. Yet, the extensive affidavits sworn by the appellant and his authorized representative in support of the Motion to Strike are both silent as to when they became aware that the debentures were not acquired (Appeal Book, Vol. 1 at pp. 74 to 77 and 113 to 118). In my view, only the trial judge after having considered the evidence on point will be in position to pronounce on the behaviour of the appellant and its impact on the position which he takes on appeal.
The motion to amend
 Paragraphs 19A and 19B of the Amended Reply complement the alternative argument by tracing the use of the invested funds back to the appellant. Having come to the conclusion that the decision of the Tax Court judge refusing to strike this argument should be upheld, it follows that his decision allowing the amendment would also have to stand.
 I would dismiss the appeal with costs.
Eleanor R. Dawson J.A.”
Johanne Trudel J.A.”