Greenfield Mining – Court of Quebec implicitly finds that ETA s. 231 trumps s. 232

Greenfield sued a junior Quebec mining company (“CRI”) for unpaid fees of around $15 million and, after 30 months of unfruitful legal proceedings and incurring over $1 million in legal fees, settled its action by agreeing to receive $7 million in instalments over a two-year period.

Greenfield then wrote down the receivable on its books accordingly, and claimed a credit under the Quebec equivalent of ETA s. 231 based on that write-down amount - which the ARQ was prepared to grant until it took the view that Greenfield should have issued a credit note to CRI for the reduction in the fee amount which, once done, would have given the ARQ the right under the Quebec equivalent of ETA s. 232(3)(c) to receive a refund of the applicable portion of the input tax refunds that had been claimed by CRI.

Zaor JCQ found that (as per the Rich test) Greenfield had made “an honest and reasonable” assessment that it would not recover anything more than the $7 million, and that this finding was sufficient to allow Greenfield’s appeal, so that she did not have to consider the s. 232 credit note rules - and noted that “the Court cannot order CRI to repay excess amounts claimed as inputs”.

Neal Armstrong. Summary of Greenfield Mining Services Inc. v. Agence du revenu du Québec (500-80-035666-172, Court of Quebec, 10 June 2020) under ETA s. 231(1).