Mimetix Pharmaceuticals Inc. v. Canada, 2003 FCA 106

Date: 20030226

Docket: A-63-02

Neutral citation: 2003 FCA 106

CORAM:        LÉTOURNEAU J.A.

ROTHSTEIN J.A.

MALONE J.A.

BETWEEN:

                                               MIMETIX PHARMACEUTICALS INC.

                                                                                                                                                       Appellant

                                                                                 and

                                                        HER MAJESTY THE QUEEN

                                                                                                                                                   Respondent

                                              Heard at Ottawa, Ontario, February 26, 2003.

                      Judgment delivered from the Bench at Ottawa, Ontario, February 26, 2003.

REASONS FOR JUDGMENT BY:                                                                              ROTHSTEIN J.A.

Date: 20030226

Docket: A-63-02

Neutral citation: 2003 FCA 106

CORAM:        LÉTOURNEAU J.A.

ROTHSTEIN J.A.

MALONE J.A.

BETWEEN:

                                               MIMETIX PHARMACEUTICALS INC.

                                                                                                                                                       Appellant

                                                                                 and

                                                        HER MAJESTY THE QUEEN

                                                                                                                                                   Respondent

                                                        REASONS FOR JUDGMENT

                                           (Delivered from the Bench at Ottawa, Ontario

                                                                on February 26, 2003)

ROTHSTEIN J.A.

[1]                 Despite the argument of counsel for the appellant, we have not been persuaded that the Tax Court Judge made any error in respect of her determination that the appellant was not a Canadian-controlled private corporation. We have not been persuaded that she made any error of law or palpable or overriding error of fact or mixed law and fact or in the inferences drawn from the facts.

[2]                 With respect to the investment tax credit claimed for the Collette mixer, according to the facts, the appellant is the first acquirer from the manufacturer. However, regulation 2902(b)(iii) excludes from qualified expenditures for investment tax credit purposes an expenditure for the acquisition of property that has been used before it was acquired by the taxpayer. Here, the taxpayer had leased the mixer for over one year before acquiring it. The lease was a bare lease - that is, it did not contain an option to purchase or any other provision that would enable it to be characterized as a purchase document. For the Court to do so, would constitute re-characterization of the lease transaction into a purchase transaction and we are unable to do that. See Shell Canada Ltd. v. Canada, [1999] 3 S.C.R. 22 at paragraphs 39 and 40. Regrettably, the acquisition in this case is a prescribed expenditure that is excluded from being a qualified expenditure for investment tax credit purposes.

[3]                 The appeal will be dismissed with costs.

                                                                                                                                        "Marshall Rothstein                                       

                                                                                                                                                                  J.A.         

                                                    FEDERAL COURT OF APPEAL

                              NAMES OF COUNSEL AND SOLICITORS OF RECORD

    

DOCKET:                                             A-63-02

STYLE OF CAUSE:                           Mimetix Pharmaceuticals Inc. v. Her Majesty the Queen

                                                                                   

PLACE OF HEARING:                     Ottawa, Ontario

  

DATE OF HEARING:                       February 26, 2003

  

REASONS FOR JUDGMENT

OF THE COURT:                              (Létourneau, Rothstein & Malone JJ.A.)   

  

RENDERED FROM THE

BENCH BY:                                        Rothstein J.A.

   

APPEARANCES:

Mr. Eric Lay                                                                                   FOR THE APPELLANT

Mr. Richard Gobeil and Ms. Jade Boucher                                  FOR THE RESPONDENT

  

SOLICITORS OF RECORD:

Gowling Lafleur Henderson LLP         

Ottawa, Ontario                                                                             FOR THE APPELLANT

Mr. Morris Rosenberg

Deputy Attorney General of Canada     FOR THE RESPONDENT