Roland
St-Onge
[Translation]:—The
appeal
of
Laurentide
Rendering
Inc
was
heard
before
me
on
January
22,
1981,
in
the
city
of
Montreal,
Quebec,
and
comprises
two
issues
arising
out
of
an
expropriation
of
the
appellant’s
business
that
took
place
during
1969.
In
assessing
the
appellant
the
Minister
included
two
large
amounts
in
computing
its
income
for
the
1975
taxation
year.
The
first
amount,
$171,496.13,
represents
compensation
for
property
in
Class
19,
and
the
second,
$260,444.81,
is
interest
income
received
for
1975.
At
the
outset
of
the
hearing
counsel
for
the
appellant
withdrew
his
appeal
with
respect
to
the
interest
paid
for
1975.
The
only
issue
that
remains
to
be
determined
is
whether
the
respondent
is
entitled
to
recapture
the
depreciation
on
Class
19
property.
The
facts
of
this
appeal
are
set
out
clearly
in
paragraph
5,
subparagraphs
(a)
to
(j)
inclusive
of
the
reply
to
the
notice
of
appeal,
whch
read
as
follows:
[Translation]
In
assessing
the
appellant
for
the
1975
taxation
year,
the
respondent
relied,
inter
alia,
on
the
following
assumptions
of
fact:
(a)
During
1969
Her
Majesty
in
Right
of
Canada,
represented
by
the
Department
of
Public
Works,
expropriated
the
appellant’s
existing
property
for
use
in
the
construction
of
Mirabel
airport;
(b)
During
1975
an
agreement
was
entered
into
between
Her
Majesty
in
Right
of
Canada
and
the
appellant
setting
the
compensation
for
the
expropriation
at
$953,282;
(c)
By
a
resolution
dated
Octiber
9,
1975
the
appellant
ratified
the
agreement
referred
to
in
the
preceding
paragraph;
(d)
The
compensation
agreed
upon
by
Her
Majesty
in
Right
of
Canada
and
the
appellant
was
broken
down
as
follows:
|
Land
|
$
41,835
|
|
Building
|
128,210
|
|
Artesian
wells,
sewers
|
5,095
|
|
Movable
and
fixed
equipment
|
778,142
|
|
Total
|
$953,282
|
(e)
In
addition
to
the
said
compensation,
the
appellant
received
from
Her
Majesty
in
Right
of
Canada
in
1975
the
sum
of
$260,444.81
as
interest
payable
on
the
expropriation
compensation
from
March
27,
1969;
(f)
Included
in
the
appellant’s
property
that
was
expropriated
was
property
in
Classes
8
and
19
(Regulation
1100
et
seq),
for
which
the
compensation
was
$778,142;
(g)
The
portion
of
the
compensation
relating
to
the
Class
19
property
was
at
least
$171,496.13;
(h)
The
undepreciated
capital
cost
of
the
Class
19
property
was
zero
(0)
on
December
31,
1975;
(i)
The
appellant’s
capital
cost
for
the
Class
19
property
was
$171,496.13;
(j)
The
recaptured
depreciation
in
respect
of
the
Class
19
property
was
$171,496.13
in
1975.
The
appellant
for
its
part
maintained
that
the
disposition
of
property
took
place
in
1969
at
the
time
of
the
expropriation
and
that
subsection
20(1)
of
the
Income
Tax
Act,
SC
1970-71-72,
c
63,
as
amended,
requires
that
the
recapture
be
included
in
computing
income
for
the
year
during
which
the
disposition
took
place.
Only
one
witness
was
called:
Mr
Courey,
a
chartered
accountant,
who
was
engaged
to
negotiate
the
expropriation.
He
stated
that
the
expropriation
had
taken
place
in
1969,
that
no
legal
proceedings
had
been
instituted,
that
the
compensation
had
been
fixed
pursuant
to
a
written
agreement
entered
into
by
the
parties
during
the
1975
taxation
year,
that
the
appellant
company
had
continued
to
operate
its
business
without
having
to
move
and
that
it
was
still
operating
at
present
under
a
written
lease
from
the
Crown
for
a
10-year
period
ending
in
1985.
