Guy
Tremblay
[TRANSLATION]:—This
application
was
heard
in
Montreal
on
June
6,
1977.
1.
Summary
It
must
be
determined
whether,
following
the
application
made
by
the
plaintiff
under
paragraph
174(3)(b)
of
the
new
Act,
the
respondent
and
the
third
parties
should
be
joined
in
the
same
hearing.
2.
Burden
of
Proof
In
this
application,
as
in
all
other
applications,
the
burden
of
proof
rests
with
the
plaintiff.
However,
since
the
facts
are
not
disputed,
the
burden
of
proof
has
no
effect,
as
only
a
question
of
law
remains
to
be
decided.
3.
Facts
The
undisputed
facts
are
well
set
forth
in
the
plaintiff’s
application
which
may
be
reproduced
here
in
its
entirety,
as
it
was
amended
at
the
hearing:
Whereas
Les
Meubles
de
Maskinongé
Inc
lodged
an
appeal
with
the
Tax
Review
Board
(No
76-780)
on
August
10,
1976
against
an
assessment
for
1973;
Whereas
Les
Associés
Houde
Inc
lodged
an
appeal
with
the
Tax
Review
Board
(No
77-305)
on
March
25,
1977
against
an
assessment.
for
1972;
Whereas
the
late
Mr
Roland
Bernéche:
died
in
September
1973;
Whereas
Mrs
Noëlla
Bernéche
was
appointed
sole
legatee
of
the
usufruct
of
all
the
property
of
her
late
husband,
Mr
Roland
Bernéche,
under
the
will
of
the
latter,
received
by
Mr
Jean-Paul
Chevalier,
notary,
on
May
2,
1972,
as
registered
at
Louiseville
on
March
6,
1975
and.
bearing
No
53180;
Whereas
Messrs
Dominique
Bernéche
and
Gilles
Bemèche,
and
Mrs
Gérard
Berneche,
Dolores
Drainville
and
Gilberte
Livernoche
were
appointed
sole
legatees
of
the
ownership
without
usufruct
of
all
the
property
of
the
late
Roland
Bernéche
under
the
will
of
the
latter,
notarized
by
Mr
Jean-Paul
Chevalier
on
May
2,
1972,
as
registered
at
Louiseville
on
March
6,
1975
and
bearing
No
99434;
Whereas
Noëlla
Bernèche
was.
appointed
executrix
of
the
estate
of
the
late
Roland
Berneche,
an
appointment
which
she
accepted,
the
whole
as
appears
in
minute
No
1226
of
Michel
Masson,
notary,
notarized
on
July
3,
1974;
A)
THE
COMMON
QUESTION
CONCERNING
WHICH
THE
PLAINTIFF
IS
REQUESTING
A
DECISION
IS
AS
FOLLOWS:
1—
To
ascertain
whether
the
monthly
sums
of
$1,250
totalling
$28,750,
paid
to
the
late
Mr
Roland
Berneche
during
the
taxation
years
1972
and
1973
by
Les
Meubles
de
Maskinongé
Inc,
represent
a
salary
or
retirement
benefits
such
that;
(i)
these
expenses
were
incurred
by
Les
Meubles
de
Maskinongé
Inc
for
the
purpose
of
gaining
income
from
its
business,
and
were
deductible
in
computing
this
taxpayer’s
income
for
the
taxation
years
1972
and
1973,
under
ss
12(1)(a)
(RSC
1952,
c
148)
and
18(1)(a)
(SC
1970-71-72,
c
63
as
amended)
of
the
Income
Tax
Act;
(ii)
these
sums
represented
income
which
should
be
included
in
computing
the
income
of
the
late
Mr
Roland
Bemèche
for
the
taxation
years
1971,
1972
and
1973
and
the
income
of
Mrs
Noëlla
Bemèche
for
the
taxation
year
1973,
under
ss
3,
5,
6(1)(a)(IV)
(RSC
1952,
c
148)
and
ss
3,
5
and
56(1)(a)
(SC
1970-71-72,
c
63
as
amended)
of
the
Income
Tax
Act;
2—
or
whether
the
monthly
sums
of
$1,250,
totalling
$28,750,
paid
to
the
late
Roland
Berneche
and
his
spouse
Mrs
Noëlla
Bernèche
during
the
taxation
years
1972
and
1973
by
Les
Meubles
de
Maskinongé
Inc
represent
consideration
in
part
for
the
sale
of
the
late
Roland
Bernèche’s
shares
in
the
following
companies:
“Les
Meubles
‘de
Maskinongé
Inc,”
“Les
Chaises
Maskinongé
Inc,”
“Maskinongé
Furniture
Transport
Inc”
and
“Les
Produits
Maskin
Inc,”
to
“Les
Associés
Houde,
Inc,”
such
that:
(i)
these
expenses
were
not
incurred
by
Les
Meubles
de
Maskinongé
Inc
for
the
purpose
of
gaining
income
from
its
business
and
were
not
deductible
in
computing
this
taxpayer’s
income
for
the
taxation
years
1972
and
1973,
under
ss
12(1)(a)
(RSC
1952,
c
148)
and
18(1)(a)
(SC
1970-71-72,
c
63
as
amended)
of
the
Income
Tax
Act;
(ii)
these
sums
constituted
payment
in
part
of
the
agreed
price
of
$225,000
for
the
sale
of
the
late
Mr
Roland
Bernèche’s
shares
in
the
following
companies:
“Les
Meubles
de
Maskinongé
Inc,”
“Les
Chaises
Maskinongé
Inc,”
“Maskinongé
Furniture
Transport
Inc”
and
‘‘Les
Produits
Maskin
Inc”
to
“Les
Associés
Houde
Inc,”
and
thus
constituted
a
fraction
of
the
total
advantage
of
$225,000
conferred
by
Les
Meubles
de
Maskinongé
Inc
on
its
shareholder
“Les
Associés
Houde
Inc,”
of
which
the
amount
of
$225,000
should
be
included
in
computing
the
income
of
“Les
Associés
Houde
Inc”
for
the
taxation
year
1972
under
s
15(1)
of
the
Act;
B)
THE
TAXPAYERS
WHICH
THE
PLAINTIFF
WOULD
LIKE
TO
SEE
BOUND
BY
THE
DECISION
ON
THIS
QUESTION
ARE
THE
FOLLOWING:
ae
—Les
Meubles
de
Maskinongé
Inc,;
—Noëlla
Bernèche;
—Dominique
Bernèche:
—Dame
Gérard
Bernèche;
—Dame
Dolorès
Drainville;
—Dame
Gilberte
Livernoche;
—Gilles
Bernéche;
—Les
Associés
Houde
Inc.
