Bow River Pipe Lines Ltd. v. Her Majesty the Queen, [1996] 3 CTC 2011

Christie A.C.J.T.C.C.: — On April 17, 1996 I signed the reasons for judgment and the judgment pertaining to these appeals. Copies attached. On April 22, 1996 they were sent to the parties by registered mail after the judgment had been recorded in the decision log book kept as part of the records of this Court.

By letter dated April 26, 1996 counsel for the appellant requested that I reconsider the terms of the judgment. In Minister of National Revenue v. Gunnar Mining Ltd., [1970] C.T.C. 152, 70 D.T.C. 6135 Mr. Justice Jackett, who was then the President of the Exchequer Court, said at page 168 (D.T.C. 6144), with reference to rehearing an appeal under the Income Tax Act or changing a decision rendered in respect of such an appeal:

The general rule is, of course, that no court can, without special authority, rehear a matter or change its decision on a matter of substantive right after its judgment has been drawn up and entered. It is generally accepted ‘that the general good of the community’ requires “a final end to be put to litigation”. Compare In re St. Nazaire Company (1879) 12 Ch. D. 88 (C.A.) per Jessel M.R. at page 100.

The appellant relies on section 168 of the Tax Court of Canada Rules (General Procedure) (the “Rules”) in support of its application. It reads:

168. Where the Court has pronounced a judgment disposing of an appeal any party may within ten days after that party has knowledge of the judgment, move the Court to reconsider the terms of the judgment on the grounds only,

(a) that the judgment does not accord with the reasons for judgment, if any, or

(b) that some matter that should have been dealt with in the judgment has been overlooked or accidentally omitted.

As will be seen from the reasons for judgment, I described the question whether the appellant was at any time a partner in the LLR Limited Partnership as “the overriding issue”. Later I said:

Apropos the overriding issue, it is manifest on the face of paragraph 98(5)(d) of the Act and subsection 26(5) of the 1986 enactment that in order to succeed on these appeals partnership is a condition precedent. The question whether the appellant was a partner arose in this way. Prior to the commencement of the trial, counsel delivered to the Registrar for the use of the Court an Agreed Statement of Facts and a related Book of Agreed Exhibits consisting of some 22 documents. All of the documents already referred to in these reasons are in that book except the “NOTICE TO AMEND CERTIFICATE” (para. P(iii) supra). It was received by the Court after the trial with a supplementary written argument submitted by counsel for the appellant dated March 15, 1996. Prior to the trial, I perused the Agreed Statement of Facts and the book of exhibits. The precise manner in which the appellant became a partner not being apparent on the face of these documents, I raised a question in this regard at the commencement of the trial.

In light of the application under section 168 of the Rules I will add more details relating to that issue. The trial commenced on Tuesday, February 27, 1996 and at 4 p.m. on that day it was adjourned to Friday, March 1, 1996 because counsel for the respondent was indisposed. The hearing resumed on Friday, March 1 and concluded in the afternoon of that day. Not only was the matter of the appellant being a member of the limited partnership raised at the commencement of the trial, it was discussed more than once after that on February 27. [1] And as agreed at trial, counsel for both parties dealt with the partnership matter in subsequent written submissions. [2]

As already indicated, the judgment in these appeals was signed on April 17 and sent to the parties on April 22, 1996. In written submissions dated April 26, 1996 in support of the application under section 168 of the Rules, the argument was advanced for the first time that the appellant was entitled to succeed even if it had not been a partner in the LLR Limited Partnership. Counsel said:

The issue in this case was whether the Appellant ‘was entitled to add the amount of $5,874,367 (“COGPE addition”) to its cumulative Canadian Oil and Gas Property Expense (“COGPE”) account in respect of Canadian resource property it received on the termination of LRRP [a partnership].! The Appellant took the position that it was entitled to the COGPE addition by virtue of the application of paragraph 98(5)(d) of the Income Tax Act. The Crown took the position that paragraph 98(5)(d) did not apply to the Appellant solely because the Appellant did not meet the “grandfathering provision” governing the repeal of that provision. The Crown took the position in its pleadings that if the grandfathering requirements were met the Appellant would be entitled to the COGPE addition. The Crown did not allege that any portion of paragraph 98(5)(d) per se had not been complied with.