Counsel
for
the
appellant
maintained
that
his
client
was
taxable
in
1969
at
the
time
of
the
expropriation
and
not
at
the
time
of
the
1975
agreement,
since
subsection
20(1)
of
the
old
Act
required
that
recapture
be
included
in
computing
income
for
the
year
during
which
the
disposition
took
place.
He
referred
the
Board
to
Her
Majesty
the
Queen
v
Compagnie
Immobilière
BCN
Ltée,
[1979]
CTC
71;
79
DTC
5068,
and
I
quote:
In
the
context
of
subsection
20(5),
the
definitions
of
“disposition
of
property”
and
“proceeds
of
disposition”
cannot
be
said
to
be
exhaustive;
these
expressions
must
bear
both
their
normal
meaning
and
their
statutory
meaning;
it
would
be
wrong
to
restrict
the
former
because
of
the
latter.
and
at
78:
In
French,
the
verb
“disposer”
would
convey
the
same
idea
as
“to
dispose
of”.
In
discussing
the
jus
abutendi
which
is
one
of
the
three
main
attributes
of
the
right
of
ownership,
Mignault
(Droit
civil
canadien,
vol
2
at
477).
He
further
maintained
that
subsection
44(2)
of
the
new
Act
cannot
apply,
first
because
having
been
introduced
by
an
amendment
enacted
in
1974
it
could
not
have
a
retroactive
effect
and
tax
the
appellant
in
1975
on
a
disposition
of
property
that
occurred
in
1969.
The
amendment
would
have
had
to
be
stated
to
be
retroactive
in
order
to
have
such
a
retroactive
effect.
According
to
him,
subsection
44(2)
applies
rather
to
very
specific
cases,
such
as
the
one
set
out
in
paragraph
(b):
where
a
claim,
suit,
appeal
or
other
proceeding
has
been
taken
before
one
or
more
tribunals
or
courts
of
competent
jurisdiction,
the
day
on
which
the
taxpayer’s
compensation
for
the
property
is
finally
determined
by
such
tribunals
or
courts,
and
the
case
set
out
in
paragraph
(c)
where
a
Claim,
suit,
appeal
or
other
proceeding
referred
to
in
paragraph
(b)
has
not
been
taken
before
a
tribunal
or
court
of
competent
jurisdiction
within
two
years
of
the
loss
.
.
.
The
evidence
indicated
that
no
legal
proceedings
had
been
taken
and
that
the
expropriation
had
taken
place
in
1969.
Consequently
the
date
of
the
disposition
of
property
would
be
deemed
to
be
the
day
on
which
the
agreement
was
signed
in
1971.
The
respondent
had
neglected
to
tax
the
appellant
in
1971
and
was
too
late
to
do
so
in
1975,
and
its
assessment
in
1975
was
consequently
invalid.
Counsel
for
the
respondent,
for
his
part,
maintained
that
it
was
impossible
for
the
respondent
to
tax
the
appellant
before
1975
because
the
amount
of
compensation
was
not
known
until
1975,
and
that
subsection
44(2)
was
added
in
May
1974
to
determine
when
an
amount
has
become
receivable
by
a
taxpayer
as
proceeds
of
disposition.
Paragraph
(a)
of
subsection
44(2)
applies
in
the
present
case
since
the
day
the
appellant
agreed
to
an
amount
in
full
compensation
to
it
for
the
property
taken
by
the
Crown
is
in
1975.
He
referred
the
Board
to
Maple
Leaf
Mills
Limited
v
MNR,
[1976]
CTC
324;
76
DTC
6182,
to
establish
when
an
amount
becomes
receivable,
and
I
quote:
This
test
is
the
one
this
court
has
applied
in
income
tax
cases
resulting
from
expropriations;
for
an
amount
to
become
receivable
in
any
taxation
year,
two
conditions
must
co-exist:
(1)
a
right
to
receive
compensation;
(2)
a
binding
agreement
between
the
parties
or
a
judgment
fixing
the
amount
.
.
.
The
evidence
indicated
that
the
expropriation
took
place
in
1969
and
the
agreement
regarding
compensation
in
1975,
and
that
the
respondent
relied
on
section
3,
subsection
13(1)
and
paragraphs
13(21
)(d)
and
(f),
which
defines
disposition
of
property,
and
subsection
44(2)
to
recapture
the
depreciation
since
the
appellant
had
received
sufficient
compensation
to
reimburse
the
cost
of
the
Class
19
property,
which
was
fully
depreciated
in
1979.