C)
STATEMENT
OF
FACTS
AND
GROUNDS
In
assessing
Les
Meubles
de
Maskinongé
Inc
for
the
taxation
year
1973
and
Les
Associés
Houde
Inc
for
the
taxation
year
1972,
the
plaintiff
relied
on
the
following
presumptions
of
fact:
1.
On
November
4,
1971
Les
Associés
Houde
Inc
acquired
all
the
issued
shares
of
“Les
Meubles
de
Maskinongé
Inc,”
“Les
Chaises
Maskinongé
Inc,”
“Maskinongé
Furniture
Transport
Inc,”
and
“Les
Produits
Maskin
Inc,”
which
had
previously
been
held
by
the
late
Roland
Bernèche,
at
a
price
of
one
dollar
and
other.
considerations;
2.
On
November
4,
1971
Les
Meubles
de
Maskinongé
Inc
concluded
an
agreement
with
the
late
Roland
Bernèche,
under
which.
it
undertook
to
pay
him
a
total
of
$225,000
in
monthly
instalments
of
$1,250
over
a
period
of
fifteen
years
from
December
1,
1971;
3.
This
latter
agreement.
concluded
between
Les
Meubles
de
Maskinongé
Inc
and
the
late
Roland
Berneche,
dated
November
4,
1971,
stipulated
that
if
the
latter
died
before
the
fifteen-year
period
had
elapsed,
the
residue
of
the
monthly
amounts
would
be
payable
monthly
to
the
spouse
or
the
estate
of
the
late
Roland
Bernèche
until
the
said
contract
expired;
4.
‘During
the
years
1971,
1972
and
1973
the
fiscal
year
of
Les
Meubles
de
Maskinongé
Inc
ended
on
October
31
of
each
year;
5.
During
the
taxation
years
1972
and
1973
Les
Meubles
de
Maskinongé
Inc
paid
monthly
sums
of
$1,250,
as
provided
for
in
the
contract,
to
the
late
Mr
Roland
Bernèche
until
his
death
in
September
1973,
and
subsequently
to
the
spouse
of
the
late
Mr
Roland
Bernèche,
Mrs
Noëlla
Bernèche,
until
the
end
of
the
taxation
year
1973,
the
whole
amounting
to
a
total
of
$28,750;
6.
Les
Meubles
de
Maskinongé
Inc
earned
no
taxable
income
during
its
taxation
year
1972;
7.
During
the
period
between
November
4,
1971
and
October
31,
1973
the
late
Mr
Roland
Bernèche
never
worked
for
Les
Meubles
de
Maskinongé
Inc;
8.
During
the
same
period
Les
Meubles
De
Maskinongé
Inc
never
requested,
and
never
intended
to
request
the
services
of
the
late
Mr
Roland
Bernèche;
9.
When
the
agreement
was
signed
on
November
4,
1971
Les
Meubles
de
Maskinongé
Inc
and
the
late
Mr
Roland
Berneche
were
not
concluding,
and
were
not
intending
to
give
effect
to
a
genuine
contract
of
employment;
10.
In
signing
the
agreement
on
November
4,
1971,.
and
subsequently
by
making
monthly
payments
of
$1,250
to
the
late
Roland
Bernèche
and
his
spouse,
Mrs
Noëlla
Berneche,
Les
Meubles
de
Maskinongé
Inc
did
not
intend
to
confer
a
retirement
allowance
on
the
late
Roland
Berneche;
11.
The
sum
of
$28,750
paid
in
part
to
the
late
Roland
Bernèche
and
in
part
to
his
spouse,
Mrs
Noëlla
Bernèche,
during
1971,
1972
and
1973
does
not
represent
a
salary
or
retirement
benefits,
and
does
not
constitute
expenses
incurred
by
Les
Meubles
de
Maskinongé
Inc
for
the
purpose
of
gaining
income
from
its
business;
12.
This
sum
of
$28,750
constitutes
the
payment
in
part
of
the
total
consideration
of
$225,000
agreed
upon
between
Les
Associes
Houde
Inc
and
the
late
Roland
Bernèche
for
the
sale
of
shares
in
the
following
companies:
“Les
Meubles
de
Maskinongé
Inc,”
“Les
Chaises
Maskinongé
Inc,”
“Maskinongé
Furniture
Transport
Inc,”
“Les
Produits
Maskin
Inc,”
to
“Les
Associés
Houde
Inc”
on
November
4,
1971;
13.
In
assessing
Les
Meubles
de
Maskinongé
Inc
for
the
taxation
year
1973,
the
plaintiff
relied
on
ss
3,
9(1),
18(1)(a)
and
18(1)(b)
of
the
Income
Tax
Act
(SC
1970-71-72,
c
63
as
amended),
and
in
assessing
Les
Associés
Houde
Inc
the
plaintiff
relied
inter
alia
on
s
15(1)
of
the
aforementioned
Act;
a)
The
monthly
sums
of
$1,250,
totalling
$28,750,
paid
by
Les
Meubles
de
Maskinongé
Inc
to.