At the trial, His Honour Judge Christie raised the question of whether, quite apart from the grandfathering provision, the requirements of paragraph 98(5)(d) had been met. A condition precedent to the Appellant qualifying for the COGPE addition under 98(5)(d) was that the Appellant had to be a member of the partnership at a particular point in time.

In the reasons for judgment the Court accepted the Appellant’s position on the interpretation of the grandfathering provision, but concludes that the Appellant never became a member of the partnership and therefore the Appellant was not entitled to the COGPE addition under paragraph 98(5)(d). On this basis, the Court dismissed the Appellant’s appeal.

It is the Appellant’s position that while a conclusion that the Appellant was not a partner results in the Appellant not being entitled to a COGPE addition under paragraph 98(5)(d), it does not follow that the Appellant is not entitled to a COGPE addition. It is the Appellant’s position that even if the Appellant did not become a member of the partnership, as determined by the court, the Appellant is nonetheless entitled to add at least the amount of $5,874,367 to its COGPE account by operation of other provisions of the Act. [3] In other words, it is the Appellant’s position that the appeal should have been allowed albeit for different reasons.

Per Amended Reply, paragraph 4. [4]

In a further submission dated May 6, 1996, counsel added:

As a starting point, it is beyond dispute that on January 15, 1986 there was a partnership in place between Lone Rock, as limited partner, and 3358277 Alberta Ltd., as general partner, and that the partnership owned all of the Canadian resource property and depreciable property transferred to it by Lone Rock. It is also beyond dispute that on September 29, 1986 Lone Rock transferred all of its assets to Bow River and that Lone Rock was dissolved thereafter.

It is the Appellant’s position that a conclusion that the Appellant did not come within subsection 98(5) is insufficient to dispose of the issue of whether the Appellant is entitled to add the $5,814,367 to its COGPE pool. It is beyond dispute that on or about September 30, 1986 the Appellant acquired the resource properties in issue because the resource properties were transferred to it. It is the Appellant’s position that if the Appellant falls out of the “rollover” provision contained in paragraph 98(5)(d) because it was not a partner, then it falls into the provisions that generally govern the acquisition of resource properties by taxpayers other than partners. More particularly, paragraphs 66.4(5)(a) and (b) of the Act [5] provide the income tax treatment that governs the acquisition of resource property by taxpayers generally and these provisions provide that such taxpayers are entitled to add the cost of the resource properties to their COGPE pools.

In the instant case, the Appellant was an assignee immediately before the resource properties were transferred to it. It is the Appellant’s position that the cost of those properties to the Appellant is equal to the fair market value of what it gave up (its rights as an assignee) [6] which, in turn, is equal to the fair market value of the underlying property (including all the resource properties). It will be the Appellant’s contention that amount is at least $5,874,367.

As for the application of section 168 to the instant case, the Appellant submits that the new provisions noted in this letter were not invoked previously because there was no dispute between the parties on whether there was a partnership. Both parties were in agreement that but for the grandfathering issue, subsection 98(5) of the Act applied. For this reason, the Appellant did not need to rely on the other provisions. As for whether paragraph 168(a) of the Tax Court Rules applies, the Appellant says that the conclusion that the Appellant was not a partner does not lead to the dismissal of the appeal. If the Appellant’s argument is correct, then the conclusion that the Appellant was not a partner leads nonetheless to the conclusion that the appeal should be allowed. In this sense, the “judgment does not accord with the reasons for judgment”.

The substance of the foregoing was repeated in the course of oral argument in support of the application made on May 28, 1996 by means of a telephone conference call. Reference was again made to paragraph 66.4(5)(a).

With respect, I cannot accede to the contention that the judgment does not accord with the reasons for judgment. Those reasons proceed on the basis that in order to succeed the appellant must have been a member of the LLR Limited Partnership. They conclude that the appellant was not a partner and consequently the appeals were dismissed. Whether the reasons are correct is, in the last analysis, subject to determination by those who exercise appellate jurisdiction in relation to this Court.

The appellant not being within the ambit of paragraph 168(l)(a) of the Rules, the remaining question is whether paragraph 168(1 )(b) applies. The appellant now seeks to have the appeals against the reassessments in ques- tion allowed on the alternative ground that it is entitled to succeed regardless of whether it was a partner. I do not think this can properly be regarded as a matter described in paragraph 168(1 )(b). It is something that was not even alluded to in the pleadings, in the evidence, in argument at trial or in the written submissions made after trial before judgment was issued.

The application is dismissed.

Application dismissed.