Collins Family Trust – B.C. Supreme Court follows Pallen even though it was “undermined” by Fairmont
Giaschi J granted an application for rescission of transactions “which concerned an almost identical set of facts” to those in Pallen (i.e., transactions which used s. 75(2) for alleged surplus-stripping, and which did not work in light of Sommerer). He stated:
I agree ... that ... Fairmont and Jean Coutu have seriously undermined Pallen. However, Pallen has not been expressly overruled and I am bound to follow it. In my view, it is for the British Columbia Court of Appeal to determine whether Pallen remains good law in light of the legal developments since it was rendered.
Respecting arguments that Satoma had established that these transactions entailed aggressive tax avoidance, he stated:
[T]he evidence before me establishes that the purpose was to shield assets from creditors and to do so in a manner that did not attract tax liability, with both aspects having equal importance.
Neal Armstrong. Summary of Collins Family Trust v Canada (Attorney General), 2019 BCSC 1030 under General Concepts – Rectification.