Mr
and
Mrs
Roland
Bernèche
during
the
taxation
years
1972
and
1973
are
not
deductible
because
they
were
not
expenses
incurred
by
it
for
the
purpose
of
gaining
income
in
accordance
with
s
12(1)(a)
of
the
Income
Tax
Act
(RSC
1952,
c
148)
and
s
18(1)(a)
of
the
Income
Tax
Act
(SC
1970-71-72,
c
63
as
amended);
b)
These
sums
do
not
constitute
salary
or
retirement
benefits;
rather,
they
represent
a
fraction
of
the
total
advantage
of
$225,000
which
Les
Meubles
de
Maskinongé
Inc
conferred
on
its
shareholder,
Les
Associés
Houde
Inc,
in
1972;
c)
In
the
event
that
these
sums
constitute
a
salary
or
retirement
benefits
deductible
in
computing
the
income
of
Les
Meubles
de
Maskinongé
Inc,
the
plaintiff
accordingly
submits
that
he
intends
to
issue
reassessments
in
the
case
of
the
late
Mr
Roland
Bernèche,
thus
involving
all
the
above-mentioned
heirs
and
the
executrix,
by
adding
these
sums
in
computing
the
income
of
the
de
cujus
for
the
taxation
years
1971,
1972
and
1973
under
ss
3,
5,
6(1)(a)(IV)
of
the
Income
Tax
Act
(RSC
1952,
c
148)
and
ss
3,
5
and
56(1
)(a)
of
the
Income
Tax
Act
(SC
1970-71-72,
c
63
as
amended);
d)
In
the
event
that
these
sums
constitute
salary
or
retirement
benefits
deductible
in
computing
the
income
of
Les
Meubles
de
Maskinongé
Inc,
the
plaintiff
maintains
that
he
intends
to
issue
a
reassessment
in
the
case
of
Mrs
Noëlla
Bernèche
by
adding
the
sum(s)
received
by
her
in
computing
her
income
for
the
taxation
year
1973
under
ss
3,
5
and
56(1
)(a)
of
the
Income
Tax
Act
(SC
1970-71-72,
c
63
as
amended);
WHEREAS
a
question
of
mixed
law
and
fact
arising
out
of
the
series
of
aforementioned
transactions
is
common
to
assessments
issued
or
which
may
be
issued
in
respect
of
the
above-mentioned
taxpayers;
WHEREAS
a
decision
on
the
question
submitted
to
the
Tax
Review
Board
in
this
application
will
affect
the
assessments
issued
or
which
may
be
issued
in
the
case
of
the
aforementioned
parties;
WHEREAS
the
plaintiff
wishes
to
see
all
the
aforementioned
parties
bound
by
a
decision
submitted
in
this
application;
MAY
IT
PLEASE
the
Tax
Review
Board:
TO
ALLOW
this
application;
TO
RENDER
a
decision
joining
the
parties
mentioned
in
paragraph
B)
to
the
appeal
of
Les
Meubles
de
Maskinongé
Inc,
so
that
the
aforementioned
parties
may
be
bound
by
the
decision
of
the
Tax
Review
Board
on
the
common
question
submitted
in
the
application.
DATED
AT
MONTREAL
this
twenty-fourth
day
of
February,
1977
(signed)
Jean
Delage
Counsel
for
the
plaintiff
There
follows
the
affidavit
of
Mr
E
Jonathan
Guignard,
an
officer
of
the
Department
of
National
Revenue,
which
there
is
no
need
to
reproduce
here.
4.
Objection
to
the
Application
4.1.
The
Parties
Objecting
The
respondent
and
all
the
third
parties
object
to
the
application
of
the
Department
of
National
Revenue.
This
objection
is
not,
however,
based
on
the
ground
that
the
facts
and
the
common
question
mentioned
in
the
application
are
disputed.
The
respondent
and
the
third
parties
object
first,
because
the
fact
that
the
heirs
of
Roland
Berneche,
on
the
one
hand,
and
Les
Meubles
de
Maskinongé
Inc
and
Les
Associés
Houde
Inc,
on
the
other
hand,
have
opposing
interests,
causes
complex
practical
problems
at
a
very
inopportune
time.
Secondly,
they
allege
that
section
174,
as
it
stands,
does
not
permit
us
to
allow
the
application.
4.2.
The
Opposing
Interests
and
the
Complex
Problems
According
to
counsel
for
the
respondents
and
the
third
parties,
the
presence
at
the
same
inquiry
of
Les
Meubles
de
Maskinongé
Inc
and
Les
Associés
Houde
Inc
on
the
one
hand,
and
of
the
heirs
of
Roland
Bernèche
on
the
other
hand,
causes
problems
of
proof.
Which
of
these
two
groups
has
the
burden
of
proof?
Normally,
with
respect
to
the
Department
of
National
Revenue,
the
taxpayer
has
this
burden.
The
assessment
issued
is
deemed
to
be
valid
as
long
as
the
taxpayer
has
not
shown
it
to
be
incorrect.
In
the
case
at
bar
no
assessment
has
been
issued
against
Roland
Bernèche’s
heirs.
Do
they
have
the
obligation
of
showing
that
the
non-existent
assessment
is
incorrect?
As
assessments
have
been
issued
only
against
the
other
two
taxpayers,
do
the
latter
alone
have
this
obligation?
Can
they
cross-examine
the
heirs
if
they
should
decide
to
testify?
Why
does
the
Department
not
also
issue
assessments
against
the
heirs?
That
would
also
place
the
burden
of
proof
on
them.
However,
which
of
the
two
groups
would
then
have
the
primary
burden?
Counsel
requested
that
this
question
of
the
burden
of
proof
be
settled
in
this
judgment,
if
the
Board
decides
to
join
all
the
parties
in
the
same
hearing.
The
issuance
of
assessments
against
the
heirs
at
this
stage
would,
according
to
counsel
for
the
plaintiff,
cause
legal
problems
of
another
kind.