Subsection
44(2)
states:
..
.
that
where
the
proceeds
of
dispostion
are
described
in
subparagraph
12(21
)(d)(iii)
or
(iv),
or
54(h)(iii)
or
(iv),
.
..
The
rest
of
the
section
applies.
What
are
these
cases
described
in
the
said
subparagraphs
13(21
)(d)(iii)
and
(iv)?
“Proceeds
of
disposition”.
—
“proceeds
of
disposition”
of
property
includes
(iii)
Compensation
for
property
destroyed
and
any
amount
payable
under
a
policy
of
insurance
in
respect
of
loss
or
destruction
of
property,
(iv)
compensation
for
property
taken
under
statutory
authority
or
the
sale
price
of
property
sold
to
a
person
by
whom
notice
of
an
intention
to
take
it
under
statutory
authority
was
given.
Subparagraphs
54(h)(iii)
and
(iv)
are
exactly
the
same
as
subparagraphs
13(21)(d)(iii)
and
(iv).
Pursuant
to
the
provisions
I
have
just
mentioned,
expropriation
is
covered
by
subsection
44(2).
Paragraphs
(b)
and
(c)
of
subsection
44(2)
read
as
follows:
(b)
where
a
claim,
suit,
appeal
or
other
proceeding
has
been
taken
before
one
or
more
tribunals
or
courts
of
competent
jurisdiction,
the
day
on
which
the
taxpayer’s
compensation
for
the
property
is
finally
determined
by
such
tribunals
or
courts,
(c)
where
a
claim,
suit,
appeal
or
other
proceeding
referred
to
in
paragraph
(b)
has
not
been
taken
before
a
tribunal
or
court
of
competent
jurisdiction
within
two
years
of
the
loss,
destruction
or
taking
of
the
property,
the
day
that
is
two
years
following
the
day
of
the
loss,
destruction
or
taking,
Paragraph
(a)
of
subsection
44(2)
applies
as
well,
however:
The
day
on
which
a
taxpayer
had
disposed
of
a
property
as
a
result
of
an
expropriation
and
the
day
on
which
an
amount
has
become
receivable
by
that
taxpayer
as
proceeds
of
disposition
of
such
a
taxpayer
shall
be
deemed
to
be
the
day
the
taxpayer
has
agreed
to
an
amount
as
full
compensation
to
him
for
the
property
lost,
destroyed,
taken
or
sold.
It
thus
seems
that
paragraph
(c)
is
favourable
to
the
appellant
and
paragraph
(a)
to
the
respondent.
However,
paragraph
(a)
seems
to
me
to
make
much
more
sense
than
paragraph
(c),
and
is
also
more
in
line
with
the
Supreme
Court
of
Canada’s
decision
in
Maple
Leaf
Mills
Limited
(supra),
on
which
the
respondent
based
his
assessment
of
the
appellant.
It
was
impossible
for
the
respondent
to
assess
the
appellant
in
1969
since
the
amount
of
the
compensation
was
not
known,
and
did
not
become
known
until
1975.
This
explains
the
existence
of
and
necessity
for
paragraph
(a).
As
for
paragraph
(c),
although
I
have
not
studied
its
application
in
detail,
it
seems
that
it
was
intended
to
cover
actions
in
damages
that
must
be
brought
within
a
certain
time
limit.
Since
notices
of
expropriation
can
be
sent
by
the
Crown
at
any
time
and
do
not
constitute
actions
in
damages,
I
am
led
to
conclude
that
it
makes
most
sense
to
apply
paragraph
(a)
in
the
circumstances.
As
for
the
question
of
retroactivity,
it
is
well
established
that
legislation
is
drafted
for
the
future
and
not
for
the
past
and
that
to
be
retroactive
an
Act
must
state
that
is
is
of
retroactive
effect.
In
the
case
we
are
concerned
with
the
appellant
was
assessed
not
for
1969
but
for
1975,
and
paragraph
44(2)(a)
has
been
in
existence
since
May
1974.
There
is
consequently
no
question
of
retroactive
taxation
here.
For
all
these
reasons,
the
appeal
is
dismissed.
Appeal
dismissed.
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