Bonner,
T.J.C.:—This
is
an
appeal
from
a
determination
of
a
loss
for
the
1981
taxation
year
of
Plant
National
Ltd.
In
making
the
determination
the
respondent
treated
as
nil
the
loss
from
the
disposition
by
the
appellant
to
Plant
Enterprises
Ltd.
(which
I
will
call
"Enterprises")
of
7.9
million
redeemable
preference
voting
shares
of
Enterprises.
The
respondent's
action
was
based
on
a
finding
that
subparagraph
40(2)(e)(ii)
of
the
Income
Tax
Act
requires
that
the
loss
be
found
to
be
nil.
Restated,
that
finding
was
that
National's
loss
otherwise
determined
arose
from
the
disposition
of
the
7.9
million
Enterprise
preference
shares
to
Enterprise,
a
corporation
that
was
controlled
by
VIP,
the
latter
being
a
person
by
whom
it,
National,
was
controlled.
The
key
to
the
appellant's
attack
on
the
respondent's
determination
is
the
assertion
that
where
reference
is
made
to
"control"
in
subparagraph
40(2)(e)(ii)
it
is
a
reference
to
control
at
or
after
the
disposition
in
question
and
not
to
control
before
that
disposition.
Upon
the
disposition
by
National
of
the
voting
preference
shares
National
ceased
to
control
Enterprises.
Industries,
which
all
along
had
been
the
holder
of
100
common
shares
of
Enterprises,
became
the
person
who
controlled
it.
Here
the
disposition
itself
effected
an
end
to
National's
control
of
Enterprises.
Industries
had
of
course
previously
sold
its
shares
in
Quebec
to
VIP.
Mr.
Adams
in
argument
observed
first
that
paragraph
(e)
uses
the
past
tense
and
speaks
of
"was
controlled”
but
he
proceeded
to
point
out
that
the
paragraph
speaks
as
well
of
"property
disposed
of”
and
there
too
uses
the
past
tense.
Thus,
he
concluded,
the
tense
used
does
not
defeat
his
position.
I
agree.
As
I
see
it,
considerations
of
grammatical
tense
are
of
very
little
assistance
here.
The
suggestion
that
the
disposition
and
loss
of
control
in
this
case
were
simultaneous
involves
the
attribution
to
the
word
“disposition”
of
a
meaning
that,
in
context,
is
much
too
narrow.
The
definitions
of
the
word
"disposition"
in
Black's
Law
Dictionary
fifth
edition
include
"the
parting
with,
alienation
of,
or
giving
up
property".
In
the
same
dictionary
"dispose
of”
is
defined
in
part
as
follows:
"to
alienate,
relinquish,
part
with,
or
get
rid
of;
to
put
out
of
the
way;
to
finish
with;
to
bargain
away”.
Receipt
by
the
person
subject
to
control
is
the
result
of
the
disposition
contemplated
by
paragraph
(e)
but
it
is
not
the
entire
disposition.
In
the
present
case
the
disposition
involved
inter
alia
the
passing
of
a
resolution
authorizing
the
delivery
of
the
shares
to
Enterprises.
(That
is
Exhibit
A-7.)
The
legislature
in
having
regard
to
the
question
of
control
of
the
recipient
has
plainly
directed
its
mind
to
the
power
of
the
controller
to
decide
to
part
with
the
property
and
to
dictate
the
structure
and
terms
of
the
transaction
leading
up
to
the
transfer
of
the
property.
Thus,
I
cannot
accept
the
submission
that
paragraph
(e)
applies
only
where
the
requisite
control
of
the
recipient
exists
at
or
after
the
receipt
of
the
property
disposed
of.
The
loss
of
National’s
control
of
Enterprises
was
a
consequence
of
National's
disposition
of
the
Enterprise
shares.
That
loss
of
control
did
not
precede
the
disposition.
Thus,
as
I
see
it,
there
was
a
disposition
of
shares
by
National
to
Enterprises,
a
corporation
that
could
fairly
be
described
as
one
that
"was
controlled"
by
VIP
within
the
meaning
of
subparagraph
40(2)(e)(ii).
Mr.
Adams
argued
further
that
absurd
or
unjust
results
would
flow
from
a
conclusion
that
the
reference
to
control
in
subparagraph
40(2)(e)(ii)
is
a
reference
to
control
before
the
disposition.
It
is
of
course
presumed
that
the
legislature
did
not
intend
what
is
inconvenient
or
unreasonable.
In
this
regard
see
Maxwell
on
the
Interpretation
of
Statutes,
12th
edition,
page
199.
It
was
Mr.
Adams’
submission
that
where
subsection
85(4)
of
the
Income
Tax
Act
applies
to
a
disposition
of
capital
property
to
a
corporation
that
immediately
after
the
disposition
was
controlled
by
the
transferor
a
resultant
loss
will
not
evaporate
but
rather
will
be
reflected
in
the
adjusted
cost
base
to
the
taxpayer
of
the
shares
of
the
transferee.
Preservation
of
the
loss
in
one
case
and
the
disappearance
of
it
in
another
is,
according
to
the
submission,
the
sort
of
result
which
the
legislature
is
presumed
not
to
intend.
I
am
unable
to
find
in
the
statutory
language
and
context
any
basis
for
restricting
the
control
referred
to
in
subparagraph
40(2)(e)(ii)
to
control
after
disposition.
It
should
be
noted
that
where
the
legislature
intended
to
impose
a
restriction
of
the
kind
sought
by
Mr.
Adams
it
did
so
expressly.
In
this
regard
I
refer
to
the
opening
words
of
subsection
85(4)
of
the
Act
which
speaks
of
the
disposition
of
capital
property
”.
.
.
to
a
corporation
that,
immediately
after
the
disposition,
was
controlled
.
.
.
by
the
taxpayer.
.
.
.”
I
therefore
do
not
accept
that
argument.
Finally,
Mr.
Adams
submitted
that
on
the
facts
of
this
case
subsection
256(6)
of
the
Act
comes
into
play
and
resolves
any
anomaly
in
paragraph
40(2)(e).
The
short
answer
to
this
submission
is
that
subsection
256(6)
might
have
applied
to
deem
Enterprises
not
to
have
been
controlled
by
VIP
at
the
relevant
time
if,
as
is
clear
from
the
final
portion
of
the
opening
part
of
the
subsection,
certain
facts
had
been
”.
.
.
established
to
the
satisfaction
of
the
Minister.
.
.
."
Nothing
was
shown
to
have
been
so
established
in
this
case.
There
was
no
evidence
that
the
matter
was
taken
to
the
respondent
for
consideration
at
all.
Accordingly,
the
subsection
does
not
apply.
For
the
foregoing
reasons
I
will
dismiss
the
appeal.
Thank
you.
Appeal
dismissed.
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