Assessments
issued
at
the
same
time
against
the
heirs
and
the
companies
would
be
contradictory.
The
same
sum
of
money
would
be
taxed
both
as
salary
paid
to
the
heirs
(without
Les
Meubles
de
Maskinongé
Inc
being
able
to
deduct
these
salaries
as
expenses)
and
also
as
an
advantage
conferred
on
a
shareholder
in
the
person
of
Les
Associés
Houde
Inc.
Addy,
J
of
the
Federal
Court
of
Canada
decided
in
Crown
Trust
Company
v
The
Queen,
[1977]
CTC
320;
77
DTC
5173,
against
the
Department’s
using
such
a
method
resulting
in
contradictory
assessments.
The
problem
was
also
raised
as
to
which
of
the
respondents
and
third
parties
would
be
assessed,
if
the
Department
of
National
Revenue
decided
to
regard
the
sums
paid
and
received
as
salary.
Would
the
assessment
be
issued
against
the
estate
or
against
each
of
the
heirs?
If
against
the
estate,
who
would
have
the
burden
of
paying
the
tax?
Should
we
apply
Article
876
of
the
Civil
Code
and
place
this
burden
on
the
usufructuary
by
general
title?
If
the
assessments
are
issued
against
each
of
the
heirs,
can
they
not
then
rely
on
the
4-year
prescription,
since
the
year
involved
is
1973
and
we
are
already
well
into
1977?
The
Department
of
National
Revenue
could
scarcely
argue
fraud
or
neglect
or
anything
similar
as
required
by
subsection
152(4).
4.3.
Does
Section
174
enable
us
to
Allow
the
Application?
4.3.1.
The
Act
section
174
reads
as
follows:
174.
(1)
Reference
to
Federal
Court
or
Tax
Review
Board
of
common
questions.^—Where
the
Minister
is
of
the
opinion
that
a
question
of
law,
fact
or
mixed
law
and
fact
arising
out
of
one
and
the
same
transaction
or
occurrence
or
series
of
transactions
or
occurrences
is
common
to
assessments
in
respect
of
two
or
more
taxpayers,
he
may
apply
to
the
Tax
Review
Board
or
the
Federal
Court—Trial
Division
for
a
determination
of
the
question.
(2)
An
application
under
subsection
(1)
shall
set
forth
(a)
the
question
in
respect
of
which
the
Minister
requests
a
determination,
(b)
the
names
of
the
taxpayers
that
the
Minister
seeks
to
have
bound
by
the
determination
of
the
question,
and
(c)
the
facts
and
reasons
on
which
the
Minister
relies
and
on
which
he
based
or
intends
to
base
assessments
of
tax
payable
by
each
of
the
taxpayers
named
in
the
application,
and'
a
copy
of
the
application
shall
be
served
by
the
Minister
on
each
of
the
taxpayers
named
in
the
‘application
and
on
any
other
person
who,
in
the
opinion
of
the
Tax
Review
Board
or
the
Federal
Court—Trial
Division,
as
the
case
may
be,
are
likely
to
be
affected
by
the
determination
of
the
question.
(3)
Where
Board
or
Court
may
determine
question.—Where
the
Tax
Review
Board
or
the
Federal
Court—Trial
Division
is
satisfied
that
a
determination
of
the
question
set
forth
in
an
application
under
this
section
will
affect
assessments
in
respect
of
two
or
more
taxpayers
who
have
been
served
with
a
copy
of
the
application
and
who
are
named
in
an
order
of
the
Board
or
the
Court,
as
the
case
may
be,
pursuant
to
this
subsection,
it
may
(a)
if
none
of
the
taxpayers
so
named
has
appealed
from
such
an
assessment,
proceed
to
determine
the
question
in
such
manner
as
it
considers
appropriate,
or
(b)
if
one
or
more
of
the
taxpayers
so
named
has
or
have
appealed,
make
such
order
joining
a
party
or
parties
to
that
or
those
appeals
‘as
it
considers
appropriate.
(4)
Determination
final
and
conclusive.—Where
a
question
set
forth
in
an
application
under
this
section
is
determined
by
the
Tax
Review.
Board
or
the
Federal
Court—Trial
Division,
the
determination
thereof
is,
subject
to
any
appeal
therefrom
in
accordance
with
the
Federal
Court
Act,
final
and
conclusive
for
the
purposes
of
any
assessments
of
tax
payable
by
the
taxpayers
named
by
it
pursuant
to
subsection
(3).
(5)
Time
during
consideration
of
question
not
counted.—The
time
between
the
day
on
which
an
application
under
this
section
is
served
on
a
taxpayer
pursuant
to
subsection
(2),
and
(a)
in
the
case
of
a
taxpayer
named
in
an
order
of
the
Tax
Review
Board
or
the
Federal
Court—Trial
Division,
as
the
case
may
be,
pursuant
to
Subsection
(3),
the
day
on
which
the
question
is
finally
determined
pursuant
to
paragraph
(3)(a)
or
on
which
an
order
is
made
under
paragraph
(3)(b),
or
(b)
in
the
case
of
any
other
taxpayer,
the
day
on
which
he
is
served
with
notice
that
he
has
not
been
named
in
an
order
of
the
Board
or
the
Court,
as
the
case
may
be,
pursuant
to
subsection
(3),
shall
not
be
counted
in
the
computation
of
(c)
the
four-year
period
referred
to
in
subsection
152(4),
(d)
the
time
for
service
of
a
notice
of
objection
to
an
assessment
under
section
165,
or
(e)
the
time
within
which
an
appeal
may
be
instituted
under
section
169
or
subsection
172(2),
for
the
purpose
of
making
an
assessment
of
the
tax
payable
to
the
taxpayer,
serving
a
notice
of
objection
thereto
or
instituting
an
appeal
therefrom,
as
the
case
may
be.
4.3.2.
Arguments
of
Parties
Objecting
with
Respect
to
Section
174
(a)
No
assessments
issued
in
respect
of
heirs
Several
objections
were
raised
concerning
the
application
of
section
174
to
the
facts
of
the
case.
As
was
emphasized
at
the
hearing,
subsection
174(1)
states,
inter
alia,
that
the
occurrence
giving
rise
to
a
question
of
law,
of
fact
or
of
mixed
law
and
fact
“is
common
to
assessments
in
respect
of
two
or
more
taxpayers”.
However,
it
was
proven
that
the
heirs
of
Roland
Bernèche
were
not
assessed
in
respect
of
the
sums
received
following
the
sale
of
shares.
The
respondents
and
the
third
parties
accordingly
submit
that
the
said
heirs
cannot
be
the
subject
of
this
application.
(b)
The
heirs
are
not
appellants
Fundamentally,
the
Department’s
application
is
based
on
paragraph
174(3)(b),
which
states
that
the
Board
may
(b)
if
one
or
more
of
the
taxpayers
so
named
has
or
have
appealed,
make
such
order
joining
a
party
or
parties
to
that
or
those
appeals
as
it
considers
appropriate.
According
to
the
facts
admitted,
only
two
parties
appealed,
namely,
Les
Meubles
de
Maskinongé
Inc
and
Les
Associés
Houde
Inc.
Therefore,
only
these
two
parties
may
be
the
subject
of
the
application,
since
the
Board
may
only
render
a
decision
to
join
the
appellant
parties.
Since
the
heirs
of
Roland
Bernèche
did
not
appeal
(and
from
what
assessments
could
they
have
appealed,
since
these
do
not
exist?),
the
respondent
and
the
third
parties
argue
that
they
may
not
be
joined
with
the
appellants.
Moreover,
the
respondent
and
the
third
parties
emphasized
the
difference
between
the
English
wording
and
the
French
wording.
This
is
the
English
wording
of
paragraph
174(3)(b):
(b)
if
one
or
more
of
the
taxpayers
so
named
has
or
have
appealed,
make
such
order
joining
a
party
or
parties
to
that
or
those
appeals
as
it
considers
appropriate.
As
may
be
seen
from
this
wording,
it
is
not
only
a
question
of
joining
the
appellants
but
of
joining
one
or
more
parties
to
the
appellant
or
appellants.
Citing
Jackett,
J
in
Compagnie
Immobilière
BCN
Limitée
v
The
Queen,
[1976]
CTC
282;
76
DTC
6153,
counsel
for
the
heirs
of
Bernèche
maintained
that
in
the
case
at
bar
we
must
apply
the
meaning
that
is
common
to
both
texts,
which
according
to
him
is
the
meaning
of
the
French
text.*
4.4.
Arguments
of
the
Plaintiff
with
Respect
to
Section
174
In
order
to
show
the
legislator’s
thinking
in
the
whole
of
section
174,
counsel
for
the
plaintiff
drew
attention
to
paragraph
174(2)(c),
which
states
that
the
application
by
the
Minister
must
set
forth,
not
only
“the
facts
and
reasons
on
which
[he]
relies
and
on
which
he
based”
but
also
the
facts
and
reasons
on
which
he
“intends
to
base
assessments
of
tax
payable”.
He
therefore
concluded
that
it
is
not
necessary
for
the
assessments
to
be
issued
in
respect
of
the
parties
which
are
to
be
joined.
In
support
of
the
same
conclusions
he
drew
attention
to
another
part
of
the
Act,
namely
paragraph
174(5)(c),
which
states
that
the
time
between
the
day
on
which
the
application
under
subsection
174(2)
is
served
on
a
taxpayer
and
the
day
on
which
the
question
is
determined
shall
not
be
counted
in
the
computation
of
the
4-year
period
referred
to
in
subsection
152(4).
If
the
prescription
no
longer
runs
in
respect
of
a
first
assessment
which
does
not
involve
an
application
to
join
cases
arising
out
of
one
or
more
occurrences,
this
is
because
no
assessment
in.
respect
of
this
occurrence
or
these
occurrences
has
yet
been
issued.
Once
again,
in
the
mind
of
the
legislator,
an
assessment
is
not
necessary
in
respect
of
a
taxpayer
for
the
latter
to
be
joined
with
others
in
accordance
with
section
174.
Finally,
counsel
for
the
plaintiff
cited
Noël,
J
in
The
Queen
v
Simard-
Beaudry
Inc,
71
DTC
5511
at
5515,
to
make
the
point
that
the
assessment
does
not
create
the
debt:
it
merely
confirms
its
existence.
The
taxpayer’s
responsibility
to
pay
the
debt
does
not
result
from
the
assessment
but
from
the
law,
and
the
general
tenor
of
this
is
to
the
effect
that
the
debt
is
created
by
the
taxable
income
at
the
time
when
it
is
earned.
5.
Points
at
Issue
The
first
question
therefore
is
whether
section
174
enables
us
to
join
the
cases,
as
requested
in
the
application.
secondly,
the
advisability
of
establishing
rules
of
evidence
must
be
determined.
6.
Comments
6.1.
Section
174
There
is
one
point
on
which
counsel
and
the
Board
were
agreed,
that
is,
the
lack
of
clarity
in
the
wording
of
section
174.
As
was
explained
above,
counsel
stressed
the
lack
of
consistency,
not
to
mention
the
contradictions,
between
the
various
subsections
of
this
section.
This
ambiguity
does
not
allow
us
to
find
an
easy
solution
to
the
problem
of
whether
a
taxpayer
who
has
not
been
assessed
in
respect
of
potential
income
involving
a
common
occurrence
may
be
joined
to
other
taxpayers
for
the
hearing
and
bound
by
the
findings.
In
cases
of
this
kind,
which
principles
of
interpretation
are
applied?
In
cases
of
ambiguity
in
a
taxing
section
or
an
exempting
section
of
a
tax
statute,
it
is
well
known
which
principles
apply.
It
is
perhaps
pertinent
to
recall
them
here:
(1)
since
a
tax
statute
is
public
law,
it
shall
be
interpreted
restrictively;
(2)
the
taxing
section
shall
be
interpreted
restrictively,
in
that
if
it
is
ambiguous,
it
is
interpreted
in
the
taxpayer’s
favour;
(3)
when
an
object
of
taxation
is
clearly
established,
the
following
principle
shall
apply:
“Taxation
is
the
rule
and
exemption
the
exception”;
moreover,
this
principle
gives
rise
to
the
following
one;
(4)
the
exempting
section
shall
be
interpreted
restrictively,
in
that
if
it
is
ambiguous,
it
shall
be
interpreted
in
favour
of
the
Department
of
National
Revenue,
that
is,
in
such
a
way
as
to
grant
the
lowest
possible
exemption
or
none
at
all.
In
the
case
at
bar
we
are
concerned
with
neither
a
taxing
section
nor
an
exempting
section.
In
fact,
we
are
not
concerned
with
a
section
of
substantive
law
but
with
a
section
concerning
procedure.
What
principles
of
interpretation
apply
in
cases
of
ambiguity
in
a
section
dealing
with
procedure?
Should
we
nevertheless
rely
on
the
literal
text,
on
a
strict
interpretation,
and
conclude
that
in
view
of
the
ambiguity
in
the
text
the
doubt
should
operate
against
the
person
favoured
by
the
section,
that
is,
the
plaintiff,
the
Department
of
National
Revenue?
The
Board
is
of
the
opinion
that
in
a
procedural
section,
even
if
it
forms
part
of
a
tax
statute,
it
must,
in
order
to
provide
an
equitable
interpretation,
interpret
the
section
in
the
way
most
likely
to
attain
the
object
of
the
legislator.
Section
11
of
the
Interpretation
Act
reads
as
follows:
11.
Every
enactment
shall
be
deemed
remedial,
and
shall
be
given
such
fair,
large
and
liberal
construction
and
interpretation
as
best
ensures
the
attainment
of
its
objects.
A
strict
interpretation
of
the
taxing
and
exempting
sections,
as
explained
above,
seems
to
run
counter
to
the
general
principle
laid
down
in
the
aforementioned
section.
However,
this
is
only
so
at
first
glance,
because
a
more
specific
principle,
that
when
the
legislator
imposes
an
-obligation
he
has
a
duty
to
do
so
Clearly,
qualifies
this
general
principle.
If
he
does
not,
the
ambiguity
counts
against
him.
The
obligation
laid
down
in
section
174
is
not
an
obligation
of
substantive
law,
such
as
taxes,
but
an
obligation
which
concerns
procedure
only.
That
is
why
the
Board
feels
that
in
the
case
at
bar
there
are
grounds
for
applying
the
general
principle
laid
down
in
section
11
of
the
Interpretation
Act.
It
appears
from
a
study
of
the
enactment
that
subsection
174(2)
is
a
specific
provision
which
provides
details
on
the
application
mentioned
in
a
general.
manner
in
subsection
(1).
Thus
the
object
of
the
legislator
is
much
more
clearly
stated
in
subsection
(2)
than
in
subsection
(1).
Accordingly,
when
he
speaks
of
facts
on
which
the
Department
“intends
to
base.
assessments
of
tax”,
it
is
clear
that
the
legislator
means
that
the
assessment
will
be
issued
in
the
future,
that
is,
after
judgment
has
been
rendered
following
a
hearing
joining
several
taxpayers.
Paragraph
174(5)(c)
confirms
this
opinion
that
the
assessment
is
not
required
prior
to
the
hearing
in
cases
that
have
been
joined.
Thus,
it
appears
to
the
Board
that
the
legislator
wished
in
the
procedure
described
in
section
174
to
join
in
a
single
hearing
and
to
bind
by
the
judgment
rendered,
all
the
taxpayers
whose
income
may
be
affected
by
the
same
occurrence
or
transaction
or
series
of
these,
whether.
or
not
these
taxpayers
have
been
assessed
in
respect
of
income
resulting
from
this
occurrence
or
transaction,
or
series
of
occurrences
or
transactions.
Paragraph
174(3)(b)
must
also
be
interpreted
as
the
legislator
intended.
If
we
take
into
consideration
the
objects
of
section
174
as
a
whole,
as
we
concluded
above,
it
appears
that,
in
the
Board’s
opinion,
the
English
text
corresponds
best
to
the
meaning
intended
by
the
legislator.
The
legislator
wished
to
give
the
Board
and
the
Trial
Division
of
the
Federal
Court
the
power
to
join
appellants,
and
to
join
to
them
taxpayers
named
in
a
previous
decision
of
the
Board,
whether
these
taxpayers
have
been
assessed
without
having
appealed
from
this
assessment
or
have
not
been
assessed
at
all.
The
Board
feels
that
this
interpretation
does
not
conflict
with
the
principle
laid
down
by
Jackett,
J
in
Compagnie
Immobilière
BON
Limitée
v
The
Queen
to
which
we
referred
above.
In
the
case
at
bar,
if
we
wish
to
understand
the
meaning
of
paragraph
174(3)(b)
and
to
discover
the
objects
of
the
legislator,
despite
the
contradictions
between
the
French
and
English
texts,
we
must
consider
other
provisions
within
section
174,
namely
subsection
174(2)
and
paragraph
174(5)(c)
as
explained
above,
which
enable
us
to
reach
almost
certain
conclusions
concerning
the
legislator’s
intent.
In
the
case
in
which
Jackett,
J
had
to
determine
the
meaning
of
Regulation
1100(2),
he
could
refer
only
to
the
difference
between
the
texts
in
the
two
official
languages,
and
more
precisely,
to
the
difference
between
the
English
words
“disposition”
and
“disposed
of”
on
the
one
hand,
and
the
French
words
“aliénation”
and
“aliénés”
on
the
other
hand.
The
Board
would
like
to
see
the
provisions
of
subsection
174(1)
and
paragraph
174(3)(b)
corrected
so
that
the
legislator’s
intent
could
be
easily
seen,
if
this
intent
has
been
correctly
understood
by
the
present
decision.
7.
Preliminary
Conclusion
Given
the
evidence
submitted
and
given
section
174
as
interpreted,
the
Board
concludes
that
the
appellants
on
the
one
hand,
that
is,
Les
Meubles
de
Maskinongé
Inc
and
Les
Associés
Houde
Inc,
and
the
following
taxpayers
on
the
other
hand,
Noélla
Bernèche,
Dominique
Bernèche,
Dame
Gerard
Bernèche,
Dame
Dolores
Drainville,
Dame
Gilberte
Livernoche,
Gilles
Berneche
and
the
estate
of
Roland
Berneche,
must
be
joined
for
purposes
of
a
single
hearing,
and
that
the
decision
which
shall
be
rendered
by
the
Board
at
that
time
shall
bind
all
the
parties.
Prior
to
this
hearing
the
heirs
of
Roland
Bernèche
may
institute
the
appropriate
proceedings
and
the
Minister
of
National
Revenue
may
reply
to
them.
8.
Comments
Relating
to
the
Complexity
of
the
Evidence
In
spite
of
the
request
made
by
counsel
for
the
respondent
and
the
third
parties
that
a
decision
be
made
on
the
burden
of
proof
in
the
event
that
the
application
was
allowed,
the
Board
does
not
feel
in
any
way
obliged
to
render
judgment
on
this
point
as
part
of
these
proceedings.
Such
a
decision
shall
be
the
responsibility
of
the
person
presiding
over
the
hearing.
As
an
obiter
dictum,
however,
it
would
perhaps
be
proper
to
consider
the
fundamental
principles
which
may
guide
the
decision
to
be
rendered.
It
is
well
known
that
in
many
decisions
the
courts
have
maintained
that
the
burden
of
proof
rests
with
the
taxpayer
when
he
is
appealing
from
an
assessment.
In
the
case
at
bar
it
is
clear
that
the
two
parties
appealing,
that
is,
Les
Meubles
de
Maskinongé
Inc
(which
maintains
that
the.
payments
made
to
the
estate
of
Roland
Bernèche
are
salaries
and
therefore
an
allowable
deduction
in
computing
its
income)
and
Les
Associés
Houde
Inc
(which
also
maintains
that
the
payments
made
by
Les
Meubles
de
Maskinongé
Inc
to
the
estate
of
Roland
Bernèche
are
salaries
and
therefore
do
not
constitute
for
it
an
advantage
conferred
on
a
shareholder)
have
the
burden
of
proving
their
point
of
view.
However,
what
happens
to
the
heirs
of
the
estate
who
have
not
even
been
assessed
and
who
clearly
cannot
appeal
from
non-existent
assessments?
They
have
come
before
the
Board
for
a
decision
from
the
said
Board
as
a
result
of
an
application
by
the
Department
of
National
Revenue
based
on
section
174.
In
view
of
the
legislator’s
objects
when
he
drafted
this
section,
as
was
explained
above,
even
a
taxpayer
who
has
not
been
assessed
may
be
joined
to
other
people
(whether
assessed
or
not,
and
whether
appellants
or
not)
in
the
same
hearing;
this
taxpayer
will
be
bound
by
the
judgment
rendered
at
that
time
and
the
assessment
of
him
shall
be
issued
following
the
said
judgment.
In
reality,
in
order
to
bring
about
this
common
hearing,
the
legislator
is
making
a
fiction
or
presumption
to
the
effect,
on
the
one
hand,
that
the
taxpayer
is
assessed,
and,
on
the
other
hand,
that
he
is
appealing.
Thus,
the
taxpayer
must
consider
himself
as
such
and
act
accordingly.
The
consequence
of
this
is
that
from
the
point
of
view
of
evidence
he
must
assume
that
the
assessment,
however
fictional
it
may
be,
is
justified
in
so
far
as
he
has
not
proven
the
contrary.
The
burden
of
proof
is
his.
In
the
case
at
bar
in
law
the
Department
of
National
Revenue
regards
the
payments
made
to
the
heirs
and
to
the
estate
of
Roland
Bernèche
by
Les
Meubles
de
Maskinongé
Inc
as
salaries.
They
must
therefore
prepare
their
evidence
on
this
basis.
As
the
evidence
which
will
be
introduced
by
Les
Meubles
de
Maskinongé
Inc
and
Les
Associés
Houde
Inc
will
run
counter
to
the
interests
of
the
heirs
of
Roland
Bernèche
and
vice
versa,
counsel
for
each
party
would
normally
cross-examine
the
witnesses
of
the
other
party.
Counsel
for
the
Department
of
National
Revenue,
moreover,
may
cross-examine
them
and
produce
their
own
witnesses,
both
to
contradict
the
evidence
presented
by
either
party
and
to
enlighten
the
Board
on
all
aspects
both
of
the
evidence
and
of
the
Act,
even
if
there
is
a
contradiction
in
respect
of
assessments
both
real
and
imaginary.
Among
the
parties
who
have
the
burden
of
proof,
which
party
should
call
its
witnesses
first?
In
fact,
the
parties
involved
could
easily
reach
agreement
on
this.
If
they
do
not,
the
person
presiding
at
the
hearing
will
have
authority
to
decide.
9.
Comments
Relating
to
the
Estate
of
Roland
Bernèche
and
to
the
Heirs
of
Roland
Bernèche
To
touch
on
another
point
mentioned
by
counsel,
it
must
be
ascertained
who
should
be
assessed
in
the
event
that
the
payments
made
by
Les
Meubles
de
Maskinongé
Inc
are
considered
to
be
salary.
Should
the
Department
of
National
Revenue
assess
the
estate
of
Roland
Bernèche
or
each
of
the
heirs
of
Roland
Bernèche?
The
Member
of
the
Board
who
presides
at
the
common
hearing
should
be
in
a
better
position
to
make
this
decision,
if
necessary,
and
the
parties
to
the
case
may
express
their
point
of
view
both
in
the
proceedings
and
at
the
hearing.
10.
Conclusion
The
plaintiff’s
application
is
allowed
and:
THIS
BOARD
ORDERS
that
the
following
persons
be
joined
before
the
Board
in
a
common
hearing:
Les
Meubles
de
Maskinongé
Inc,
Les
Associés
Houde
Inc,
Noélla
Bernèche,
Dominique
Bernèche,
Dame
Gérard
Bernèche,
Dame
Dolorès
Drainville,
Dame
Gilberte
Livernoche
and
Gilles
Bernèche,
so
that
a
decision
can
be
made
as
to
which
of
the
following
two
common
questions
may
be
retained:
1—To
ascertain
whether
the
monthly
sums
of
$1,250,
totalling
$28,750,
paid
to
the
late
Mr
Roland
Berneche
during
the
taxation
years
1972
and
1973
by
Les
Meubles
de
Maskinongé
Inc,
and
to
his
spouse,
Mrs
Noëlla
Berneche,
represent
a
salary
or
retirement
benefits
such
that:
(i)
these
expenses
were
incurred
by
Les
Meubles
de
Maskinongé
Inc
for
the
purpose
of
gaining
income
from
its
business,
and
were
deductible
in
computing
this
taxpayer’s
income
for
the
taxation
years
1972
and
1973,
under
ss
12(1)(a)
(RSC
1952,
c
148)
and
18(1)(a)
(SC
1970-71-72,
c
63
as
amended)
of
the
Income
Tax
Act;
(ii)
these
sums
constituted
income
which
should
be
included
in
computing
the
income
of
the
late
Mr
Roland
Bernèche
for
the
taxation
years
1971,
1972
and
1973
and
the
income
of
Mrs
Noélla
Berneche
for
the
taxation
year
1973,
under
ss
3,
5,
6(1)(a)(IV)
(RSC
1952,
c
148)
and
ss
3,
5
and
56(1
)(a)
(SC
1970-71-72,
c
63
as
amended)
of
the
Income
Tax
Act;
2—or
whether
the
monthly
sums
of
$1,250,
totalling
$28,750,
paid
to
the
late
Roland
Berneche.
and
to
his
spouse
Mrs
Noëlla
Berneche
by
Les
Meubles
de
Maskinongé
Inc
during
the
taxation
years
1972
and
1973,
represent
consideration
in
part
for
the
sale
of
the
late
Roland
Bernèche’s
shares
in
the
following
companies:
Les
Meubles
de
Maskinongé
Inc,
Les
Chaises
Maskinongé
Inc,
Maskinongé
Furniture
Transport
Inc
and
Les
Produits
Maskin
Inc,
to
Les
Associés
Houde
Inc,
such
that:
(i)
these
expenses
were
not
incurred
by
Les
Meubles
de
Maskinongé
Inc
for
the
purpose
of
gaining
income
from
its
business
and
were
not
deductible
in
computing
this
taxpayer’s
income
for
the
taxation
years
1972
and
1973,
under
ss
12(1)(a)
(RSC
1952,
c
148)
and
18(1)(a)
(SC
1970-71-72,
c
63
as
amended)
of
the
Income
Tax
Act’,
(ii)
these
sums
constituted
payment
in
part
of
the
agreed
price
of
$225,000
for
the
sale
of
the
late
Mr
Roland
Bernèche’s
shares
in
the
following
companies:
Les
Meubles
de
Maskinongé
Inc,
Les
Chaises
Maskinongé
Inc,
Maskinongé
Furniture
Transport
Inc
and
Les
Produits
Maskin
Inc,
to
Les
Associés
Houde
Inc,
and
thus
constituted
a
fraction
of
the
total
advantage
of
$225,000
conferred
by
Les
Meubles
de
Maskinongé
Inc
on
its
shareholder
Les
Associés
Houde
Inc,
of
which
the
amount
of
$225,000
should
be
included
in
computing
the
income
of
Les
Associés
Houde
Inc
for
the
taxation
year
1972
under
s
15(1)
of
the
Act;
THIS
BOARD
DOTH
FURTHER
ORDER
that
a
copy
of
this
order
be
sent
to
the
representatives
of
the
parties
and
the
parties
themselves
by
registered
mail.
THIS
BOARD
DOTH
FURTHER
ORDER
that
the
following
persons
may,
within
30
days
from
the
mailing
of
this
order,
file
with
the
Board,
either
in
person
or
through
their
counsel
or
agent,
a
notice
of
appeal
as
if
these
persons
were
appealing
from
an
assessment
to
this
Board,
such
assessment
being
issued
in
accordance
with
the
first
common
question
described
above:
Noëlla
Bernèche,
personally
and
as
executrix
of
the
estate
of
Roland
Berneche,
Dominique
Berneche,
Dame
Gerard
Berneche,
Dame
Dolores
Drainville,
Dame
Gilberte
Livernoche
and
Gilles
Berneche.
THIS
BOARD
DOTH
FURTHER
ORDER
that
the
Minister
of
National
Revenue
may
file
a
reply
in
the
usual
manner
to
any
notice
of
appeal
by
the
persons
mentioned
in
the
preceding
paragraph.
THIS
BOARD
FINALLY
ORDERS
that
if
among
the
above-mentioned
persons,
one
or
more
or
all
do
not
appeal
in
the
capacity
already
mentioned,
that
person
or
persons
shall
not
be
entitled
to
receive
any
further
notice
of
the
proceedings
herein.
Application
allowed.
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